In September 2014, multi-level marketing company Avon left the Direct Selling Association (DS) with a flourish:
NEW YORK, September 12, 2014 – Avon has made the decision to withdraw from the U.S. Direct Selling Association (DSA) based on our belief that in the U.S. the DSA is not advocating effectively for Avon and our Representatives. We are committed to direct selling in the U.S. and markets around the world. Avon’s number one priority is supporting our 6 million Representatives worldwide. We succeed when they succeed.
Media about Avon’s decision suggested that the company was worried about pyramid scheme allegations, although the company never explicitly said that.
In a letter posted on the company’s website, an Avon executive made a few key points:
- We believe the association’s agenda in the U.S. is overly focused on the issues of a few specific brands rather than industry-wide challenges.
- We believe that the U.S. DSA Code of Ethics requires updating to better reflect the current state of the industry in the U.S.
- As the U.S. DSA is currently operating, we do not believe that either of these issues will be addressed.
- In the U.S., we believe there is a need to enhance the DSA Code of Ethics to better ensure that individuals entering direct selling have the benefit of adequate safeguards.
But for all the drama surrounding Avon’s departure from the DSA, no one seems to have reported on the fact that Avon rejoined the organization. It may have occurred in late 2016. Here is the company’s Code of Ethics page as of July 20, 2016:
And here is the same page as of October 11, 2016:
Notice that previously they only mentioned the World Direct Selling Association (a separate organization), and then the switch to the Direct Selling Association (the one they left in 2014).
And then in 2017, as luck would have it, Avon won an award from the DSA! What a coincidence!
Why does any of this matter? It is a little curious that Avon left the DSA in 2014, with what appeared to be concerns about multi-level marketing companies really being pyramid schemes. They said the DSA wasn’t really doing anything about that. Has anything changed in MLMs? Of course not! They’re the same as ever, and the DSA is likely the same as ever too.
Now let’s be clear… the DSA really does nothing to protect consumers. It promotes itself as a watchdog over MLMS: “It holds member companies accountable to policies that protect independent salespeople and consumers and encourages the entire marketplace for direct selling to meet these high standards.” The unfortunate truth is that the DSA is really focused on lobbying politicians so laws are not enforced or enacted that will negatively impact the MLM companies. (They claim their lobbying is to protect the distributors, but it’s really to protect the companies that profit while 99% of distributors lose money in these scams.)
See some of what the DSA does politically on their web page, including their PAC and their SuperPAC:
Of course, they’ll tell you that the Anti-Pyramid Promotional Scheme Act of 2017 that they mention on this page was all about protecting consumers. It wouldn’t have protected consumers at all. Robert FitzPatrick, noted expert on MLMs, explained what was wrong with the bill:
With a clever insertion of a few key words, the bill eliminates the fundamental distinction applied by the regulators, prohibiting recruiting-based rewards and play-to-play purchase requirements that must lead to losses for the “last ones in”, i.e., the vast majority. Instead of a business being determined legal or illegal based on facts of its operation, the bill shifts the required proof of illegality to a “motive”. Yet, when the whole purpose of a fraud is to deceive the victims, how can the fraud be determined by the “motive” of the people being deceived? MLM pyramids use products to divert victims from seeing that they are paying for the right to recruit others who pay for the right to recruit. They are led to think it’s about “products” even though no one makes any money from personally selling the products.
HR5230 creates a new definition of “pyramid scheme” that cleanses the classic toxic practices of “endless chain”, closed market, payment for rights to recruit and rewards gained from the recruits’ payments – as long as the promised rewards are derived from “purchases”. In other words, if the pyramid money transfer is laundered through product-purchases, everything is suddenly legal.
The entire “mission” of the DSA is a complete farce. Remember, “direct selling” is a misnomer. The companies as they exist today may “sell directly” to consumers, but their focus is on recruiting. As such, the correct term is multi-level marketing. Direct selling is a term that attempts to hide the fact that these companies are actually focused on recruiting. The DSA exists to protect MLM companies from changes in laws and possible prosecution for running illegal pyramid schemes.
I don’t care if Avon (or any other MLM, for that matter) is a part of this worthless organization or not. I just find it interesting that such a big deal was made out of Avon leaving the DSA (concerns about pyramid schemes, people!)… and then not a peep out of anyone when they rejoined.