Code of Ethics Updates as Approved Sept. 15, 2009
USDSA Code of Ethics Changes
Ensuring Conformance with the WFDSA Model Code
Approved by DSA Board of Directors, September 15, 2009
Includes Only Amended Sections
Existing Provisions in Normal Type, Changes Italicized and Bolded
1. Deceptive or Unlawful Consumer or Recruiting Practices
a. No member company of the Association or independent salesperson for a member company shall engage in any deceptive, false, unethical or unlawful consumer or recruiting practice. Member companies shall ensure that no statements, promises or testimonials are made that are likely to mislead consumers or prospective independent salespeople.
b. Member companies and their independent salespeople must comply with all requirements of law. While this Code does not restate all legal obligations, compliance with all pertinent laws by member companies and their independent salespeople is a condition of acceptance by and continuing membership in DSA.
c. Member companies shall conduct their activities toward other members in compliance with this Code and all pertinent laws.
d. Information provided by member companies and their independent salespeople to prospective or current independent salespeople concerning the opportunity and related rights and obligations shall be accurate and complete. Member companies and their independent salespeople shall not make any factual representation to prospective independent salespeople that cannot be verified or make any promise that cannot be fulfilled. Member companies and their independent salespeople shall not present any selling opportunity to any prospective independent salesperson in a false, deceptive or misleading manner.
e. Member companies and their independent salespeople shall not induce a person to purchase products or services based upon the representation that a consumer can recover all or part of the purchase price by referring prospective consumers, if such reductions or recovery are violative of applicable referral sales laws.
f. Member companies shall provide to their independent salespeople either a written agreement to be signed by both the member company and the independent salesperson, or a written statement containing the essential details of the relationship between the independent salesperson and the member company. Member companies shall inform their independent salespeople of their legal obligations, including their responsibility to handle any applicable licenses, registrations and taxes.
g. Member companies shall provide their independent salespeople with periodic accounts including, as applicable, sales, purchases, details of earnings, commissions, bonuses, discounts, deliveries, cancellations and other relevant data, in accordance with the member company’s arrangement with the independent salesperson. All monies due shall be paid and any withholdings made in a commercially reasonable manner.
h. Independent salespeople shall respect any lack of commercial experience of consumers. Independent salespeople shall not abuse the trust of individual consumers, or exploit a consumer’s age, illness, handicap, lack of understanding or unfamiliarity with a language.
2. Products, Services and Promotional Materials
a. The offer of products or services for sale by member companies shall be accurate and truthful as to price, grade, quality, make, value, performance, quantity, model and availability. Consumers' orders for products and services shall be filled in a timely manner.
b. Member companies shall not make misleading comparisons of another company’s direct selling opportunity, products or services. Any comparison must be based on facts that can be objectively substantiated. Member companies shall not denigrate any other member company, business, product or service – directly or by implication – in a false or misleading manner and shall not take unfair advantage of the goodwill attached to the trade name and symbol of any company, business, product or service.
c. Promotional literature, advertisements and mailings shall not contain product descriptions, claims, photos or illustrations that are false, deceptive or misleading. (Promotional literature shall contain the name and address or telephone number of the member company and may include the telephone number of the individual independent salesperson).
d. Independent salespeople shall offer consumers accurate information regarding: price, credit terms; terms of payment; a cooling-off period, including return policies; terms of guarantee; after-sales service; and delivery dates. Independent salespeople shall give understandable and accurate answers to questions from consumers. To the extent claims are made with respect to products, independent salespeople shall make only those product claims authorized by the member company.
3. Terms of
a. A written order or receipt shall be delivered to the consumer at or prior to the time of the initial sale. In the case of a sale made through the mail, telephone, Internet, or other non face-to-face means, a copy of the order form shall have been previously provided, be included in the initial order, or be provided in printable or downloadable form through the Internet. The order form must set forth clearly, legibly and unambiguously:
i. Terms and conditions of sale, including the total amount the consumer will be required to pay, including all interest, service charges and fees, and other costs and expenses as required by federal and state law;
ii. Identity of the member company and the independent salesperson, and contain the full name, permanent address and telephone number of the member company or the independent salesperson, and all material terms of the sale; and
iii. Terms of a guarantee or a warranty, details and any limitations of after-sales service, the name and address of the guarantor, the length of the guarantee, and the remedial action available to the consumer. Alternatively, this information may be provided with other accompanying literature provided with the product or service.
b. Member companies and their salespeople shall offer a written, clearly stated cooling off period permitting the consumer to withdraw from a purchase order within a minimum of three days from the date of the purchase transaction and receive a full refund of the purchase price.
c. Member companies and their independent salespeople offering a right of return, whether or not conditioned upon certain events, shall provide it in writing.
5. Identification and Privacy
a. At the beginning of sales presentations independent salespeople shall truthfully and clearly identify themselves, their company, the nature of their company’s products or services, and the reason for the solicitation. Contact with the consumer shall be made in a polite manner and during reasonable hours. A demonstration or sales presentation shall stop upon the consumer’s request.
b. Member companies and independent salespeople shall take appropriate steps to safeguard the protection of all private information provided by a consumer, a prospective consumer, or other independent salespeople.
9. Inventory Loading
A member company shall not require or encourage an independent salesperson to purchase inventory in an amount which unreasonably exceeds that which can be expected to be resold and/or consumed within a reasonable period of time. Member companies shall take reasonable steps to ensure that independent salespeople receiving compensation for downline sales volume are consuming, using or reselling the products and services they purchase in order to qualify to receive compensation.
10. Payment of Fees
Neither member companies nor their independent salespeople shall ask individuals to assume unreasonably high entrance fees, training fees, franchise fees, fees for promotional materials or other fees related solely to the right to participate in the direct selling business. Any fees charged to become an independent salesperson shall relate directly to the value of materials, products or services provided in return.
11. Training and Materials
a. Member companies shall provide adequate training to enable independent salespeople to operate ethically.
b. Member companies shall prohibit their independent salespeople from marketing or requiring the purchase by others of any materials that are inconsistent with the member company’s policies and procedures.
c. Independent salespeople selling member company-approved promotional or training materials, whether in hard copy or electronic form, shall:
i. Use only materials that comply with the same standards used by the member company,
ii. Not make the purchase of such materials a requirement of other independent salespeople,
iii. Provide such materials at not more than the price at which similar material is available generally in the marketplace, and
iv. Offer a written return policy that is the same as the return policy of the member company the independent salesperson represents.
d. Member companies shall take diligent, reasonable steps to ensure that promotional or training materials produced by their independent salespeople comply with the provisions of this Code and are not false, misleading or deceptive.
B. Responsibilities and Duties
1. Prompt Investigation and No Independent Contractor Defense
a. Member companies shall establish, publicize and implement complaint handling procedures to ensure prompt resolution of all complaints.
b. In the event any consumer shall complain that the independent salesperson offering for sale the products or services of a member company has engaged in any improper course of conduct pertaining to the sales presentation of its products or services, the member company shall promptly investigate the complaint and shall take such steps as it may find appropriate and necessary under the circumstances to cause the redress of any wrongs which its investigation discloses to have been committed.
c. Member companies will be considered responsible for Code violations by their independent salespeople where the Administrator finds, after considering all of the facts, that a violation of the Code has occurred. For the purposes of this Code, in the interest of fostering consumer protection, member companies shall voluntarily not raise the independent contractor status of independent salespersons distributing their products or services under its trademark or trade name as a defense against Code violation allegations and such action shall not be construed to be a waiver of the member companies' right to raise such defense under any other circumstance.
d. The member companies subscribing to this Code recognize that its success will require diligence in creating awareness among their employees and/or the independent wholesalers and retailers marketing the member's products or services of the member company's obligations under the Code. No member company shall in any way attempt to persuade, induce or coerce another member company to breach this Code. A member company’s inducing of the breach of this Code is considered a violation of the Code.
e. Individual salespeople are not bound directly by this Code, but as a condition of participation in a member company’s distribution system, shall be required by the member company with whom they are affiliated to adhere to rules of conduct meeting the standards of this Code.
f. This Code is not law but its obligations require a level of ethical behavior from member companies and independent salespeople that is consistent with applicable legal requirements. Failure to comply with this Code does not create any civil law responsibility or liability. When a company leaves the DSA membership, a company is no longer bound by this Code. However, the provisions of this Code remain applicable to events or transactions that occurred during the time a company was a member of DSA.
2. Required Publication
a. All member companies are required to submit to DSA, along with its application for membership or in the case of existing member companies along with their next dues payment, a proposed program as to how the member company plans on publicizing DSA’s Code of Ethics to its sales people and consumers. The plan shall contain, at a minimum, one of the following:
i. an inclusion on the member company’s web site of DSA’s Code of Ethics with a step-by-step explanation as to how to file a complaint; or
ii. a link from the member company’s web site to DSA’s Code of Ethics with a clear, bold faced statement as to how to make the connection; or
iii. an inclusion of the member company’s code of ethics, or its complaint process, in its web site, or with an explanation of how a complainant may appeal to the DSA Code Administrator in the event the complainant is not satisfied with the resolution under the member company’s code, or the member company’s complaint process, with a reference to the web site of DSA’s Code of Ethics.
4. Extraterritorial Effect
Each member company shall comply with the World Federation of Direct Selling Associations’ Code of Conduct with regard to direct selling activities outside of the United States to the extent that the WFDSA Code is not inconsistent with U.S. law, unless those activities fall under the jurisdiction of the code of conduct of another country’s DSA to which the member company also belongs.
C. Administration
2. Code Administrator
a. The Administrator shall be a person of recognized integrity, knowledgeable in the industry, and of a stature that will command respect by the industry and from the public. He shall appoint a staff adequate and competent to assist him in the discharge of his duties. During his term of office, neither the Administrator nor any member of his staff shall be an officer, director, employee, or substantial stockholder in any member or affiliate of the DSA. The Administrator shall disclose all holdings of stock in any member company prior to appointment and shall also disclose any subsequent purchases of such stock to the Board of Directors. The Administrator shall also have the same rights of indemnification as the Directors and Officers have under the bylaws of the Direct Selling Association.
b. The Administrator shall establish, publish and implement transparent complaint handling procedures to ensure prompt resolution of all complaints.
E. Powers of the Administrator
1. Remedies
If, pursuant to the hearing provided for in Part D Section 3, the Administrator determines that the accused member company has committed a Code of Ethics violation or violations, the Administrator is hereby empowered to impose the following remedies, either individually or concurrently, upon the accused member company:
a. Require complete restitution to the complainant of monies paid for the accused member company's products which were the subject of the Code complaint;
b. Require the replacement or repair of any accused member company's product, the sale of which was the source of the Code complaint;
c.
Require the payment of a voluntary contribution to a special assessment fund which shall be used for purposes of publicizing and disseminating the Code and related information. The contribution may range up to $1,000 per violation of the Code.
