The Direct Selling Association Responds to Accusations About Direct Selling Business

FOR IMMEDIATE RELEASE

Washington, D.C.—As the association representing more than 200 leading firms that manufacture and distribute goods and services sold directly to consumers, the Direct Selling Association (DSA) would like to respond to accusations made by Pershing Square Capital Management about the direct selling business model.

On December 20, 2012, Pershing Square delivered a lengthy presentation attacking Herbalife, one of the DSA’s long-standing member companies. As the leading trade association representing the direct selling industry, the DSA can assure the public that the presentation made an ill-informed, grossly inaccurate representation of the direct selling business model.

In fact, nearly 16 million Americans engaged in direct selling in 2012, some as full-time entrepreneurs seeking to build a business and some as part-time representatives hoping to earn a little extra money. Others sign up as representatives simply to purchase products or services for their own use at a discount and never sell to anyone else. Regardless of their income expectations, almost all direct sellers use the products themselves.

These direct sellers generally fall into three categories
  • Distributors as customers;
  • Small retailers with no downline distributors; and
  • Business builders or retailers in the process of developing a downline.
Among its misrepresentations, Pershing Square focuses on this first group of representatives who become distributors for the purpose of purchasing product at a discount and mischaracterizes them as “failing to earn a profit.” But Pershing Square willfully ignores the critical fact that earning a profit is not the intent of all distributors. The main economic objective of many who join a direct selling company is simply to qualify for purchasing product for their own consumption at a significant discount.

The DSA is working closely with its member companies to standardize these distributor categories across the industry. It is committed to ensuring that its member companies market their products and/or their direct sales opportunities with the highest level of business ethics and service to consumers. Every member company pledges to abide by the DSA’s Code of Ethics as a condition of admission and continuing membership in the Association. The Code of Ethics is enforced by an independent code administrator. Unfortunately, direct sellers have been targeted in the past by short sellers who have deliberately injected inaccurate information or rumors into the marketplace with the goal of driving down stock prices for financial gain. In the end, it is the millions of hardworking American direct sellers who suffer the results of these attacks while the perpetrators walk away with millions in profit. The DSA exists to protect and promote the direct selling industry by educating policymakers, the business community and the general public about the nature of the industry and how it works; and ensuring DSA member companies behave ethically in all aspects of their businesses through enforcement of the DSA Code of Ethics.

The direct selling business model has been thriving for more than 100 years. We encourage anyone who wants to learn more about this quintessential American industry to visit our websites at www.dsa.org or www.directselling411.com, or contact us by phone at (202) 452-8866.

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About the Direct Selling Association

The Direct Selling Association (DSA) is a 102-year-old national trade association that represents companies who distribute products to customers through or with the assistance of independent salespersons who personally demonstrate and explain those products to the consumer, usually in the home or work place. Direct sellers are perhaps best known to the public as person-to-person, door-to-door, or home party plan sellers. Through the efforts of direct salespersons that provide personal demonstration, home delivery, and a variety of other sales-related services, direct-selling companies can offer quality products to consumers without substantial advertising or other barriers to entry found in other distribution systems, like brick-and-mortar stores.



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