Amended DSA Code of Ethics: Are the modifications meaningful?

Direct Selling Association Modifies They Current Code Of Ethics - Is It Enough?

Beyond just ringing in a new year, January 1, 2016, also signified the enactment of the Direct Selling Association’s (“DSA”) latest Code of Ethics. Before breaking down the differences that exist between the new and previous versions, my commentary on the subject remains the same: the DSA has a long way to go before providing a Code that offers serious protection for member companies from regulatory issues.

The Code’s prior shortcoming was epitomized by the FTC’s action this past year against Vemma, a longstanding member of the DSA that was touted for exemplifying ethical and appropriate business practices. Vemma went from being a recipient of the DSA’s Ethos Award in 2013 to getting targeted and sued by the FTC.

I’ve said it before and I’ll say it again — to really “tighten the screws,” the DSA needs to take the kind of proactive steps that’s bound to upset some people. This would mean implementing stricter requirements that will cause companies to really stretch, improve and adapt.

What Does The DSA Have To Say About The FTC Claiming VEMMA Is A Pyramid?

Direct Selling Association Preliminary Analysis - Federal Trade Commission Action against Vemma Nutrition Company

John W. Webb, Associate Legal Counsel & Senior Director, Government Relations of the Direct Selling Association wrote the following preliminary analysis on the FTC .vs Vemma pyramid allegations. 

DSA Perspective: With Independent Contractor Rights in Mind, Direct Sellers Seek to Manage Distributors Who Operate Multiple Businesses

Distributors Rights

With the rise in demand for nontraditional employment and the ease with which today’s direct selling consultants can grow their businesses through social media, companies are increasingly likely to face a question that poses both legal and operational challenges: should distributors be allowed to operate businesses with multiple direct selling companies at once?

For years, many companies have been challenged to manage distributors who maintain downlines with multiple direct selling companies simultaneously. Regardless of whether or not those distributors operate businesses that offer similar, competing product lines, companies could face challenges such as brand dilution, confusion of product offerings or questions of distributor loyalty.

Distributors Rights

“We currently allow our consultants the opportunity to sign on with other direct sales companies until they reach ‘Director’ status or above, at which time we strongly discourage it.” said Karen Eschebach, Co-Founder of Clever Container. “Our train of thought is that they cannot do either company—or themselves—justice if they are trying to run multiple businesses at a management level. Prior to directorship, however, we believe our organizing products fit nicely with any other company which sells mixes, supplements, candles, housewares and so forth since we have products that can organize everyone—and even their businesses! For example, at a vendor fair, if someone is interested in food mixes, our consultant can show them a pantry product to organize the food mixes.”

One of the major challenges companies face when allowing distributors to operate multiple direct selling businesses stems from the temptation to co-brand. Whether distributors look to market different product lines via the same Twitter account or Facebook page, or they simply reference multiple companies in their email signature or promotional materials, such actions can result in brand confusion and dilute each of the respective companies’ messages.

“We prefer that our distributors market each company separately in email distribution, marketing materials and social media,” Karen said. “We have not noticed any abuse of our guidelines in the field and we believe our consultants are actually relieved that we have [guidelines] in place upfront.”

While Clever Container has enjoyed great success in offering clear-cut guidelines for distributors looking to operate multiple direct selling businesses, other companies have faced a fair share of challenges in ensuring distributors do not neglect one business for another or, worse yet, that they do not proselytize.

Still, many companies have found that allowing distributors the freedom to explore businesses with other direct selling companies positions them for greater opportunities to express creativity, learn the ins and outs of the industry and garner new ideas on how to grow and maintain each of their businesses.

Paperly’s consultants are independent business operators, but just as important, they are thriving entrepreneurs,” said Paperly CEO Jay Rudman. “Entrepreneurs, be it Paperly consultants or a more general population, constantly search for creative, legal and ethical ways to grow their businesses. Should Paperly tamp that creativity, existing and potential consultants might find other, more liberating business opportunities.”

In addition to the fact that restrictions on where a distributor can and cannot pursue new business opportunities could pose challenges for companies looking to attract new recruits, such restrictions could also pose legal concerns by blurring the lines between “independent contractor” and “employee.”

As noted in the “IRS 20-Factor Test: Independent Contractor or Employee, “if a worker performs services for a number of unrelated persons at the same time, they are usually independent contractors.” However, the amount of control a company has over its salesforce may impact whether members of the salesforce are classified as independent contractors.

“Direct selling companies need to be careful not to instruct the salesforce about when, where, and how to do their work,” said Valerie Hayes, DSA Senior Director of Global Regulatory Affairs. “The more detailed instructions or limitations a company places on its salesforce, the more likely members of the salesforce are to be deemed employees rather than independent contractors.

“It is important for companies to have written policies and procedures documenting each of the factors in the IRS’s test. When determining whether a person is an independent contractor or an employee, a regulatory body or a court is going to look at the relationship between the parties, the degree of control the company has over the individual’s work and the documentation the company provides regarding that relationship,” Valerie noted.

To that end, companies such as Clever Container and Paperly provide distributors with education and training on how to effectively operate multiple direct selling businesses without threatening the integrity or branding of any company.

“While the number of direct sellers continues to grow, it certainly is beneficial to tap into those who already know how to be successful in the industry,” Jay said. “Therefore, a direct selling company might stymie its own growth if it limits its recruiting to individuals purely outside the industry.

“One benefit of allowing Paperly consultants to sell another direct selling company’s products is it allows for cross-selling of complementary products,” he continued. “For example, Paperly’s personalized phone case might be the perfect cross-sell when a customer is purchasing a personalized purse from another company. Another benefit is Paperly can heighten a consultant’s entrepreneurial drive by removing business barriers, such as ‘You cannot sell for another company.’ By eliminating obstacles, Paperly signals that we will do everything possible to help our consultants be successful business owners.”

Breaking MLM News: The Direct Selling Assocation Releases The 2012 Direct Sales Figures

Each year the Direct Selling Association (DSA), releases the USA financial figures and statistical information covering companies which utilize one of the following marketing, compensation and distribution models… MLM, Network Marketing, Party Plan, and Single Level structures. The numbers and stats from 2012 truly show a positive tick upwards.

Source Direct Selling Association

Source Direct Selling Association




FTC Action Against Alleged Pyramid Scheme Affirms DSA Membership Process


Washington, D.C. (Jan. 29, 2013) – Following the Jan. 28 announcement that an enforcement action against Fortune Hi-Tech Marketing (FHTM) is being initiated by the Federal Trade Commission (FTC) and several attorneys general for allegedly operating a pyramid scheme, the Direct Selling Association (DSA) has received numerous inquiries regarding whether FHTM is a member of the Association. “FHTM is not a member of DSA,” confirmed President Joe Mariano. Additionally, he stated that “the Association’s membership application process is rigorous, and is designed to ensure that only legitimate direct selling companies become members of the direct selling industry’s trade association.”


FHTM had applied for DSA membership, but withdrew its application in 2011. A rigorous review of each applicant’s marketing and compensation plan is conducted to ensure compliance with DSA’s self-regulatory Code of Ethics. DSA works with applicant companies to address any deficiencies in policies and procedures prior to recommending to the Board of Directors that the company be approved for full membership. Mr. Mariano explained that “the membership review process serves to identify pyramid schemes that are masquerading as legitimate direct selling companies.” Mr. Mariano also stated “that well over half of the companies that apply for membership in the Association withdraw their applications for a variety of reasons including failure to come into full compliance with the requirements of the DSA Code of Ethics,” thus making the company ineligible for membership. Pyramid schemes and other fraudulent scams are ineligible for DSA membership.

While DSA cannot comment on the specific allegations regarding FHTM, Mr. Mariano commended the FTC and state attorneys general “for their comprehensive, ongoing efforts to identify and prosecute illegal and fraudulent pyramid schemes, an approach that is consistent with concerns raised by DSA through its membership application process and its long-established self-regulatory efforts.”

As part of the membership review process, DSA welcomes comments from the public about pending member companies. A full list of pending members of the association can be found at

For more information about DSA’s membership review process visit


Amy Robinson

MLM News: The Main Stream Media Is Critical Of Network Marketing Let’s Share The Real News “Your MLM Story”

Late last week the Network Marketing community was the subject of a series of articles critical of the Direct Selling industry. The articles were slanted to give a very negative view of political affiliations, consumer protection issues and questions raised with regard to short selling.

The articles had several things in common – misstatements of facts, political opinion and repetition of outdated myths about direct selling. Ironically, given our industry’s support of candidates from all parties, much of this seems to be tinged with the rancor of this heated political season.

Regardless of one’s political persuasion, the use of 16 million hard-working direct sellers as a way to attack candidates for office is a clear failure on the part of journalists and news outlets to fairly and fully report the facts; however, that is the reality with which we are faced.

There were three articles related to direct selling published on Friday, Oct. 26:

Marketwatch: 10 things direct-sales marketers won’t say

FORTUNE: Nu Skin and the short-sellers

New York Times: For Romney, Ties That Bind

The Direct Selling Association had anticipated the Marketwatch piece as Chief Marketing Officer Amy Robinson spent considerable time talking to the reporter.

While it is framed negatively, we were pleased to see that the perspective of the industry was at least included, even if as a secondary point in some cases. That said, many decades-old stereotypes were dredged up and we will be responding as appropriate, including through posts on our blog DirectSelling411/com

The most frustrating issues are the articles published in FORTUNE and the New York Times. The fundamental mischaracterizations of the Network Marketing community and the Direct Selling channel is not new, but they reinforce the fact we as the Network Marketing Community, Owners all the way down to the newest independent distributor, must focus doing business with the highest of ethics, and providing the media, lawmakers, regulators and the public with the proof the Network Marketing Community and the Direct Selling Companies we represent hold those we serve in the highest of regards.

Two Ways You Can Participate In This Critical Repositioning

1) DSA’s blog is specifically designed to provide a forum for discussion of important issues, but in order to gain maximum exposure online it is imperative that we have continued engagement from the larger direct selling community – our 16 million-strong salesforce.

So please encourage you to engage with the DSA online, whether through the blog ( and at their facebook page ( to learn more about these issues.

2) As a a way to illustrate the strength of the Network Marketing community, submit your own success stories here at MLM Help Desk and at the above two direct selling websites.

The Direct Selling Association Has A New Blog

The DSA aka The Direct Selling Association has just launched a new blog for consumers, distributors and prospects looking to get into MLM.

Here is a taste of what you will find on their new blog and why I think it is one of the best resources for those who want to become students of our profession.

By the way, I wrote a blog post a week or so ago about how Party Plan companies like the former Weekenders Clothing company were still alive and kicking. Well, here is a great post by Amy Robinson – V.P. of Communications of the DSA.

Here is a great video produced by the Direct Selling Association.

Never Give Up,

Troy Dooly