February 01, 2011
2011: The Year of Ethics
by Adolfo A. Franco
According to the Chinese calendar, 2011 is the year of the Rabbit, which means a year in which one should strive to be creative and compassionate. For the direct selling industry, 2011 might well be the year of focusing on a continued and diligent commitment to ethics. During his address at the Annual Meeting several years ago, Direct Selling Association (DSA) President Neil Offen challenged our industry to be both creative and compassionate by redoubling efforts to make direct sellers the envy of other industries by “walking the walk and talking the talk” on high ethical standards and consumer protection. DSA companies responded in earnest to this challenge with renewed vigor and commitment to raising the bar on ethics on a variety of fronts.
With the leadership and vision of Andrea Jung of Avon and Truman Hunt of Nu Skin, the World Federation of Direct Selling Associations’ (WFDSA) model world code of ethics was revised and updated to enhance ethical standards and provide more consumer protections. These standards provide clear and consistent rules for all direct sellers worldwide and bind direct selling companies and distributors to the highest standards of consumer protection. In the United States, DSA went beyond some of these already high global standards and enhanced its pending and active member company review process to ensure initial and continued adherence to the requirements of the DSA Code of Ethics.
To complement these efforts, DSA launched a Code of Ethics Communication Initiative that recognizes DSA member companies which not only meet the minimum requirement of publishing the Code, but also actively disseminate information about the rights and responsibilities of sellers and their customers to their internal audiences and the public at large. By bringing the Code to life it becomes a tool that helps to grow businesses and create more confidence in direct sellers and the products they sell. Moreover, DSA is working on emerging consumer protection initiatives with the Direct Selling Education Foundation (DSEF), which has produced a variety of videos and other practical and hands-on materials to educate the public, and current and prospective distributors and consumers, about the ethical business standards they should expect and practice. By doing so, everyone is a winner. A partnership between DSEF and the Council of Better Business Bureaus (CBBB) was also forged in 2010 to promote sound direct selling business practices on the Council’s website. This joint venture was a milestone in communicating more useful and concrete information to the public about legitimate direct selling opportunities.
DSA is also committed to its continued work and liaison with the Federal Trade Commission (FTC) as that agency concludes work on a business opportunity rule that largely exempts direct sellers because of the industry’s existing commitment to self-regulation. Although direct sellers are by no means exempt from laws designed to address fraudulent business practices, the Association has been successful in demonstrating to the FTC and other regulatory and lawmaking bodies that burdensome requirements for direct sellers are not necessary because of the industry’s commitment to self-regulation through an independently administered Code of Ethics, vigorous ethics review of pending and active members and an expansive ethics communications initiative that would be the envy of any other industry.
Nevertheless, DSA is not resting on its laurels. There will always be unscrupulous pyramid scheme operators that need to be rooted out and exposed for what they are—frauds. To that end, DSA continues through its advocacy efforts to work closely with national attorneys, general organizations and state and federal authorities and agencies to expose these fraudulent schemes that masquerade as legitimate direct selling companies. Equally troubling are disgruntled and self-interested industry critics, such as felon and fraudster Barry Minkow, who use the same deceptive and misleading tactics of which they accuse legitimate direct sellers to defame and devalue companies and hardworking individuals, all in the name of personal gain. Despite a recent ruling that found Mr. Minkow had destroyed evidence, lied under oath and deceived the court and even his own attorneys, the damage has been done. It is up to those who choose to take the high road to promote open, frank and honest exchanges on issues that affect the public, consumers or distributors through its innovate and interactive methods such as DSA’s consumer website (directselling411.com), DSEF’s work with consumer organizations and WFDSA’s efforts to promote ethical business practices on a global scale.
The year 2011, as DSA President Neil Offen has said on more than one occasion, will be the “year of ethics” as our industry strives to raise the bar on ethical standards and consumer protection initiatives, thereby walking the walk, talking the talk and leading the way in creating a high level of marketplace excellence.
Adolfo A. Franco is Vice President of Global Regulatory Affairs for the Direct Selling Association.