Understanding the DSA Code of Ethics
The DSA Code of Ethics is the cornerstone of DSA’s commitment to ethical business practices and consumer service. Every member company and pending member company pledges to abide by the Code's standards and procedures as a condition of admission and continuing membership in DSA.
The DSA Code of Ethics speaks to both the consumer and the seller. It provides that member companies may make no statements or promises that might mislead either consumers or prospective sales people. Pyramid schemes are illegal and companies operating pyramids are not permitted to be members of the DSA.
The DSA Code of Ethics is enforced by an independent code administrator who is not connected with any member company. The code administrator will do everything possible to resolve any complaints to the satisfaction of everyone involved, and has the power to decide on remedies. All member companies have agreed to honor the Code administrator's decisions.
The Code is a constantly evolving, enforceable standard of behavior for DSA members and a mechanism that does aid salespeople and customers alike in getting answers to many of their complaints. Thankfully, despite millions of consumer transactions each year, DSA receives relatively few complaints. That’s a testament to the standards themselves and the pledge that DSA member companies make to abide by them.
Following are some commonly asked questions regarding the Code and its function:
- How was the DSA Code of Ethics developed?
The Code of Ethics has been developed over many years to protect distributors and consumers from unfair and deceptive business practices. It addresses issues that have been identified over the years as areas for potential abuse by companies or distributors. The US Code of Ethics is in conformance with the World Codes promulgated by the World Federation of Direct Selling Associations (WFDSA).
- What does the Code of Ethics mean for me if I’m a distributor for a DSA member company?
The Code sets forth a number of provisions to protect the interests of those who choose to affiliate with a company as an independent salesperson. There is an important and mutually beneficial relationship that exists between a company and its sellers. Direct sellers are a "volunteer salesforce" in that they set their own hours and work habits. At the same time, the company provides sellers with the opportunity to build their own business without the tremendous start up costs involved in a traditional business. Read more about what sellers should expect from a direct selling company.
- What does the Code of Ethics mean for me if I’m a customer who has made a purchase from a DSA member company?
At its inception in 1970 the Code of Ethics was created as a consumer Code - specifically speaking to the interests of direct selling customers. The Code was expanded in 1978 to address the relationship between companies and their sellers, but the consumer protection aspect of this self-regulatory document remains a critical component. Find out more about what consumers should expect from direct selling companies and their sellers.
- What does it mean if a company is a member of DSA?
DSA is a corporate membership organization. Direct selling companies are admitted to the association following a minimum one-year review period during which time the company's business plan is reviewed to verify compliance with all provisions of DSA's Code of Ethics. At present, only companies with direct selling operations in the U.S. are eligible for membership. Companies considering beginning direct sales or companies operating only in foreign countries may consider subscriber status with the association. After acceptance into the membership, companies are periodically reviewed to ensure continued compliance with all aspects of the Code of Ethics. Important among the requirements of the Code are pledges to: buyback inventory from departing distributors, not engaging in inventory loading, not requiring unreasonable upfront fees, not making misrepresentations about their products or opportunities, not operating as a pyramid scheme and hiding 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 standards and providing a mechanism to address them when they happen.
- What does it mean if a company is a pending member of DSA?
Pending member companies are undergoing the minimum one-year review process and must abide by the DSA Code of Ethics during this period. A list of pending member companies can be viewed on DSA's Web site.
- What does the member review process entail?
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, DSA looks at company marketing materials, contracts, manuals, video and other items to ensure compliance with the DSA Code. Law enforcement agencies and others are contacted to determine what kind of consumer complaints and legal and regulatory actions have been lodged that might raise questions about the applicant. Periodically Unannounced visits to company meetings are conducted to help ensure printed materials and real world practices of the applicants are consistent. If there are any questions about the company or its marketing plan, or any complaints of which DSA has been made aware, the company must explain them. If they can’t explain, or won’t, their application will be deferred it will be recommended to the DSA Board of Directors that the company not be admitted to membership.
- What if I feel a DSA member company or representative/distributor has violated the Code of Ethics?
If at any time a DSA member company representative/distributor or customer feels one or more provisions of the Code has been violated, the incident should be reported to DSA's independent Code Administrator. The Code Administrator will review the incident in question and prescribe a remedy based on his findings. DSA member companies are required to abide by all rulings made by the Code Administrator to maintain membership in the association.
- What is the role of the "Code Administrator?"
The Code Administrator is a person of recognized integrity, knowledgeable in the industry, and of a stature that will command respect by the industry and from the public. The Administrator establishes, publishes and implements transparent complaint handling procedures to ensure prompt resolution of all complaints.
- I filed a complaint but did not receive a response from the company within 30 days. What do I do?
If you are concerned a complaint did not reach a company or that a complaint has not been addressed, you can contact the Code Administrator. The Code Administrator’s toll-free phone number can be found in the letter you received regarding your complaint. If you cannot find the number, or have not heard back within a reasonable time frame, please contact DSA at 202-452-8866.
- Can I file a complaint against a direct selling company that is not a member of DSA?
No. Unfortunately, DSA can only hold member companies accountable to the DSA Code of Ethics.
- I have a complaint against a member company, but I’m not sure if it’s a Code complaint. What should I do? You may review the provisions of the Code of Ethics to make your own determination of whether a potential violation has taken place or you can simply file a complaint with the Code Administrator. The Code Administrator is the ultimate arbiter of whether a violation has occurred.