Direct Selling Association

Last updated
Direct Selling Association
Formation1910 (1910)
Purpose Trade association for direct selling (multilevel marketing) companies
Headquarters Washington DC
Membership
130 companies [1] (approximate)
Chairman
Kevin Guest [2]
President and CEO
Joseph Mariano
Website dsa.org

The Direct Selling Association (DSA) is a trade association in the United States that represents direct selling companies, primarily those that use multi-level marketing compensation plans. On behalf of its members' companies, the DSA engages in public relations and lobbying efforts against regulation of the multi-level marketing industry, and it funds political candidates through a political action committee. [3] [4] [5]

Contents

History in the US

The American DSA, headquartered in Washington, D.C., is the national trade association of a group of firms that manufacture and distribute goods and services sold directly to consumers typically through social selling that includes a compensation model called multi-level marketing.

Founded in Binghamton, New York in 1910 as a trade group for door-to-door salesmen, the association was originally called the Agents Credit Association. It was renamed the National Association of Agency Companies (NAAC) in 1914, and briefly renamed the National Association of Agency and Mail Order Companies in 1917, before returning to the NAAC in 1920. It became the Direct Selling Association in 1968. [6] As of 1970, less than 5% of the DSA's members were multi-level marketing companies. By 2018, the DSA's membership had grown to include nearly 130 companies, more than 90% of which were multi-level marketing companies. [1]

The DSA belongs to the National Retail Federation and its member companies pledge to abide by the DSA code of ethics. [7]

In 2019, DSA helped launch the BBB National Programs Direct Selling Self Regulatory Council. [8] The Direct Selling Self-Regulatory Council (DSSRC) provides impartial monitoring, enforcement, and dispute resolution regarding product claims or income representations (including lifestyle claims) disseminated by direct selling companies and their sales force members. This program provides a robust challenge process that also includes the opportunity for a company to appeal a decision. [9]

In other countries

As of 2011, the DSA has sister organizations in the UK (with over 40 member companies), [10] Australia (nearly 70 member companies), [11] and Israel (7 member companies), [12]

Political lobbying

The DSA serves as a public relations and lobbying group acting on behalf of its member companies. [3] [5] The DSA played a role in petitioning the Federal Trade Commission (FTC) to exempt multi-level marketing companies from consumer protection regulations outlined in the FTC's 2006 proposed Business Opportunity Rule, encouraging people to write 17,000 form letters complaining about the rule from 2006 to 2008. [4] [13] [14] The law was passed in 2012, with most multi-level marketing companies considered exempt. [13]

The DSA supported and allegedly drafted much of the language of the "Anti-Pyramid Promotional Scheme Act" introduced by US Representative Marsha Blackburn, and an amendment to the US House of Representatives' omnibus Financial Services and General Government Appropriations bill for fiscal year 2018 by US Representative John Moolenaar that would have limited the ability of the FTC and other agencies to classify companies as pyramid schemes and to investigate whether MLMs are pyramid schemes. [15] [16] The amendment would have disbarred the Treasury Department, the Judiciary Department, the Small Business Administration, the Securities and Exchange Commission, the FTC, or any other agencies from using any monies to take enforcement actions against pyramid operations for the fiscal year. [16] The Act would blur the lines between legitimate MLM activity and pyramid schemes established under the original 1979 FTC case by deeming sales made to people inside the company as sales to an “ultimate user,” thus erasing the key distinction made in the ruling between sales to actual consumers of a product and sales made to members of the MLM network that are used for recruitment of additional members or to qualify for commissions. [17] [16] [18] The amendment was opposed by a coalition of consumer interest groups including Consumer Action, the Consumer Federation of America, Consumers Union (the publisher of Consumer Reports magazine), Consumer Watchdog, the National Consumers League, and the United States Public Interest Research Group (US PIRG), [17] as well as Truth in Advertising (TINA.org) in its original incarnation. [18]

Pyramid schemes

The DSA has said that pyramid schemes which disguise themselves as direct selling companies have caused confusion in the industry. [19] In 2013, Tupperware left the DSA citing industry changes and concerns over pyramid schemes. [20] In 2014, Avon (a founding member) left the DSA citing that its bylaws were inadequate in protecting consumers from fraud. News reports have connected Avon's quitting to pyramid scheme allegations against DSA member Herbalife, which was under investigation by the FTC at the time, [20] [21] [22] and has now been ordered agreed to pay two hundred million dollars in a settlement. [23] The DSA made a statement that they would look at Avon's concerns. [21]

Related Research Articles

<span class="mw-page-title-main">Amway</span> American multi-level marketing company

Amway is an American multi-level marketing (MLM) company that sells health, beauty, and home care products. The company was founded in 1959 by Jay Van Andel and Richard DeVos and is based in Ada, Michigan. Amway and its sister companies under Alticor reported sales of $8.9 billion in 2019. It is the largest multi-level marketing company in the world by revenue. It conducts business through a number of affiliated companies in more than a hundred countries and territories.

<span class="mw-page-title-main">Pyramid scheme</span> Type of unsustainable business model

A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products. As recruiting multiplies, the process quickly becomes increasingly difficult until it is impossible and most members are unable to profit; as such, pyramid schemes are unsustainable and often illegal.

<span class="mw-page-title-main">Amway North America</span> American multi-level marketing company

Amway North America is an American worldwide multi-level marketing (MLM) company, founded 1959 in Ada, Michigan, United States. It is privately owned by the families of Richard DeVos and Jay Van Andel through Alticor which is the holding company for businesses including Amway, Amway Global, Fulton Innovation, Amway Hotel Corporation, Hatteras Yachts, and manufacturing and logistics company Access Business Group. After the launch of Amway Global, it replaced the Amway business in the United States, Canada and the Caribbean, with the Amway business continuing to operate in other countries around the world. On May 1, 2009, Quixtar made the name change to Amway Global and fused the various different entities of the parent company.

Herbalife Nutrition Ltd., also called Herbalife International, Inc. or simply Herbalife, is a global multi-level marketing (MLM) corporation that develops and sells dietary supplements. The company has been alleged to have fraudulently operated a pyramid scheme. Some products sold by Herbalife have caused acute hepatitis. The business is incorporated in the Cayman Islands, a tax haven, with its corporate headquarters located in Los Angeles, California.

Vector Marketing is a direct selling subsidiary company and the domestic sales arm of Cutco Corporation, an Olean, New York–based cutlery manufacturer. The company was founded in 1981 in Philadelphia, Pennsylvania.

Holiday Magic was a multi-level marketing organization, founded in 1964, by William Penn Patrick (1930–1973) in the United States. Originally the organization distributed goods such as home-care products and cosmetics. Company distributors were encouraged to recruit other distributors in a multilevel marketing structure, which was later characterized as a pyramid scheme.

Mary Kay Inc. is an American privately owned multi-level marketing company. Mary Kay is based in Addison, Texas. The company was founded by Mary Kay Ash in 1963. Richard Rogers, Ash's son, is the chairman, and Ryan Rogers, Ash's grandson, was named CEO in 2022.

<span class="mw-page-title-main">Nu Skin Enterprises</span> American multi-level marketing company

Nu Skin Enterprises, Inc. is an American multilevel marketing company that develops and sells personal care products and dietary and nutritional supplements. Under the Nu Skin and Pharmanex brands, the company sells its products in 54 markets through a network of approximately 1.2 million independent distributors.

In re Amway Corp. is a 1979 ruling by the United States Federal Trade Commission concerning the business practices of Amway, a multi-level marketing (MLM) company. The FTC ruled that Amway was not an illegal pyramid scheme according strictly to the statutory definition of a pyramid scheme, but ordered Amway to cease price fixing and cease misrepresenting to its distributors (participants) the average participant's likelihood of financial security and material success.

<span class="mw-page-title-main">BurnLounge</span> American multi-level marketing company

BurnLounge, Inc. was a multi-level marketing online music store founded in 2004 and based in New York City. By 2006, the company reported 30,000 members using the site to sell music through its network. In 2007, the company was sued by the Federal Trade Commission for being an illegal pyramid scheme. The company lost the suit in 2012, and lost appeal in June 2014. In June 2015, the FTC began returning $1.9 million to people who had lost money in the scheme. The company is dormant pending additional appeals.

Multi-level marketing (MLM), also called network marketing or pyramid selling, is a controversial marketing strategy for the sale of products or services in which the revenue of the MLM company is derived from a non-salaried workforce selling the company's products or services, while the earnings of the participants are derived from a pyramid-shaped or binary compensation commission system.

Direct selling is a business model that involves a party buying products from a parent organization and selling them directly to customers. It can take the form of either single-level marketing and multi-level marketing.

<span class="mw-page-title-main">AdvoCare</span> American dietary supplement company

AdvoCare International, LLC is an American dietary supplement company. They are a direct sales company and a former multi-level marketing company that was charged with operating a pyramid scheme. The company, headquartered in Richardson, TX, was founded in 1993 by Charles Ragus.

Market America is a multi-level marketing company founded in 1992 by JR and Loren Ridinger. Headquartered in Greensboro, North Carolina, the company employed around 800 people as of 2016. The products offered by the company include household cleaning supplies, jewelry, personal care products, auto care, cosmetics, dietary supplements, custom websites, water purifiers, and weight management products. A 2017 lawsuit accused the company of being an illegal pyramid scheme.

VemmaNutrition Company was a privately held multi-level marketing company that sold dietary supplements. The company was shut down in 2015 by the FTC for engaging in deceptive practices and being a pyramid scheme.

<span class="mw-page-title-main">Fortune Hi-Tech Marketing</span> American pyramid scheme which was shut down in 2013

Fortune Hi-Tech Marketing (FHTM) was a Lexington, Kentucky based company which used multi-level marketing to sell consumer goods and services. The company was founded in January 2001. In January 2013, the Federal Trade Commission (FTC) and regulators for three states shut down FHTM for being a pyramid scheme.

Rodan & Fields, LLC, known as Rodan + Fields or R+F, is an American multi-level marketing company specializing in skincare products. Katie Rodan and Kathy A. Fields, creators of Proactiv, started the Rodan + Fields brand in 2002 and sold it a year later. They relaunched the brand in 2007 as a multi-level marketing firm.

Arbonne International, LLC, known as Arbonne, is an international multi-level marketing company founded in 1980 in the United States by Norwegian entrepreneur Petter Mørck. Its product lines include vegan skincare, cosmetics, and nutrition. Arbonne's CEO is Tyler Whitehead, who succeeded Jean-David Schwartz in April 2021. Arbonne is headquartered in Irvine, California, US, with US offices in Chatsworth, California, Greenwood, Indiana, Addison, Texas, and international offices in Australia, Canada, New Zealand, Poland, and the United Kingdom.

Pure Romance is a United States-based multi-level marketing company that sells adult products including sex toys. Under the multi-level marketing (MLM) model, all products are sold exclusively through independent consultants at women-only at-home parties. In April 2023, Pure Romance moved away from the MLM model.

References

  1. 1 2 "Search Results For Company: DSA". www.dsa.org. Retrieved 5 September 2018.
  2. ↑ "Press Release". www.dsa.org. Retrieved 2021-06-11.
  3. 1 2 Barrett, Stephen. "Consumer Health Digest #11-39". National Council Against Health Fraud. Retrieved June 16, 2012.
  4. 1 2 Klein, Karen E. (April 16, 2012). "The Multibillion-Dollar Direct-Selling Industry Dodges the FTC". Bloomberg News . Archived from the original on April 19, 2012. Retrieved June 16, 2012.
  5. 1 2 Taylor, Jon M. "Direct Selling Association (DSA) vs. Consumers". Consumers Awareness Institute. Archived from the original on 2012-06-13. Retrieved 2012-06-17.
  6. ↑ "History - Direct Selling Association (US)". Direct Selling Association (US). Retrieved 21 December 2014.
  7. ↑ "DSA Code of Ethics". Direct Selling Association (UK). Retrieved June 17, 2012.
  8. ↑ "NAD's Brett: Chasing Direct Sellers' COVID-19 Product Claims".
  9. ↑ "Direct Selling Self-Regulatory Council".
  10. ↑ "Direct Selling Organization (UK) Member Companies". Direct Selling Association (UK). Archived from the original on 22 August 2010. Retrieved 12 August 2011.
  11. ↑ "Direct Selling Association of Australia - List of Members". Direct Selling Association of Australia. Archived from the original on 9 August 2011. Retrieved 12 August 2011.
  12. ↑ "Direct Selling Association (Israel) - Members" (in Hebrew). Direct Selling Association (Israel). Archived from the original on 21 July 2011. Retrieved 12 August 2011.
  13. 1 2 Stroud, Matt (8 April 2014). "How lobbying dollars prop up pyramid schemes". The Verge. Retrieved 31 July 2015.
  14. ↑ Greenberg, Herb (9 January 2013). "How Multi-Level Marketers Dodged a Bullet". CNBC. Retrieved 31 July 2015.
  15. ↑ Kosman, John (18 September 2017). "DeVos' family seeks deregulation of Amway so it can beat Herbalife". New York Post . Retrieved 6 May 2018.
  16. 1 2 3 Gingerich, Jon (20 October 2017). "Pyramid Scheme Protection Law Pits Legal Group Against Multilevel Marketers". O'Dwyer's: The Inside News of PR & Marketing Communications. Retrieved 6 May 2018.
  17. 1 2 NCL Communications (March 2018). "Public interest groups' letter to Congress in opposition of Moolenaar pyramid scheme rider". National Consumers League . Retrieved 6 May 2018.
  18. 1 2 Vander Nat, Peter (23 May 2016). "Why This Anti-Pyramid Scheme Bill is Outrageously Wrong for Consumers". Truth in Advertising (TINA.org) . Retrieved 6 May 2018.
  19. ↑ Greenberg, Herb; Frayter, Karina (9 January 2013). "Why Spotting a Pyramid Scheme Isn't So Easy". CNBC. Retrieved 31 July 2015.
  20. 1 2 Ehrenfreund, Max (16 September 2014). "Avon splits with trade group, citing risk of pyramid schemes". Washington Post. Retrieved 31 July 2015.
  21. 1 2 Berr, Jonathan. "Why Avon quit direct-sales group". CBS News. Retrieved 31 July 2015.
  22. ↑ Smith, Ernie (19 September 2014). "It's Not Me, It's You: Why Avon Left an Association it Helped Found". Associations Now. Retrieved 31 July 2015.
  23. ↑ "Herbalife settles pyramid scheme case with regulator, in blow to Pershing's Ackman". Reuters. 15 July 2016. Retrieved 15 July 2016.
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