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To find out more about how the U.S. Direct Selling Association Code of Ethics benefits member companies as well as consumers, Direct Selling News spoke with Jared O. Blum, DSA’s Code of Ethics Administrator. He shares the process for initiating code complaints, as well as his role as a neutral arbiter in making sure concerns are addressed.
Since its adoption in 1970, the DSA Code of Ethics has stood as a cornerstone of the direct selling industry’s efforts to ensure the highest standards of conduct for its member companies and their salespeople, standards that are more stringent than those required by law. As a condition of membership, DSA companies agree to adhere to this code and abide by the decisions of the Code Administrator, a position I have held for the past 12 years. Today, the code stands as a testament to DSA’s responsiveness to perceived or real challenges in the direct selling marketplace. The new amendments recently approved by the DSA Board of Directors, which take effect on Jan. 1, 2016, will provide greater clarity and specificity on many topics, including claims that range from product performance to lifestyle and earnings. This clarity will be to the benefit of consumers and companies alike.
Substantial benefits accrue, not only to the consumer and the direct sellers, but also to the DSA member companies. The presence of the code increases the attractiveness of the company and the industry in both selling and recruiting by providing assurance to the consumer and direct salesperson that the member company is committed to ethical business practices and accountability to the consumer. The credibility of the code’s purpose is demonstrated by my independence as the Administrator whose judgments may not be changed by DSA staff, and who is accountable solely to the DSA Board of Directors. I serve as a neutral arbiter whose goal is to assure the company, salespeople, and the consumer that their concerns have been addressed. The Administrator also does what sometimes is overlooked in the complaint process—he or she listens. Studies have shown that allowing someone to feel their concerns validated and responded to is the first step to emotional resolution of their grievance.
Code complaints involving an alleged violation by a DSA member company are generated from a number of sources: a consumer, a direct seller, another DSA member company or directly from the Code Administrator. The procedure for filing a complaint is done electronically through the DSA website, http://www.dsa.org/code-of-ethics/filing-a-code-complaint. Prior to filing a complaint a consumer is advised to contact the salesperson to correct the problem. If the salesperson cannot or will not correct the problem, the complainant should contact the company and explain the situation as well as outline the steps that are desired to correct it. In the event the company does not resolve the problem a complaint may then be filed. The complainant must provide a detailed description of the alleged code violation including:
- The date and details of the incident;
- The parties involved;
- The code violation believed to have occurred, if possible to identify;
- Efforts made to resolve the matter;
- The amount and cost of product, if relevant, including invoices or other supporting documents;
- Any responses the other parties have made to resolve the matter;
- The current status of the complaint; and
- How the complainant would like to see the complaint resolved or remedied.
Upon receipt of a code complaint I review it to determine if the facts, as expressed, involve a violation of the code. The Administrator also can open an investigation based on public information as well. A formal complaint then is emailed from the Administrator to the Code Responsibility Officer at the involved company, requesting a response to the Administrator and the complainant within 30 days. (Each company must appoint one person as the Code Responsibility Officer and notify DSA if any changes occur in that designation.) At the same time, the complainant is notified by email of this action and asked to contact the Administrator by email if the company has not responded within the 30-day window.
Companies too sometimes avail themselves of the benefits of the code, as occasionally complaints arise between companies. The Administrator may assist in finding a solution that allows an outcome short of further contentious or legal action.
The complaint is considered closed when the company responds to the Administrator and he determines that the member company has adequately addressed the issue. If the company has not resolved the issue or responded in a satisfactory manner, the Administrator may impose remedies, such as return of monies paid for products or services, or repair of products. In the case of an independent salesperson, those remedies may include cancellation of orders, return of products purchased, payment of monies owed, or cancellation or termination of the contractual relationship with the company.
If a company does not respond within the specified time, or fails to comply with the remedy imposed by the Administrator, further electronic and telephonic contacts are initiated. If non-compliance continues, the company will be notified by return receipt requested mail that the Administrator will recommend to the DSA Board of Directors that the member company should be suspended or terminated from membership in DSA. Experience has shown that the prospect of membership termination has been a powerful motivator in impelling companies to act in accordance with the code and or respond to Administrator inquiries.
Quite often a committed self-regulation program, combined with a committed industry, can result in more effective and achievable market behavior compliance than the heavy hand of government. So it is with the DSA Code.