Thinking of joining or buying from an MLM? Why you need to choose a DSA member
Thinking of joining or buying from an MLM? Find out why you’re safer if you choose a member of the DSA, and what protections the organisation offers you.
Since we started investigating MLMs we’ve read many horror stories from reps and customers. And some of them have been treated appallingly by the companies they’ve joined or bought from.
We’ve heard reports of rules being changed at will, boxes of products people felt pressured to buy remaining unsold, wild claims (and blatant lies) being shared on Facebook, and rightfully earned commissions and bonuses mysteriously withdrawn.
And while it can sometimes feel like there is little you can do, in the UK there is regulation in the sector; if the company you joined or bought from is a member of the Direct Selling Association (DSA) you do have some protection. Because not only are member companies required to comply to specific codes of conduct, but if they don’t you can use the DSA’s Complaints Resolution Procedure.
To help clarify what your rights are – either as a rep selling for an MLM, or a customer buying from one – we asked the DSA to tell us exactly what they do, and how they protect consumers.
Who are the Direct Selling Association?
The DSA was established in 1965, and is the recognised trade body for direct selling companies in the UK. The organisation’s aim is to guide the direct selling industry forward and continue to strengthen its image and reputation by promoting a better understanding of direct selling in an open and honest manner.
Around two thirds of UK direct selling companies have been granted DSA membership status, including Avon, Neal’s Yard Remedies Organics, Usborne Books at Home, The Body Shop at Home and Arbonne.
What do the DSA say about becoming a direct seller?
Not everyone will succeed at direct sales. And not every company offers what you might be looking for in an opportunity. If you are considering becoming a direct seller, the DSA has this advice for you.
1) Check they’re a member of the DSA
Before you join an MLM, check that they’re a member of the DSA (to find out, you can look for the DSA logo, or search their list of member companies here). If they are, you’ll have more rights and protection, including a 14-day cooling off period, prompt payment of commission and bonuses, and adequate basic training.
And if you don’t feel that the company has acted in accordance with the codes of conduct set out by the DSA (we cover these in more detail below), and you are unable to resolve your issue with the company directly, you can make a formal complaint to the DSA.
2) Set yourself realistic earning expectations
Direct selling is like any other job in that it requires time, effort and hard work. Money is made through product sales, and each company offers different levels of commission on these sales.
Be realistic about how much time you have to dedicate to your business and explore carefully how much you can expect to earn. The DSA know that this isn’t always easy to predict, and it’s also very dependent on how things go once you’re up and running (this is an area they’re currently working on to help make things clearer across the sector).
Speak to other people you know who work in the industry to get an idea of their experiences and ask the company to clarify things if you are unsure.
3) Know your rights (and those of your customers)
The Direct Selling Association is committed to upholding standards in the industry. Do have a look at the DSA’s Codes of Conduct to familiarise yourself with your rights when joining a DSA member company, and learn more about how you can uphold good practice as a direct seller.
The DSA stresses that this is really important, as huge reputational damage can be caused by poor practice by a small number of individuals.
4) Think about what you want to achieve
There are over 425,000 people working in direct selling in the UK, and although earning some extra money is a key motivation for many, there are other reasons people get involved.
Be clear about what you want to achieve through your direct selling work and choose which company fits these requirements best. For example, is learning new skills or receiving specific training key for you, or do you want to be part of a team environment or meet new people?
Different member companies can be quite different in terms of how they operate and the training they provide, so it’s worth exploring the options to find the right fit for you.
5) Beware of ‘rogue traders’
As in many industries, there are companies – and individuals – that can do huge damage to the wider industry and others in the sector.
Steer well clear of any companies that are not members of the UK Direct Selling Association (DSA), those that ask you to commit large amounts of money to get started, or pressure you into doing things or buying things you don’t want to.
Also, beware of individuals making outlandish claims about direct selling being a chance to ‘get rich quick’ – anything that looks or sounds too good to be true probably is.
6) Think hard before deciding
Direct selling can be a rewarding, flexible and satisfying way in which to earn, but it is important to take the time find a responsible company to work with.
It’s also not for everyone; not everyone is good at the things you need to be good at to succeed in direct selling. Although the initial outlay/start-up costs are typically low in direct selling compared to franchising (as an example), do think hard about the points above before making your decision.
What rules must DSA member companies abide by?
The DSA has worked to develop two Codes of Conduct to which all its members must comply. You can read them in full here, but here’s an overview.
1) The DSA Code of Business Conduct
- The company must provide proper contracts, contract cancellation rights and product buy back rights which exceed those demanded by law.
- The company must provide adequate basic training as part of any initial investment.
- They must pay commissions and bonuses promptly, and provide regular and comprehensive statements of account.
- The company and their direct sellers must not make unrepresentative or exaggerated earnings claims.
- They must not ask for unreasonable investments.
2) The DSA Code of Practice for Consumers
- The company must provide adequate training to those joining, including training on their responsibilities to customers.
- They must use transparent and fair selling methods.
- They must offer a 14 day cooling off period for all customers.
- All sales and promotional literature must be truthful and accurate.
DSA member companies will buy back unsold products
If you wish to join an MLM, one of the big advantages of joining a DSA member company, in our opinion, is the reduction of risk on your part. For example, if you change your mind and cancel your contract within 14 days of joining, the company will refund you any costs associated with signing up. They’ll also buy back any unsold products at full cost (as long as you return them within 21 days).
If you decide to leave after those 14 days, the company will buy back any unsold products ordered up to 90 days before your termination date at full cost. They’ll also buy back any unsold products ordered more than 90 days and up to one year before your termination at 90% of cost.
And finally, if at any point you find that you have ordered too much product, you can request that your company buys back products ordered up to a year before and expect to have it bought back at 90% cost.
(For all the above policies, the products you return must be in a good, re-saleable condition and the member company may deduct a reasonable handling charge.)
What happens if you need to make a complaint?
The DSA has a stringent Complaints Resolution Procedure for both reps working for one of their member companies, and customers buying from them. So if you have an issue that you are unable to resolve directly with the company, you can refer your complaint to the DSA complaint resolution service (it’s quite rare that it gets to this stage, apparently).
If this happens, the Independent Code Administrator’s adjudication is binding on the DSA member company, whilst not incurring any cost to you.
Why we’re publishing this advice
Regular readers of this site will be aware of our opinion on the MLM industry. But with 425,000 people involved in direct selling in the UK, and 34% of the British population buying products through this channel, we know that it remains a popular choice for many. And we want you to be safe.
So if you are thinking of joining or buying from an MLM, please do follow the advice in this article and choose a DSA member company. And if you find that a DSA company (or one of their reps) is not abiding by their Codes of Conduct, then please do inform the company directly. If you get no satisfaction from them, then contact the DSA.
If the DSA is unaware that MLM reps are making false claims, or companies aren’t treating their reps in accordance with their values, then they can’t do anything, and bad practice will flourish. So please do speak up.
Photo by Joseph Pérez