US DSA Code of Ethics
The U.S. Direct Selling Association’s Code of Ethics sets forth the basic fair and ethical principles and practices to which member companies of the Association will adhere in the conduct of their business. Section A.1. of the Code, “Deceptive or Unlawful Consumer or Recruiting Practices” states as follows:
No member company of the Association shall engage in any deceptive, unlawful or unethical consumer or recruiting practice. Member companies shall ensure that no statements, promises or testimonials are made which are likely to mislead consumers or prospective salespeople.
Additionally, Section A.8 of the Code specifically deals with “Earnings Representations”:
No member company shall misrepresent the actual or potential sales or earnings of its independent salespeople. Any earnings or sales representations that are made by member companies shall be based on documented facts. (emphasis added)
Explanatory provisions to the Code, adopted by the DSA Board of Directors, amplify:
There is ample legal precedent in the form of FTC decisions to afford guidance on the subject of earnings representations. While not controlling, these precedents should be used by the Code Administrator in making determinations as to the substantiation of company earnings claims.
The Code’s simple prohibition of misrepresentations was intended, in part, to avoid unduly encumbering start-up companies that have little or no actual earnings history with their compensation plan or established companies that are testing or launching new compensation plans. The prohibition approach is meant to require that companies in these circumstances need only ensure that their promotional literature and public statements clearly indicate that the compensation plan is new and that any charts, illustrations and stated examples of income under the plan are potential in nature and not based upon the actual performance of any individual(s).