Seeking Regulatory Clarity

Seeking Regulatory Clarity

This Sidebar is part of the August 2018 Cover Story

Continuous and transparent communication about how direct selling works and its value has prompted greater understanding by governments and the public around the world, Tamuna Gabilaia, executive director and COO, WFDSA, says.

Offering this education ensures more favorable operating environments for distinguished and credible direct selling businesses, but global growth also depends upon clarity in the regulatory environment from country to country.

Pick up your print copy of the August 2018 issue in which this article appeared.

Misconceptions and false perceptions continue to dog direct selling. Despite an evolving 40-year effort to identify and eradicate pyramid schemes, inventory loading, misleading earnings claims, high-pressure sales, scrutiny from lawmakers, press and investors has increased, USDSA Joe Mariano says.

“DSA members are in agreement that we can no longer rely upon our self-congratulations for our industry-leading Code of Ethics,” Mariano says.

More and more USDSA member companies want guidance on what to do and how to compete effectively in a changing marketplace beset by competitors, regulators, press and consumer demand. USDSA-issued guidance papers identifying direct selling best practices will provide additional informal help next year.

Overall, Mariano says, the U.S. regulatory environment is favorable, but the pressing 2018 regulatory issue revolves around the independent contractor status of salespeople.

“Our goal this year will be to continue to fight on Capitol Hill and in the state legislatures to resist any attempt to deprive or diminish their independent status or to delegitimize their activities by defining them as pyramid schemes. We will continue working to educate policymakers on these differences and support policies that define them,” Mariano says.

Within the European market, consumer protections are the focus of regulators where direct selling faces a challenge with consumer policy with the European Union. “A New Deal for Consumers,” published in April lays out additional provisions that would effectively ban doorstep selling if justified by “grounds of public policy or the protection of the respect for private life.”

No factual evidence supports such EU action, Seldia Executive Director Katarina Molin says. The very few reported abuses of certain doorstep selling practices in very few Member states does not justify legislative steps to further restrict commercial practices on the direct sales channel. Seldia does not condone these practices and Molin says existing provisions specifically prohibit “personal visits to the consumer’s home ignoring the consumer’s request to leave or not return.”

Lobbying efforts with European Parliament and the Council are underway and will continue through the fall 2018.