DSA Membership - What Does it Mean?
There are a lot of questions circulating on the Internet and blogosphere with regard to the recent complaint filed by the California Attorney General against YTB, a DSA member. You can read DSA’s official statement on the matter, but I thought it would be helpful to weigh in with some thoughts that address some of the questions people have asked about what membership in the Direct Selling Association (DSA) really means.
To be sure, we are proud of our members and their collective efforts over decades to create standards for themselves regarding sales and recruiting practices. Those standards are embodied in the DSA Code of Ethics. The Code is not a perfect document – that’s why our Ethics Committee and Board are constantly evaluating the Code to reflect what we see going on in the marketplace. But the Code is an enforceable standard of behavior for our members and a mechanism that does aid salespeople and customers alike with getting answers to many of their complaints. Thankfully, despite millions of consumer transactions each year, we get relatively few complaints. That’s a testament to the standards themselves and the pledge that our member companies make to abide by them.
And that’s what DSA membership really means – that DSA member companies pledge to abide by the rigorous standards of the Code – that they will buyback inventory from departing distributors – that they will not allow inventory loading – that they will not require unreasonable upfront fees – that they will not make misrepresentations about their products or opportunities – that they will not be pyramid schemes – that they will not hide behind the independent contractor status of their salespeople to avoid application of the Code. And when a company doesn’t abide by these standards, it will be subject to the judgment of an independent Code Administrator who makes determinations that are in the best interests of the consumer and the industry – not necessarily the company.
Even the best of us make mistakes, and DSA’s purpose is to minimize those mistakes by creating the standards I’ve described and providing a mechanism to address them when they happen. But what about companies that are accused of breaking the law? Fortunately, DSA member companies are rarely accused of this in any credible way. But it sometimes happens that one of the hundreds of DSA members, or some of their millions of salespeople, are charged with serious, systemic wrongdoing. How can this happen and what does DSA do about it?
DSA’s process for reviewing companies prior to becoming association members is a rigorous one. It takes at least one year for applicants to become members. During that year, we look at company marketing materials, contracts, manuals, video and other items to ensure compliance with the DSA Code. We contact law enforcement agencies and others to determine what kind of consumer complaints and legal and regulatory actions have been lodged that might raise questions about the applicant. We will periodically attend company meetings to help ensure that the materials we’ve seen and real world practices of the applicants are consistent. If there are any questions about the company or its marketing plan, or any complaints that we’ve been made aware of, we ask the company to explain them. If they can’t explain, or won’t, we’ll defer their application or recommend to our Board that the company not be admitted to membership.
After approval, if a member company is accused of a fundamental wrongdoing, we take the allegation seriously. If there is an allegation, we forward it to our Code Administrator for possible further action based on his review and the evidence and conclusions that come from any government claim.
But DSA’s reviews and standards are no substitute for one’s own wisdom, caution and education about direct selling. Whether a company is a member of DSA or not, anyone considering direct selling should always ask the same questions – Is the cost to get started reasonable? Is the product a viable one that you think you can sell? Is the compensation of the plan based on sales to real users of the product and not merely based on recruiting other people? Are you being told that this will take hard work to succeed? Does the company have an inventory buy-back policy?
We’re confident that when you ask these questions about DSA members, they’ll be answered to your satisfaction. If not, the DSA Code comes into play. If a member company is not complying with the requirements of the Code or the law, the Code Administrator will take action to force the company to comply, help any individual complainant, or if necessary, ask the Company to leave DSA, make the matter known publicly, or refer it to law enforcement for action.
We’re proud of our Association, our Code, and our member companies and we know that the standards we adopt, fight for, and enforce are an important part of making sure direct selling is a business model that represents the best for consumers, sellers and companies.
Tags: California Attorney General, Code of Ethics, direct selling, DSA, MLM, YTB
August 9th, 2008 at 5:59 pm
I wonder how many direct sellers (distributors) have read the DSA’s code of ethics. For those direct sellers reading this post, have you ever read the Code of Ethics? Do you help your company remain in compliance to the code?
Chances are most direct sellers have not, but should read the code and help their company by doing what they can to work from the code as a distributor. I believe this so strongly that we (the academy) have incorporated the DSA’s code of ethics as a required reading in our course curriculum.
I feel it is important to understand that people many times will be quick to point blame or allege that someone did something just to try and derail the good efforts one is trying to do.
If direct sellers themselves work to implement strong ethical standards in their in-the-field actions, they can help keep this industry growing as a respectable business model… preserving the ability to earn a residual income through a multi-level compensation plan.
While the DSA does a great job in educating their member companies on working from a strong code of ethics, there are many more companies that are a part of this industry that do not belong to the association. These companies should begin following the same code and even their distributors should voluntarily work to implement higher standards in their selling and recruiting efforts.
TIP - If the company you represent is not a DSA member, encourage them to join the association.
As a direct seller, know that the association is on your side as well. While you can’t join as a consumer, you will see in the code of ethics that the code is design for benefit of the company, you (the direct seller), and the consumer. Know that the efforts provided through the association and its members is to help improve this industry (which includes you).
August 10th, 2008 at 10:55 pm
This topic has sparked the interest of industry critics – many apparently forgetting the whole “due process” part of our legal system and talking as though the company has already been tried and convicted. In fact one blogger, Bob H. (aka “Q”), who used to post regularly on this forum, has apparently given up on working toward a constructive solution to the things he sees as issues, and has instead resulted to name calling by awarding to me the “Toothless Hag” award based on his misunderstanding of the limitations of self-regulation. The nomination was seconded by another former contributor here – Scott J. (aka “Tex”) – who also has apparently decided he’s not interested in the conversation anymore. It’s too bad, really, as I was enjoying the opportunity to discuss the issues they find important. (By the way, both are still free to post on this blog as long as their comments are relevant.)
I have responded to this “award” directly on Bob’s blog by reiterating the finer points of self-regulation. Hopefully he’ll post my response as I have posted many of his comments here even though I do not necessarily agree with his views. It’s a shame, really, as we were having such a civil conversation, but it appears it was nothing more than lipservice.
Now, most people probably wouldn’t wear the award given me by Bob as a badge of honor, but I do because it gives me just one more opportunity to help people understand what DSA membership is all about – and why the fact that a member company has come under scrutiny by a law enforcement official does not undercut the purpose of the Code of Ethics. DSA obviously takes the allegations in California very seriously, and as I pointed out in the post above, DSA is not empowered to enforce the law – but we are empowered to create and enforce standards that serve as guideposts for people evaluating direct selling. DSA will seize situations like this as opportunities to evaluate the Code’s standards against marketplace demands – afterall it is ultimately the expectations of consumers that set the bar. If the Code’s standards need to be updated, they will be.
So, I am disappointed that my fellow bloggers have become frustrated because they do not understand or respect due process, self-regulation or the role of DSA with regard to its member companies and the public. But, I know there are millions of others out there who are interested in helping DSA set the standard in self-regulation and will continue this conversation with me.
August 11th, 2008 at 8:04 am
Amy…
I am glad you accepted the wine-house trophy and have given your acceptance speech.
I have never stopped commenting on your blog (as you have suggested). Your last post on “The Waning Days of Summer” didn’t inspire me to comment.
I suppose if I were running a product based pyramid scheme, I would want to be involved in an association which furthered my desire to pull the wool over any new prospects eyes. That is really what the DSA does. The DSA doesn’t sell anything. They serve to provide the window dressing of respectability so I could go about my pyramid scheming in confidence that if any questions are asked, I’d at least have one association that I can point to who supports my business. I can support the DSA’s code which requires buy back provisions and so forth and still act as if my business is legit.
It doesn’t surprise me that questionable cons, schemes and scams fronting as MLMs or direct selling businesses would become part of an association that lends some degree of normality to the insane MLM business model. Not insane for the company, but the distributors that end up being fodder for some of these bad deal companies. Inventory loading, high priced products, over-blown dream selling, and money extracting tool kingpins being some of the worst situations going on within the supposedly legit DSA organizations.
The DSA will continue to hold its nose about all the bad fruit in the Association’s basket. In this case, it took action by the California Attorney General to force you to peek into the basket and take a look at this one rotten YTB piece of bad fruit. Do you not see any others in there while your eyes are cast in this direction?
I don’t know how you can say I have cohorts. That is your situation! You have all the cohorts; look in your basket?
I happen to agree with Tex that there are important issues raised by the TOOL SCAM which make association with Tool Scammers and the companies they front for something prospects need to avoid all together.
Amy, you’ve been in denial so long, I don’t think you’d know what a pyramid scheme is? Think about that the next time you receive an application for new membership. Obviously all the buy back policies in the world and the DSA Code are not going to make many of these bad deal MLM schemes a good deal for consumers or folks who really open themselves up for fleecing by signing on as distributors.
Your trophy is in the mail.
August 11th, 2008 at 10:14 am
Ahhh, it’s good to have you back on the blog.
I don’t really have too much to add, other than disappointment that you still don’t get what the role of the association is. If it makes to feel better to blame us for the things you don’t like about direct selling, I guess that’s fine, but it would be nice to get some credit for the role we play in organizing more than 300 very diverse companies under a single standard. If no association existed you’d be out there looking for someone to listen to your complaints (and complaining that there was no one there to communicate with). The very fact that we’re willing to listen (and in fact using all the information we gather from people like you to work on strengthening the Code) should be enough for you to understand that DSA is in anything BUT denial.