Washington, D.C. – Yesterday, in a long-anticipated decision for direct sellers, the Northern District of Texas released its decision in Federal Trade Commission v. Neora. The court ruled against the FTC alleging the company was operating a pyramid scheme, saying Neora’s compensation structure is legal. DSA filed two amicus briefs in the case reminding the court of the legal standard that should be used in their analysis.
”We hope yesterday’s decision in the Neora case will help provide clarity about the direct selling business model to regulators, consumers, and the public,” said Joseph N. Mariano, DSA President and CEO. “The court cited the company’s robust inventory repurchase agreement and strong compliance efforts that all DSA members abide by. The decision reinforces the importance of these principles as core tenets of consumer protection and Neora’s adherence to them as part of their membership in the association.”
In 2019, the industry launched the Direct Selling Self-Regulatory Council in conjunction with the BBB National Programs, which proactively monitors the marketplace for income, earnings, and product claims. The program already has impressive case decisions and 25 referrals to the Federal Trade Commission. Additionally, with the assistance of our Compliance Officers Council, the association has released a “Direct Selling Compliance Officers Handbook” to help guide compliance efforts industry-wide.
Direct selling companies and independent direct sellers are important to the communities where they live and work. The prospect to explore entrepreneurship through direct selling is unmatched and with current government and self-regulation in place this decision has solidified that direct selling is valued and appreciated by consumers if done correctly.
DSA will continue working closely with policymakers and regulators to advocate for strong consumer protection and clear legal standards so companies and independent salespeople know how to operate ethically.
ABOUT DIRECT SELLING ASSOCIATION
For more than a century, the U.S. Direct Selling Association (DSA) has served as the national trade association for companies that offer entrepreneurial opportunities to independent sellers to market and sell products and services, typically outside of a fixed retail establishment. In 2022, direct selling took place across the United States, generating $40.5 billion in retail sales and 6.7 million entrepreneurs in the U.S. sold products or services through the direct selling channel, providing a personalized buying experience for 40 million customers.
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