May 10, 2012
DSA Issues Statement on Internal Consumption
The United States DSA issued the following statement on Monday, May 9.
DSA released a statement (www.dsa.org/statement/) today concerning recent developments in the Wall Street community that have raised questions about certain aspects of the direct selling model – specifically with regard to internal consumption.
These developments began to unfold on May 1, when hedge fund manager David Einhorn participated in an investor teleconference call with Herbalife executives and posed questions regarding reporting of the purchase and use of product/services by salespeople themselves (internal consumption). Subsequent commentary raised implicit questions about internal consumption and the direct selling business model. This commentary misunderstood and mischaracterized the state of the law and industry practice regarding the purchase and use of products by the salesforce. In apparent reaction, many publicly traded direct selling companies experienced a decline in stock value.
DSA is concerned about the impact any misunderstanding about the direct selling business model could have on the entire industry. Importantly, the regulatory community follows these developments closely and we assume any comments questioning the legitimacy of direct selling and internal consumption will be closely examined.
DSA has argued consistently for many years that the purchase of products or services by distributors for their own use is a common and legitimate aspect of direct selling and not a fraudulent or illegal activity.
DSA has released its statement via wire and distributed it directly to a number of journalists who have covered the issue. I felt it important to bring the matter to your attention in the event you receive any questions about this issue – whether related to internal consumption or the business model generally. Please feel free to use the DSA statement and refer those with questions directly to me at firstname.lastname@example.org or 202-452-8866 x. 404.
DSA will of course continue to monitor the situation and distribute additional information as necessary to reinforce the legitimacy of direct selling and correct the record on any misstatements related to the direct selling business model.
View the statement online: http://www.businesswire.com/news/home/20120509006725/en