However, some of the most exciting work has been done by the Ethics and Self-Regulation Committee which has spent more than a year carefully reviewing every clause of DSA’s Code of Ethics. For those who aren’t aware, the Code outlines the ethical guidelines DSA member companies must  follow, and guides DSA’s independent Code Administrator in handling any violations of the Code.

The Code is a living document that maintains its strength because it can adapt to a changing marketplace. After review, the Ethics and Self-Regulation Committee recommended substantial changes and additions to the Code. These changes were adopted by the DSA Board of Directors in September and I am pleased to be able to share these with readers of this blog!

Here’s a brief summary of what’s new:

• Statements Regarding Other Companies: Member companies are specifically prohibited from making misleading comparisons of another company’s direct selling opportunity, products or services. All comparisons must be based on objectively substantiated facts. 
• Promotional Materials: Promotional literature, advertisements and mailings may not contain product descriptions or other information that is false, deceptive or misleading. All literature must also contain the address and telephone number of the direct selling company and may include contact information for the independent salesperson. 
• Training and Materials: Independent salespeople may not market supplemental materials that are inconsistent with the member company’s policies and procedures. Further, the materials must be reasonably priced and cannot be a required purchase. The materials must also have a return policy consistent with that of the company itself. 
• Sales Receipts and Cooling Off: In the case of sales made in a non-face-to-face manner, such as via mail, phone or the Internet, a written order or receipt must be provided either in a printable or downloadable form via the Internet or with the initial order. Consumers must also be offered a clearly written description of the cooling-off period permitting cancellation of an order within three days for a full refund of the purchase price. 
• Inventory Loading: Companies must reasonably ensure that sellers who receive compensation for downline sales are consuming, using or reselling the products they purchase. In other words, salespeople should not be purchasing product for the sole purpose of qualifying for their downline commissions. 
• Fees: Any fees charged by a company to become a salesperson must be directly related to the value of materials, products or services provided in return. This provision does not prohibit a company from making a profit on their sales kit or other fees, but it would prohibit, for example, a $300 sales kit that includes nothing more than a set of pamphlets worth $20. 
• Extraterritorial Effect: U.S. DSA member companies operating in a country where they are not a member of the local DSA, or where a DSA does not exist, must comply with the World Code to the extent it is not inconsistent with U.S. law.

These changes address some very important and hotly debated direct selling issues and I’m confident the new provisions will add clarity and strength in these areas. Of course, the Code is only effective when consumers are aware of its existence and take advantage of it if they encounter a problem. The Code doesn’t have the power of law, but DSA member companies are responsible for making sure their corporate policies and the actions of each individual seller are in compliance – otherwise they risk losing their DSA membership or other remedial action. DSA’s job is to set standards and be the first line of protection if there’s a problem.

I encourage everyone to liberally share these changes, and the Code itself, with any one involved in direct selling – whether as a customer of the product or as a seller. You can also find an updated ”plain language” version of the Code online for both consumers and sellers.

As always, anyone is welcome to file a Code complaint if they’ve encountered a problem. 

And don’t think DSA is done yet! There will likely be additional tweaks and changes coming over the next 6-12 months so stay tuned.

I sat with a group of four women at lunch yesterday. Their experience with the company ranged from two years to just a few months. I asked each how she got involved and was impressed with the candor of their responses. None of them set out saying “I want to be a direct seller,” but each had found her way here. One had reluctantly attended a party, ended up buying several products and a few months later decided to give selling a shot because she thought some extra money each month would take the pressure off the family finances – that was two years ago.

All the consultants I’ve met are very genuine, real, intelligent and motivated women. There’s no hype, there’s no pretense – but there is a lot of camaraderie. During the introduction of the fall product line each was busy writing notes and facts that they will use when they demonstrate the products. The addition of additional colors was a particular high point. “I can’t tell you how many people have been asking me for that in red!” I heard one woman say.

I’m headed home on a red-eye flight tonight. Most of the women here will make their way home tomorrow, armed with a new selection of products, new friends and new strategies for achieving their goals. I leave here with a certain satisfaction that the collective story of direct selling, for all of its diversity, is still just as I portray it every day – a flexible opportunity that can be personalized to one’s own situation. In a world with so much bad news, I think that’s pretty cool.

But this past weekend I had an interesting opportunity to be part of a conversation that was a bit different from a product demonstration. I was at the mall with my daughter and we stopped in the food court for lunch. We were seated in a cluster of tables and next to us six women were having a friendly conversation. During a break in the discussion I was having with my daughter about her upcoming birthday party, the conversation at the next table caught my ear. After casually eavesdropping for a few moments it was confirmed – the women were direct sellers having a team meeting. It didn’t take long to determine that the company they were with is a DSA member, so I listened intently. What would the sales leader say to motivate her team, particularly in this tough economy? Would she say anything that would make me want to leap up and flash my business card as though I were an undercover cop? Would the ladies report brisk sales or tough times?

The leader asked the women how they were feeling about their business. One woman began by reporting strong sales the week before. Another woman reported that even though sales were pretty good she said she knew the economy was having an impact on people – they were considering more carefully how their money was going to be spent. After going around the table the leader chimed in again. Her direction to her team was the following –

“Almost all of you joined this company after having used the products yourselves. You know they are great products, but just as with anything, some people will love them and some people won’t. It’s our job as consultants to show people the products and help them decide if they are the right products for them. If you find yourself trying to convince someone to make a purchase, that’s not the right kind of sale. Just give them the facts and let them decide.”

By this time my daughter was asking me to remind her who had RSVP’d for her party so my attention went back to her, but I was grinning on the inside. Despite the urge I had to turn around and congratulate this seller on her wise advice (and wanting to continue listening), I finished my lunch and headed back to shopping. The meeting continued and no one in the group had any idea that I had been listening to the conversation or that their words had fallen on the ears of someone who had a much different perspective than most.

It’s not that the conversation at that adjacent table was unique – it happens thousands of times each day in this country and around the world. But the perspective was unique – and what I heard reaffirmed for me why direct selling works. Tough economy or not, direct selling has a real impact on the lives of millions of people around the globe every day. It works because it’s a business about people. I don’t know the stories of each of those women, but I know they wouldn’t stand out in a crowd – they are just doing what they need to do to put food on the table, have a little fun, buy products they love, etc. etc.

So, thanks to those women for providing me with an opportunity to be a fly on the wall. I wish them good luck in their business and hope they continue to find success.

Phone rep: “Oh, I’m sorry to hear that you want to cancel your service. You have been a valued customer since 2000. Is there anything we can do to convince you to stay with our service?”

ME: “I’m not unhappy with the service and as I explained I’m not leaving your company – I just don’t need two lines anymore.”

Phone rep: “Well perhaps we could offer you a better rate plan. Would you like me to look into that?”

ME: “No, thanks, I still have all the same services I had before, but now I get them through one account so I have no need, at any price, for the second line.”

Phone rep: “OK, I can certainly take care of closing your account for you if there’s nothing we can do to keep your business. PAUSE. OK, ma’am, your account has been closed, but just so you know, you have 59 days should you decide you’d like to reinstate services from our company as we do value you as a customer and are disappointed that you no longer need our service. Is there anything else I can help you with today?”

ME: “No.”

Phone rep: “OK, thank you and please refer us to your family and friends.”

I had to wonder where the training broke down there. She was treating a perfectly happy customer as though I was unhappy, and in fact made me feel like I wasn’t getting good customer service because she clearly wasn’t listening to a word I was saying. To top it all off, at the end of the conversation, she asked me to refer my friends and family to her. So which is it – am I an unhappy customer they want back or am I satisfied customer that they want to encourage to go out and talk about their services to people who trust me? Sounds like they need to update their phone script.

Anyway, the point I’m trying to make here is customer service cannot be a cookie cutter. I’m sure the minute the word “cancel” came out of my mouth the computer chugged away and spit out a script for this woman to read. It didn’t matter what my answers were – she was trained to read that script and by-golly that’s what she was going to do. Do I feel valued? Nope, not at all.

I would have much preferred the rep to actually listen to what I was saying and offer assistance based on what I said. Asking how I liked my new phone or if there were any additional services I would be interested in would have been more appropriate. But, no, not in the script.

Think about the last time you experienced great service……still thinking?……not surprising. Good customer service is lost on most people today. A poor economy usually means customer service improves, but I haven’t noticed it. I rarely even get a “thank you” after the completion of a sale.

Perhaps I’m particularly cognizant of this as I spend a lot of time talking about the individualized service offered through direct selling. Think about it – you’re shopping with someone who knows you or at least knows something about you. You can call them at any time with questions and they’ll follow up with you after the sale to make sure you’re happy with your purchase. It’s their job to make sure you are happy and most take that role very seriously. Some people may not like being treated like a valued customer – and may even mistake it for being pestered – but the alternative is anonymous and sterile and doesn’t make me feel good in an economy that could use a little sunshine.

So the next time you’re out shopping, take note of how you are treated as a customer and then consider how you would like to be treated. Try the same thing if you are a direct seller yourself – treat your customers in the same way you’d like to be treated, listen carefully when they talk to you, pick up on the details that will make them feel important and then do your best to make them the most satisfied customer you have. Do this and you’ll feel confident saying “Please refer me to your family and friends!”

The following information only touches on the ways direct sellers contribute – if you have other examples that illustrate direct sellers contributing to the betterment of their communities, I’d love for you to talk about them here.

• There are more than 15 million independent direct sellers in the United States selling everything from organic gardening supplies and household products to cosmetics and food mixes. A majority of these individuals pursue direct selling on a part-time basis, earning supplemental income, although some do make direct selling a full-time career. Without the additional income some would find it difficult to make ends meet.
• There are many well-known name brands that use a direct selling model, but perhaps more importantly there are countless small sole-proprietorships – individuals who started their businesses in their home as a way to stay at home with their families. In turn, they are now helping others have a flexible schedule that meets each person’s unique needs.
• Direct selling is a perfect example of micro-enterprise. For just the cost of a starter kit (which is usually less than $100 and typically contains product samples, catalogs and training manuals provided by the company at-cost or below) a person from any background, with any level of education and with any goal can get started in direct selling. That small investment may enable that person to make ends meet or he/she may grow it into a larger business. And, if a person decides direct selling is not a fit, he/she has invested little more than their time.
• Direct selling companies and their independent sellers are passionate about giving back to the community. In fact, according to a study on the socio-economic contribution of direct selling to the US economy, in 2004 US direct selling companies gave an estimated $90 million to charitable causes. When asked what types of organizations benefited, 89 percent said they contributed to human services and charities, 36 percent of respondents contributed to education and 14 percent said they contributed to causes that benefited the environment.
• The direct and indirect economic activity generated by direct selling companies resulted in an estimated $6.6 billion in total federal, state, and local taxes in 2004. This helps communities run.
• While economic contributions are more easily measured, the industry also contributes considerably to the quality of life enjoyed by many Americans. Supplementary income, work schedule flexibility, and the entrepreneurial aspects of direct selling are some of the major benefits cited by direct sellers. These social contributions are no less important than the economic contributions.

Direct selling has an impact on many sectors of the economy. It is about much more than selling products and earning an income. For many it’s a chance to accomplish a goal, develop business skills, or simply to meet new people. The companies are active in their communities and encourage their sellers to do the same. It’s really impossible to separate direct sellers from the community because they are one in the same.

]]> http://www.directselling411.com/blog/direct-selling-contributes-to-the-community/feed/ 1 http://www.directselling411.com/blog/the-future-is-bright/ http://www.directselling411.com/blog/the-future-is-bright/#comments Wed, 07 Jan 2009 16:25:59 +0000 Amy Robinson http://www.directselling411.com/?p=116 Happy New Year! After a healthy winter break (went skiing – luckily no broken bones) I’m greeting the new year with a dose of optimism I hope will infect others so the economy can find the jump start it needs. Everyone is evaluating their financial situation and looking for ways to make things a little brighter. Over the break I thought about some of the reasons why direct selling is generally fairly resilient during any economic situation and thought the following five messages summed it up pretty well.
1. Direct selling represents the ultimate microenterprise. Any individual who is willing to work hard has the potential to be a successful direct seller. Some choose to do that on a small scale – others take it much further. The flexibility, creativity and potential for growth distinguish direct selling from more traditional businesses. Low-start-up costs and ease of setting up shop add to the appeal.
2. Direct selling is a case study in personal empowerment. From getting over the fear of standing in front of an audience to being the first person in a family to own a small business, direct selling provides millions of women and men around the world with a path to success. Reaching one’s financial goals is often secondary to the importance of the life skills gained through direct selling.
3. Every direct seller is the equivalent of a local small business. Even direct sellers working with companies with billions in annual revenue are making a local impact through their individual efforts. For their customers, the company itself isn’t nearly as important as the fact that they are supporting someone in their community.
4. There’s never been a better time to stay home and enjoy the company of family and friends. Who needs a night out on the town when you can have just as much fun at home – without the crowds. Adding shopping to the mix just doubles the fun.
5. Consumers tend to look for things that will make them feel good during a recession. Many direct selling products can do just that. From a lipstick to “look good” to nutritional supplements to “feel good,” people are looking for little extras that won’t make big dents in their pocket books. Eating at home more? Try some new kitchen accessories or food mixes. Foregoing the family vacation? Redo a room in your home instead. With the wide variety of products and services offered through direct selling, it’s easy to get creative with ways to spark consumer interest.

The economy will rebound – it always does. It may take time and there may be some bumps in the road, but in the meantime, focusing on stabilizing and improving your personal financial situation is key. For some, that may mean pinching pennies, for others it may be looking for additional sources on income. Either way, the future for America is always bright.

Ironically, it is exactly this kind of deceptive behavior Mr. FitzPatrick accuses direct sellers of engaging in.

Anyway, in the interest of setting the record straight, I’d like to propose a more realistic alternative – one that’s actually true. Meet Bjorn Boss. Bjorn works for a small consulting firm in Anytown, USA. Bjorn is also an independent seller for a direct selling company. He works about 10 hours per week on his direct selling business and makes about $200 per month. It’s not a lot, but it helps pay the bills each month. He joined the company about two years ago because he wanted to buy products he was already using at a discount. After awhile, others found out he was selling the products and wanted to buy them too – thus his business began to grow. Maybe someday he’ll build the business into a full-time endeavor, but for now, he’s enjoying the extra income and the flexibility to decide when, where and how he runs his direct selling business.

The defining difference between Lasdwun and Bjorn Boss is that Bjorn actually exists – in the form of millions of Americans who are direct sellers. Some get involved for supplemental income, some build a business, and some sign up as a seller because they want to buy products they already use at a discount. There’s no cookie cutter description for all the Bjorns out there. That’s one of the greatest attributes of direct selling – it’s completely customizable to each person’s unique goals.

Critics like Mr. FitzPatrick will try to lump all direct sellers into one big pot and suggest that no one succeeds because only a small percentage make a full-time income. Not only does that completely misrepresent the reality of direct selling, but it disrespects to the millions of people who rely on their modest direct selling income to pay the bills each month. I’d like to see Mr. FitzPatrick look those people in the eye and tell them they aren’t successful. It might give him a whole new perspective on what “success” means – and for most, that’s not a 6-figure income.

Here are just a few thoughts:

1)      Give yourself a “pick-me-up.” If the news of economic woes has you feeling down, you need to look on the bright side. The economy is cyclical – it always has been and always will be. Sitting at home a worrying about it won’t change a thing. If you are invited to a direct selling party or demonstration – go and have fun! It’s an inexpensive night out. If you find something you love, consider it a little gift to yourself. If not, thank the hostess for a wonderful evening, and on the drive home think about how you didn’t spend $25 for dinner, $10 for a movie ticket, and who knows how much for drinks afterwards.

2)      Be part of the solution. Most women don’t stop wearing cosmetics when a recession hits, just like most people don’t stop their health and wellness routine. For people who already buy these products, most will keep on buying. Others may even discover new brands because smart companies (direct selling, traditional retail or otherwise) increase their marketing during economic slowdowns. Research shows people are very receptive to marketing when the economy is slow because they are looking for signs that things are getting better. I say, don’t just look for signs – get out there and do something about it! When people start buying again, the economy is going to get better, so forget about putting your money in your mattress and be part of the solution.

3)      Do yourself a favor. A thriving economy is built on commerce. Whether a particular company has its products on store shelves, sells through mail order or engages a salesforce of consultants to market its products – the end result is the same – products and services are distributed to those who want them. There is always going to be a market for quality products and services – and direct selling gives people the opportunity to earn supplemental income while having fun at the same time. If you are looking for an additional source of income and are intrigued by the thought of doing something on your own, direct selling may be a good option. But, that doesn’t mean you should take the choice lightly. Be sure to set goals and thoroughly check out any company you are interested in to make sure your expectations are reasonable. Direct selling is, in fact, selling, so don’t expect the commission checks to start rolling in without putting in some work. And be sure to think beyond your immediate family and friends. While they are a great group to start with to get your feet wet, long term success will require you to get out of your comfort zone and market your products on a wider scale.

Pessimism fuels economic woes, and depriving oneself of a little fun now and then only makes the situation seem worse. So America, while the government is busy throwing billions of dollars at the situation, take the easiest step you can and change your own outlook. Get out there and have a little fun. If you happen to pick up a new shade of lipstick or a new centerpiece for the dining room table, all the better. Consider it a dose of medicine for both your psyche and the economy.

Reporters often ask me questions about how the price and quality of direct selling products compare with that of their in-store counterparts. I haven’t done any research to assess price or quality of direct selling products, so there will be no dollar figure or performance assessments here.

But what intrigues me about Leah’s post is her description of how the kitchen shears she bought ended up being such a useful tool for her that she bought another pair to have around the house. Were the kitchen shears so special that every household in America should have a set? Probably not – but they worked for Leah. Could she have picked up a comparable set of scissors at Target for less? Maybe, but they may not have cut the same way, or been as versatile as Leah found her favorite set to be. The point is, those scissors have value for her and that’s all that matters.

She also mentions that she left the direct selling party she attended with some other gadgets that she hasn’t really used yet. She saw them demonstrated and had to have them. Trust me – I know the feeling. I have plenty of items in my closet that I might have seen demonstrated in the store or featured at a direct selling party. I don’t regret having purchased them, I just don’t use them as much as I’d like to – witness with proverbial treadmill or gym membership.

But back to the discussion of value and quality. I can buy a $3 lipstick through direct selling – I can also buy a $50 lipstick through direct selling. I can do the same in a retail store. I can be disappointed with the quality of a product I bought in a store – or be amazed by it. The same is true for direct selling products. In any shopping environment, there is never a substitute for the consumer’s ability to evaluate a product and make a purchase decision. I don’t care if you are in a busy mall or your best friend’s living room, the assessment of value remains with each individual consumer. What has value to me, may be outrageous to you – and that’s the beauty of having choices.

However, neither price nor quality even touches on what really differentiates direct selling from a traditional retail store – often, the extra value for direct selling products and services comes in the form of the demonstration and personal service.

It’s true, demonstration of a product, whether in a store or someone’s home, probably sways a lot of people to buy a things they wouldn’t have purchased if that same product was just sitting on a shelf with only its packaging to speak for it – why do you think grocery stores set up sample stations on Saturday afternoons? It’s not to give patrons a free snack – it’s so you’ll be exposed to something you otherwise wouldn’t have noticed and buy it!

So, the next time you are invited to a direct selling party or demonstration, look at it as the opportunity to be exposed to new products and ideas that you otherwise might not have noticed. Don’t feel compelled to fall in love with anything – but don’t sell the experience short, either. You never know when you might find the perfect pair of kitchen shears.

This week I’ve seen several blog posts repeating the tired assertion that 99% of direct sellers lose money. One even referred to the myth as a “cold hard fact.”
As I’ve pointed out previously on this blog, more than half of direct sellers report that their net income from direct selling, after taxes and expenses, is positive. In addition, positive net income is reported by nearly half of new direct sellers – those representing their current company for less than a year.
I’m sure this post will encourage the same critics who spread the 99% myth to respond to this message with the same information, that quotes the same circle of people, referencing the same “research” again and again. You can go back and review all of those previous discussions on earlier posts on this blog if that information is of interest to you. I won’t repeat it all here.
Anyway, my purpose with this post is not to spend more time debunking the 99% myth with dueling facts and figures. We’ve done that already. More important are the stories of actual people, average Americans like those profiled in a few recent media stories I’ve linked to below, who personify the success direct selling can provide – whether success is $200 a month or much more. Take a look at these examples:

Direct selling has carved out substantial niche

Direct sales businesses boom as economy tightens

Direct sellers strike balance, maybe gold

There are a couple of key points from these stories worth mentioning.

Not everyone in direct selling earns a six figure income, but then, not everyone is looking to earn a six-figure income. Many of the people profiled are seeking a little extra income in their spare time and they’re obtaining it via direct selling. As I am proud to point out, the median income for a direct sellers is about $2,400. The average income is actually significantly higher, but statistically speaking, the $2,400 number is far more accurate – that’s based on the millions of people just looking for (and achieving) supplemental income.

One of the other theories posited by direct selling critics is that if you’re not already in the business, it’s too late and the market is saturated. Not true. As the stories above demonstrate, successful direct sellers are entering the business all the time.

As I’ve said numerous times on this blog – direct selling is not for everyone, and just as with anything in life, there are people who will try it and not find the level of success they were hoping for. Anyone considering direct selling should clearly define their personal goals and thoroughly research both the industry and the specific company they are considering. Hopefully this Web site will assist in those efforts.

So, keep in mind that despite the stories in the articles above, success in direct selling is not guaranteed. But contrary to what our critics would have you believe, neither is failure.

It’s just about this time that many direct sellers are getting ready for holiday sales. In fact, many direct sellers do most, if not all, of their selling activity during this time just to earn extra money for the holidays or qualify for great deals on holiday gifts that they’ll buy themselves! Consumers are also finishing up their shopping lists and want to find interesting gifts – which they can do in a less stressful, more fun atmosphere through direct selling.

While you may not be able to avoid the mall completely, direct selling is a great way to get a jump on your shopping list. And consider this:

* Instead of driving circles around a mall parking lot, you can park in your host’s driveway.
* Instead of battling the crowds, you can relax with family or friends and take your time perusing the merchandise.
* Instead of standing in line at the cash register, you can fill out an order form at your leisure.
* Instead of lugging bags of gifts out to your car, your purchases will be delivered to your home.

Hard to argue with that! To see if the gifts on your list are available from a DSA member, check out this list of companies. Happy shopping!

The full analysis is a bit more complicated, but it is instructive to look at the last documented recession, which lasted from November 2001 to November 2002. In 2001, direct selling companies reported an additional 1.2 million sellers over the prior year, with anecdotal reports indicating that many of those recruits came on board in the last quarter of the year, post 9/11. (The average increase between 1990 and 2006 was about 656,000 sellers per year.) Sales showed a similarly positive performance as 2002 sales were up $2 billion from the prior year, far outpacing the average increase between 1990 and 2006 of $1.2 billion.

Certainly the data from one recessionary period does not constitute a trend, but coupled with the steady growth pattern of direct selling over the past two decades, the numbers suggest that when the national economy sours, direct selling can be expected to demonstrate its recession-resistant tendencies. During more stable times, direct selling will track more closely with the economy, a fact that has become particularly evident since 9/11.

But back to the unemployment rate. A side-by-side comparison of direct sellers vs. the unemployment rate reveals that high unemployment doesn’t result in a mushrooming of direct sellers as a counter-cyclical argument would suggest. Instead, over the past decade the number of direct sellers has increased as unemployment has decreased, except for the 2001-2002 recessionary period following 9/11 when the number of sellers increased markedly during rising unemployment. This further supports the theory that a true recession causes a strengthening of direct selling numbers, whereas other economic situations result in a closer tie between performance of the direct selling sector and the economy.

So what about our current situation? Sales and salesforce numbers for 2007 showed the first declines in more than two decades. At the same time some companies are reporting solid sales and recruiting numbers while others are noting decreased sales. In addition, economists are still undecided if we are truly in a recessionary period. Can we predict that the worst is behind us, or is direct selling tied so closely to economic performance that we can expect the roller coaster ride to continue unless a documented recession occurs? Only time will tell.

After submission of a membership application the pending process takes at least one year. There are three main things that happen during this period:

1) DSA reviews company materials, including a starter kit and other documents that represent what a potential recruit would receive, to ensure compliance with the DSA Code of Ethics. Does the company offer a 90% buyback policy? Are the startup costs reasonable? Are there any statements that indicate inventory loading or other prohibited practices?

2) DSA makes inquiries to law enforcement and consumer protection agencies such as the Attorney General in the state where the company is located, the Better Business Bureau, and on a case-by-case basis any other entity that may have relevant information to share. It is also important to note that the mere existence of a complaint with any of these bodies does not preclude membership, but instead what is considered is the way any issues were resolved.

3) It is clear that the two activities above could be completed in far less than a year. However, one of the most important parts of the pending process is what is essentially a waiting period during which potential issues have an opportunity to come to the surface. These are issues that may not necessarily be obvious with a review of the materials, but are exposed by the marketplace over time.

Should questions arise from any of the three activities above, companies must answer and/or address those questions before the company can move forward to full membership. In fact, each year there are dozens of companies that make application and either withdraw their application or are not put before the Board of Directors for approval because of outstanding issues. Additionally, once a member, companies go through the entire review process at least once every five years (possibly more often).

I’m tempted to reiterate here the difference between a law enforcement agency and DSA, but that’s mostly embodied in my last post. What’s key though is that DSA’s review is not a substitute for one’s own review of a company and it also doesn’t guarantee that a law enforcement agency won’t disagree with DSA’s interpretation.

DSA has come under fire by industry critics recently as a result of a complaint filed against YourTravelBiz.com, a subsidiary of YTB, International, Inc., a DSA member company.

It has been interesting for me to recognize disconnect between the perception some people hold about the role of a trade association and the parameters under which a self-regulatory Code of Ethics operates. The questions have been posed to me in various ways – some more civil than others – but the questions essentially boil down to one: How can a company be prosecuted as a pyramid scheme and still be a member?

Using YTB as an example, the basic answer is easy – so far the allegations are merely that – allegations. Nothing has been proven – the company has not even had a chance to respond to the court. The Code of Ethics says companies cannot operate as pyramid schemes – it does not say they can’t be accused of being pyramid schemes. But the tiny little point about due process aside, based on the information presented to DSA at the time of their application, in DSA’s interpretation, this company met the standards of both the Code of Ethics and laws applicable to direct selling. Information presented by the California Attorney General may change that view, or it may not – that’s what due process is all about.

However, until information is presented that runs contrary to the information we evaluated as part of the application process, there are no grounds to revoke their membership. You can be sure, though, that we are keenly following this case and are evaluating information as we receive it.

Here are a couple more questions that have been raised:

What value does DSA membership have if a company can be prosecuted as a pyramid scheme? First, the standards of the Code are designed as a guide for consumers when evaluating a company – member or not. In the case of a member, though, if the Code Administrator determines a company has not met the standards, the company must make it right. DSA cannot guarantee that a company will not violate the Code, just like a government cannot guarantee that people will not break the law. But as with the law, there is a process for recourse when the rules are broken.

Does the Code process guarantee satisfaction for consumers? Of course the Code can’t guarantee satisfaction, but it provides an option that in most cases is exactly what a consumer needs. Instead of a lengthy complaint process with the Attorney General or Better Business Bureau, most complaints can be taken care of through the independent Code Administrator. However, if the Code process doesn’t yield the desired results, more formal legal action can still be pursued. I don’t know about you, but I’d much rather try the easy (and free) route before filing a lawsuit.

Why not kick a company out when they violate the Code? The answer is two-fold. First, a company CAN lose their membership if they are determined to have violated the code – either once or repeatedly. However, in most cases this is not necessarily the best course of action because the company is then not subject to the additional standards provided by the Code at all. From DSA’s perspective it’s far better to keep the company’s feet to the fire by enforcing the Code than by kicking them out, thus releasing them from the Code requirements. I’d much rather see a company reform than go somewhere else and continue to act unethically.

I guess in some respects I’m flattered to learn that DSA’s Code is recognized as such an important example of self-regulation. At the same time I’m disappointed to learn that there is so much misunderstanding about the limits of the Code. However, I view this as a great opportunity to evaluate public opinion and explore ways to both strengthen the Code and help close the gap between public understanding of the role of the Code.

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.

While I’d certainly be a direct selling customer no matter what, my role with DSA has given me a different perspective on the many reasons why people are involved in direct selling. When we talk about the benefits of direct selling, we tend to focus on the fact that direct selling provides customers with a unique experience that includes the personal touch of a knowledgeable sales representative, or the opportunity for supplemental income that many find attractive. But whenever I attend a party or a personal demonstration I’m always reminded that for many people, the best thing about direct selling is that it builds a community. Admittedly, women will look for any excuse to do a little shopping – it’s a relaxing pastime that for many is a much-needed release from otherwise stressful lives. The chance to shop and socialize is, well, the best of both worlds.

Most of the women at a recent gathering I attended are long-time friends – and those who didn’t know each other quickly found conversation centered on the products for sale, which led to discovering other common interests. It was clear that they welcomed the opportunity to peruse the items offered for sale; and most went home with a new-found gem or two. However, what was most clear was that they came for the opportunity to sip wine, catch up with old friends and take a brief break from their responsibilities back home. The direct selling experience facilitated their community gathering, but by no means drove it – and while they still talked about their kids, their husbands and their jobs, it was a welcome respite from the outside world.

I also spent some time talking to the sales consultant, a single mother of two who started with the company to earn some extra money to make ends meet. She’s part of a community too, one that provides her with access to training from the company she represents and support from her fellow consultants across the country. It’s not uncommon for consultants to form life-long friendships and even business partnerships through their participation direct selling.

My experience at this event and others like it always reminds me that direct selling is more than a business. It’s a community that often extends far beyond any financial motivations. Today, many people make personal connections online through social networks, but direct selling companies used this concept far before the Internet even existed. Direct selling not only reflects current social trends – it even helps shape social trends. So, whether you’re chatting with your friends online, or sitting in your best friend’s living room browsing through product samples, think about the community you’re a part of and the important connections you are making.

One thing I didn’t fully anticipate was that people would have questions about DSA’s mission. Several people have asked, “How can DSA represent the direct selling industry and work to protect the sales consultants and consumers involved?”

It’s a legitimate question, one that DSA President Neil Offen addressed during his Annual Meeting Speech last week in Phoenix. He explained that these twin goals are really two sides of the same coin, but I’ll let Neil speak for himself:

“Of course we have a duty to our dues-paying members to protect and promote their interests, but one of the most important ways we fulfill that part of our mission is through a commitment to consumer protection. By holding ourselves to a higher standard, by policing our own actions through a system of self-regulation that goes above and beyond the requirements of the law, we do more to promote and protect ourselves than is possible through any other method.”

In other words, we achieve one goal by achieving the other. Happy, satisfied customers who understand and exercise their rights as consumers represent the best kind of success for DSA and every member company. We never rest on our laurels, and Neil shared his thoughts on where we plan to focus our efforts in the coming year and beyond:

“We must continue to do more to enforce our own rules and always act in the best interests of our sellers and their customers. Throughout the course of this meeting, we have heard about Corporate Social Responsibility. But it means more than “doing well by doing good.” It means operating using only the highest standards in business ethics by every measure of the term. The tenets of the (DSA) Code (of Ethics) outline this behavior, but consumers and distributors will ultimately define acceptable marketplace standards. Today’s consumers and distributors are empowered and they speak loud and clear – we must listen and act accordingly. Companies and industries that do not meet consumer expectations will be left by the roadside.”

Neil, who reinforced the Association’s ongoing review and enhancement of the Code of Ethics, closed his remarks by reminding attendees that when it comes to DSA’s mission they must think about the long term:

“We have made great strides this past year, but the road before us is long and winding. We are in it for the long-haul and we shall not retreat from [our members’] mandate to always do what is right, to choose the high road when faced with a fork and to always have DSA act in the public interest…for that is in the interest of our companies and its millions of salespersons who rely on us.”

Neil’s remarks accurately reflect the importance of representing member companies, independent sellers and consumers – the concepts really are inseparable and I look forward to continuing to comment on this site about our efforts.

I chose to post this as a new entry because there are certainly many opportunities for discussion here, and I don’t think being buried in the comments of an old post would give site viewers enough opportunity to review and react to it. As such, it is posted in its entirety below. I will look forward to the reactions of others.

Just one final note before we get to the post itself. Thus far the visitors to this site have conducted themselves with respect to the opinions of others. The intent of this blog is to discuss the issues, and personal attacks have no place here. However, I am posting this message in its entirety because I hesitate to do ANY editing to posts – one would then always need to wonder if something had been left out. Since the bulk of the post does address relevant issues, I did not want to lose that input – no matter how far afield it may be from my viewpoint or that of DSA. That being said, in the future I will not post any comments from this author or any other that make personal attacks on people or their opinions, or simply restate the same information regardless of the topic at hand.

Message from Jon Taylor posted 10:28 pm ET 6/4/2008:

Amy – Is this the same Amy Robinson that used the web version of identity theft to register pyramidschemealert.com to divert honest people seeking the truth from finding the pyramidschemealert.org web site they were seeking? And the same DSA that blatantly lied in our Utah legislative committee hearings to get MLM exempted from prosecution as pyramid schemes? The same DSA that used blatant influence peddling to get MLM exempted from a Business Opportunity Rule that would have given consumers some protection from the worst business opportunity scams?

I don’t expect that you would dare post my response (below) to some of the above comments on your blog. It would only be honest and ethical to do so, since the statistics you challenge are my statistics. But I would be surprised if you were that open to honest feedback. Here are a few points for readers to consider:

1. The 89%, 84%, and 91% satisfaction rates for direct selling you cited above on “Happy Mothers Day” (and which have been cited in legislative hearings, etc.) are themselves extremely misleading, since they combine legitimate direct selling with pyramid or chain selling. MLM is not considered as a separate category, but is treated as core direct selling activity.

2. I worked my way through college selling World Book Encyclopedia while you were still in diapers. World Book, Fuller Brush, Tupperware, etc. were not endless chain selling operations, but legitimate direct sellers at that time. I have watched MLMs gradually take over the agenda of the DSA, which initially represented legitimate direct sellers. Now the DSA spends its resources twisting the truth to match the deceptions used to recruit hapless victims into the revolving door of recruits needed to fuel the insatiable appetites of TOPPs (top of the pyramid promoters), officers, and founders of MLMs that are its most profitable members.

3. Back to your statistics, only “active” participants in MLM are included in statistical population, not the 90% that are gone within 5 years in many of the programs we’ve studied. If you included only MLM and ALL who were enrolled in a 5-year period, you would get strikingly different statistical results. This is only fair, since some of the “successes” included in the studies have been with the company for ten or more years.

4. As far as the “99% myth,” you should read Bob Fitzpatrick’s “The Myth of ‘Income Opportunity’ in Multi-level Marketing.” (See www.falseprofits.com) He comes up with a loss rate of closer to 99% using the numbers published by the MLM companies themselves – assuming you subtract minimal expenses. My 99.9% figure comes from a more strict accounting and statistical standard – subtracting “pay to play” expenses (purchases required to qualify for commissions and advancement) and minimal operating expenses – which I established be carefully tracking expenses in a one-year test. It also includes ALL recruits within a reasonable time period – not just “active distributors,” etc. And since the vast majority of MLM recruits soon become EX-participants, they deserve to be represented.

5. Now to the tax studies. If you read my tax survey carefully, you would know that I acknowledged the problems of doing the survey from the outset. If anyone were to do a simple survey of tax professionals on the profitability of MLM participants using a standard survey questionniare, they would be unable to get the desired data – period. You should know that. This is confidential information. What happened to me was that accountants aware of my research were asking me why no one doing MLM was reporting any profits. So they gave me the opening for talking with others. I would simply ask “…  Shoot, I’m not going to write out pages to repeat the process that is reported on my site. Go to www.mlm-thetruth.com and click on the research link, and you will find it. My approach was the best I could do under the circumstances. And I stand by my 99.9% loss rate for the companies I have studied – not based on the tax survey, but on careful analysis of actual company data.

6. You should know that Bruce Craig, while working in the AG office in Wisconsin in the 70’s and 80’s, was able in a state action to obtain the tax returns of the top 1% of Amway distributors. Their average income was minus $900. So there was a precedent.

This feedback is surely too honest and straightforward for you to post, so I don’t expect anyone but you to see it. But I feel better having written it.

Amy Robinson, how can you sleep nights, knowing (as you must) the great harm the DSA and its member firms are doing world wide?

Jon M. Taylor, MBA, Ph.D., President, Consumer Awareness Institute and Advisor, Pyramid Scheme Alert

Amy’s response:

The author says he has the same goal as DSA – and that’s to make sure pyramid schemes are not able to operate in the marketplace. The problem is we don’t agree on the definition of a pyramid scheme. However, I find value in the exercise of finding common ground from which to start a discussion. Undoubtedly there is somewhere in the middle where we have some agreement, and both sides could probably benefit from an open and honest discussion of each other’s opinions. Certainly there are areas where we would have to agree to disagree, but I’m not sure the author would ever be able to accept that his views might be wrong.

Now, since I chose to proceed with posting the personal attacks, I will respond to them briefly. The online identity theft assertion has been used frequently by the author – and is absurd. Why the author has made this an issue personal to me, I’m not sure – it is only my name on the registration because one has to be there. But that detail aside, DSA does in fact own a domain similar to one used by the author and at one point we did have information posted there relevant to anti-pyramid scheme legislation being considered by Congress. However, at no point did we conceal our identity or masquerade as anyone else.

Assertions about DSA’s testimony with regard to anti-pyramid scheme legislation in Utah are equally as absurd – and in reality represent no more than a difference of opinion. Just because our view is different than the author’s doesn’t take away from the truth of what we are saying – we simply view the facts differently. This is further evidence that the author is unwilling or unable to entertain different points of view.

With regard to the Business Opportunity Rule, the FTC reviewed our feedback on the issue just as they reviewed the feedback from the author and others and decided the merits were on our side. If we had the influence the author suggests, wouldn’t we have used it to prevent the Rule from being proposed in the first place? We are confident in our position because we know we have the facts on our side and verifiable data to back it up.

Now to the specific, and more substantive, assertions made by the author:

Regarding the author’s specific comments on my previous posts, the numbers I quoted with regard to satisfaction are from our 2002 National Salesforce Survey, during which more than 1,800 direct sellers involved in both MLM and non-MLM compensation systems were polled by an independent research firm. While the interviewees were current direct sellers when selected at random from the salesforce, that group ultimately represents people who were just starting, well-established or in the process of quitting – for a variety of reasons. I don’t understand the suggestion to limit the pool of respondents to only companies using a multilevel marketing compensation plan – while most direct selling companies use MLM, some don’t and they should be represented proportionately. And why would we want to limit the time period to exclude those who have been active for a long period of time? Are the experiences of those people less relevant than newcomers, people who had only a short-term goal or decided direct selling was not for them? You can’t pick and choose your respondents to get the results you want, nor is it credible to conduct your own research and analysis, as the author did, when you have a clear and stated bias.

Interestingly enough, the author goes on to state in another part of his post that when looking at income stats, then we should consider ALL distributors – not just those who are active. So which way is it? Do we pick and choose or do we include ALL participants?

The credibility of DSA’s numbers is backed up by the outside research firms that conduct the studies. A respectable research firm won’t risk their reputation by cooking the numbers – regardless of who pays for the study.

That said, I’ve made no claims on this blog that there are not issues to address. On the contrary, one of the reasons we’ve started this Web site and this blog is to have an open exchange of ideas about the industry regardless of one’s position. Our goal is to improve the direct selling experience for everyone – if that means changing policies or educating companies about what today’s consumer’s want, then everyone would win.

Further, this site encourages people to do their homework regarding direct selling in general and the companies they are considering in particular before signing up – and to begin with realistic expectations regarding the time involved and the income potential. In case I have not been clear, direct selling is not an easy way to get rich quick.

In addition, the site promotes the DSA Code of Ethics – which acts to both prevent issues and solve them. Compliance with the provisions of the Code sets a framework for ethical behavior, but if a seller or consumer encounters a problem, it also provides a structure for relief.

Regarding the studies the author cites, it’s not surprising that one would choose to cite the research of others they agree with – particularly when they already work closely with those individuals, closely enough in fact that they are all advisors for each others’ organizations. The studies the author cites contain limited data. For example, his own study group was admittedly a sample of just 33 tax preparers from three counties in Utah who were asked what they recalled about returns they had completed. Further, they were asked to divulge confidential information and then coaxed further by being told what others had already said. That is simply not an objective way to collect data. The data may have been difficult to collect, but that doesn’t mean you can introduce a bias to extract information or randomly fill in missing information. At best, the data is anecdotal, at worst it’s just outright wrong.

Lastly, Mr. Taylor asked how I can sleep nights. Well, with a full-time job, a husband, and two small children, I don’t sleep as much as I’d like to. However, I do sleep well because I know that direct selling can be a rewarding opportunity for men and women, whether they’re looking to begin a new career or just earn some extra money to pay bills or take a trip. And I also know that those of us at the DSA are working to make the industry even better.

Mr. Taylor is certainly welcome to be part of the conversation and I do hope that we’ll be able to have a useful back and forth free from personal attacks that focuses on the issues at hand. It’s fine if we reasonably disagree on the basis of facts and data. It is not acceptable to degrade the other party.

A quick Google search today uncovered a blog post questioning not only the motivations behind this site, but also the Direct Selling Association’s credibility. I think the directselling411.com mission has been made very clear – to provide accurate information about direct selling, as well as a forum for dialogue about direct selling. Don’t agree with the information provided? Then let’s talk about it. There aren’t many other sites about direct selling out there that provide a two-way street for the dialogue. It’s fine if, in the end, you disagree with the information on the site, but at least engage in the conversation.

I’ll be the first to admit that the direct selling industry is not without its issues – if it were perfect you wouldn’t be reading this blog. But contrary to what industry critics would have you believe, the vast majority of participants in this industry are honest, ethical human beings.

The part most critics choose to ignore is that the good guys are working hard to address the industry’s issues – as well as change outdated stereotypes kept alive only through the misinformation spread by those who refuse to understand direct selling is an honorable and time-tested method of product distribution that helps millions of people achieve their goals.

Do the good guys ever err? Of course – that’s one of the reasons the Direct Selling Association’s Code of Ethics, enforced by an independent Code Administrator, is a great consumer protection vehicle. Anyone who has encountered a problem with a DSA member company is invited and encouraged to file a Code complaint. Complain to your friend or neighbor if you choose, but to get a resolution, file a Code complaint. DSA member companies are required to resolve all issues to the satisfaction of the Code Administrator – their membership depends on it.

I was hoping this post wouldn’t get too long, but quickly I want to respond to some of the specific statements from the aforementioned post.

1. “Most of the direct selling that is done by direct selling companies are to their distributors.” FALSE! What’s true is that more than 50% of Americans have purchased through direct selling in the past year. In addition, there are a significant number of people who sign up only to purchase the products at a discount – they never intend to sell a single thing (or make a single dollar for that matter!). Some companies have a fairly high percentage of people in this category – often called discount buyers. However, certainly anyone reading this post knows more than a handful of people with kitchens outfitted with direct selling products, homes accented with direct selling products and even jewelry boxes, well, you know…
2. “In past years the FTC has taken a dim view of [sales made to participants in the plan, a.k.a. internal consumption].” FALSE! While the FTC maintains an interest in making sure bad actors do not use internal consumption as a cover for inventory loading, and has looked closely at this issue with regard to specific companies (and in some cases has imposed requirements specific to those companies based on their findings), there is no FTC rule regarding internal consumption. In fact, in a 2004 staff advisory opinion, the FTC specifically states that the amount of internal consumption does not determine whether a plan is illegal; such a determination is instead dependent on the source of funds for commissions.
3.  “The DSA operates to keep direct selling businesses in business.” TRUE! That’s the nature of a trade association. But what’s also true is that DSA helps keep its companies in business by making sure they operate in a legal and ethical manner. And through the work of the Direct Selling Education Foundation (DSEF), direct sellers work with consumer protection groups around the world to advance the rights of consumers everywhere. (Incidentally, the post in question also asserts “the DSA probably manages to put mucho cashola in Senate and Congressional pockets very effectively.” Anyone who believes legislators and regulators are influenced by DSA’s money vs. being on the right side of the issue should check here to get the real picture.)

The bottom line is this:

Anyone who asserts DSA is doing anything that is not open and honest clearly hasn’t spent too much time on this site. The facts are here for all to see – with an invitation to comment. Sure, we can be accused of “whitewashing MLM,” making an “attempt to paint [the] business with respectability,” and “treating the public like small children,” but in the end, DSA’s goal is to make sure all direct selling companies are operating ethically and fairly. I would encourage those who share this goal to work with DSA to improve the industry.