Keeping the Media Accountable

In our January 2019 issue of Direct Selling News, we published a story on some best practices to employ when responding to misleading facts about your company or negative criticism of the industry.

The article illustrates that sometimes it’s better to leave things alone because it can just bring more attention to the story.

But, there are times when you need to respond to an unfair attack on an entire industry, especially when the attack is coming from a respected publication that operated fast and loose with the facts.

A recent Washington Post article by Laura Richards titled “How MLMs are Hurting Female Friendships,” currently gaining traction in multiple media outlets across the U.S. is a perfect example.

On January 21, the Post article referenced a report on the Federal Trade Commission (FTC) website in which Jon Taylor, Ph.D., claimed that 99 percent of people involved in direct selling do not make any income at all:

According to a report by Jon M. Taylor of the Consumer Awareness Institute posted on the Federal Trade Commission’s website, less than 1 percent of MLM participants will profit, a far worse rate than for “legitimate small businesses,” of which 39 percent are profitable over the lifetime of the business. “MLM makes even gambling look like a safe bet in comparison,” the report states.

Here is the misleading part: The FTC, nor any other government agency, requested or conducted a report of this nature. The report cited in the article was not an official FTC report. It was part of a comment posted on the FTC website.

Here lies the dilemma, as noted in DSN’s January story: When a negative and misleading story appears, do you respond to it, or do you leave it alone so as not to bring more attention to it?

In this case, the story in the Post, which is a highly respected publication, impelled U.S. Direct Selling Association (DSA) President & CEO Joseph N. Mariano to offer a swift response, largely due to the inaccuracies regarding the income potential of direct sellers:

The report mentioned in this blog post written by Laura Richards erroneously implies that it was published by the Federal Trade Commission (“FTC”) in support of how few people make money participating in direct selling. The fact is, the FTC has never published a report of this nature and the citation of such a report in this manner is simply inaccurate and flat out wrong. There are no government reports of any sort which address the issue of how much money direct sellers across the business channel earn. The link referenced in the article is directly linked to a public comment provided independently to the FTC site from a very outspoken critic of the direct selling industry. Should you conduct a brief research of the FTC site, you will also see many positive direct selling reports provided as public comment on the FTC site.

Here are the facts: DSA’s 2018 Growth and Outlook survey found that more than 18.6 million Americans were involved in direct selling in some capacity in 2017, and the retail channel generated more than $34.9 billion in sales. 5.6 million were building full-or part-time businesses. Another 4.1 million were involved to purchase products or services for their personal use. Close to 9 million people stopped being active direct sellers for reasons as varied as those that motivated their initial involvement in the business.

According to DSA’s 2018 National Salesforce Study, 80% of respondents rate their experience in direct selling as good, very good, or excellent.In addition, DSA’s 2018 National Salesforce Study shows that based on the DSA sample, 90% of people involved in direct selling work part time (fewer than 30 hours per week) with more than 50% working fewer than 10 hours per week. You can see additional data from the DSA at www.dsa.org.

I suggest you also take a look at the research conducted by the Direct Selling Education Foundation Fellow, Dr. Anne Coughlan, Polk Brothers Chair in Retailing, Professor of Marketing, Kellogg School of Management, Northwestern University. Dr. Coughlan discusses her independent research on the individual motivations of direct sellers who become involved in the direct selling industry.

Finally, those who find direct selling meets their needs and interests, do so because it provides them with a flexible, economical, protected way to generate additional income to support their families, and because the community, training and support available to them is unmatched in other secondary income opportunities.

Due to DSA’s response, the Washington Post added a correction to the end of Richards’ story that states the following:

Correction: Earlier versions of this story incorrectly referred to an independent report on the profitability of MLMs that was written by Jon M. Taylor. It was submitted as a comment to the Federal Trade Commission, not written by the FTC.

When reporters fail to do their due diligence in researching stories, people are misled, even after the correction is made. The damage in most cases is already done. That is what is most disconcerting. And that is why we will continue to support the DSA’s efforts to debunk myths like this one by requesting corrections and clarification with media.

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