Montana Enacts Registration Requirement for Multilevel Distribution Companies, Direct Selling Association Members Exempt

May 8, 2013

Washington, D.C. (May 8, 2013)—Effective immediately, all multilevel distribution companies which are not subject to the self-regulatory requirements of the Direct Selling Association (DSA) and operating in the state of Montana will be required to register as such via certified mail with the Montana Securities Commissioner’s office. Registration must be renewed on an annual basis. The new enactment is an expansion of the law’s pre-existing registration requirement for some multilevel distribution companies.

Members of the Direct Selling Association are now specifically exempt from the registration requirement by virtue of their coverage under DSA’s self-regulatory requirements.

State Sen. Larry Jent (D) introduced Senate Bill 20 in coordination with the Montana Securities Commissioner’s Office. The legislation outlines a registration process and fee for multilevel distribution companies and differentiates between legitimate multilevel distribution companies and fraudulent schemes. DSA worked closely with the Commissioner’s office to ensure that consumers were protected from illegal pyramid schemes and that legitimate direct sellers were not affected. DSA Senior Director of Global Regulatory Affairs, Valerie Hayes, testified during Montana House and Senate hearings in support of the bill, along with the Montana Retail Association and representatives from the Securities Commissioner’s Office. The bill passed the Montana House by a vote of 42-5 and the State Senate with a vote of 81-18.

“Montanans need protection from pyramid schemes and easy access to opportunities in direct selling,” said Jent. “By partnering with the industry, this law protects consumers and valuable economic opportunities alike.”

The Commissioner’s Office recognized that, in order to be accepted into DSA membership, companies must undergo a thorough review process to ensure compliance with one of the strongest self-regulatory codes in business today, the DSA Code of Ethics.

Given that DSA’s membership review process is more rigorous than the review process implemented with the Montana registration requirement, the Commissioner’s office supported the exemption of DSA member companies from the registration requirement.

"Any time we can partner with industry and protect consumers it is a win-win for Montana," said Montana Securities Commissioner Monica J. Lindeen. "I thank the DSA for their willingness to work with my office to protect business opportunities and root out scams. The DSA's membership oversight is more rigorous than what the original bill envisioned. With some good amendments, the new law leverages the DSA's self-policing efforts to avoid duplication for our legitimate MLM industry."

“The Direct Selling Association applauds the efforts of Sen. Larry Jent, the Montana Securities Commissioner’s Office and all who have worked to defend the very rights that ensure legitimate direct sellers may continue to operate as a driving force in our nation’s economy,” said DSA President Joseph Mariano. “Montana has further progressed in its efforts to put illegal pyramid schemes out of business. Likewise, the Montana Securities Commissioner’s Office has appropriately recognized DSA’s firm commitment to the highest standards of business ethics. Montana need not devote extra resources to registering legitimate direct sellers who protect their customers and salespeople through a stringent self-regulatory regimen like ours. Instead, consumer protection officials can focus on enforcing their anti-pyramid law and monitoring the actions of those not subject to strong self-regulation.”

According to the Montana statute, a multilevel distribution company is defined as “a person that (i) sells, distributes, or supplies goods or services through independent agents, contractors, or distributors at different levels of distribution; (ii) may recruit other participants in the company; and (iii) is eligible for commissions, cross-commissions, override commissions, bonuses, refunds, dividends, or other consideration that is or may be paid as a result of the sale of goods or services or the recruitment of or the performance or actions of other participants.”

There are approximately 73,320 direct sellers in Montana—nearly 90 percent are women working part-time to earn supplemental income.


About the Direct Selling Association

DSA is the national trade association of the leading firms that manufacture and distribute goods and services sold directly to consumers. Among its more than 240 active and pending members are companies selling both via a party-plan method and in the traditional person-to-person style. All member companies are not only required to comply with the DSA Code of Ethics to be admitted to the association, but must also continue to uphold and promote the Code as a condition of continuing membership in the association. DSA’s Code is enforced by an independent code administrator who investigates and prescribes remedies in response to salesforce and consumer complaints against member companies.

In 2011, U.S. direct sales were more than $29.8 billion with nearly 16 million direct sellers nationwide. The vast majority are independent business people—micro-entrepreneurs—whose purpose is to sell the product/service of the company they voluntarily choose to represent. Approximately 90 percent of direct sellers operate their business part-time. For more information on direct selling, DSA and its Code of Ethics, visit and
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