Direct Selling Association (DSA)
History of the DSA
In 1900 there were slightly less than 93,000 traveling salesman, numbers warranting the formation of a national association - one that would look after the needs of direct selling companies and create an image for direct selling as a respectable profession by making sure ethical business methods were observed.
What is today known as the Direct Selling Association was formed in Binghamton, New York in 1910. At its founding, the association was called the Agents Credit Association. This formation of this group marks the start of the modern-day direct selling era.
The Agents Credit Association had 10 members and functioned primarily in the fields of credit matters and collection of accounts, as its name implies. The original 10 members were:
• California Perfume Company (now Avon Products, Inc.) - New York, New York
• Freeport Manufacturing - Brooklyn, New York
• McLean, Black & Co. - Boston, Massachusetts
• Mitchell & Church - Binghamton, New York
• Mutual Fabric - Binghamton, New York
• National Dress Goods Co. - New York, New York
• Queen Fabric - Syracuse, New York
• Security Company - Weedsport, New York
• Standard Dress - Binghamton, New York
• World's Star Knitting - Bay City Michigan
The Agents Credit Association was reorganized in 1914 and re-named the National Association of Agency Companies. For a brief period between 1917 and 1920, the name was changed to the National Association of Agency and Mail Order Companies, but the name was changed back in 1920.
The greatest part of the business of the direct selling association in the first decade was attracting new members. Officials of the NAAC realized that the health of the industry depended to a great extent on a large and active membership.
By 1920, the NAAC had formed a strong enough organization to issue the following proclamation describing its purposes:
1. To protect against unjust taxation, license fees or other illegal restraint or interference with their business.
2. Co-operation, promotion and protection of the business interests of our members.
3. To prevent and discourage misleading advertising and all dishonest practices in the agency and mail order field.
4. To assist in the enactment and enforcement of laws, which in their operation shall deal justly with the rights of the Agency Houses and consumers.
5. To promote confidence between the consumers and the Agency Houses in our Association.
6. To foster and promote good will among our members.
In 1924, the Association established its headquarters in Winona, Minnesota. Shortly thereafter, at the annual meeting of the NAAC in 1925, the Association was again reorganized and renamed the National Association of Direct Selling Companies. The list of active members numbered 80 and, for the first time, an associate membership category was added. This membership category, equivalent to today's supplier members, included companies offering services or merchandise to the direct selling companies.
In 1968, a final reorganization gave the association its current name, the Direct Selling Association, and the headquarters moved to Washington, D.C., where it has remained since.
Today, DSA operates from its D.C. headquarters which it shares with the Direct Selling Education Foundation and the secretariat of the World Federation of Direct Selling Associations. DSA provides educational opportunities for direct selling professionals and works with Congress, numerous government agencies, consumer protection organizations and others on behalf of its member companies.
Recent monopoly of the DSA by the MLM industry
I have referred to the DSA/MLM lobby as a cartel that seeks to define the dialogue of deception upon which MLM depends. It also seeks to strengthen and legitimize member MLMs by weakening laws and misleading legislators, regulators, consumers, and the media into accepting the deceptive arguments of MLM promoters. Let’s take a closer look at the DSA, or Direct Selling Association.
Legitimate direct selling has virtually disappeared. The DSA represented legitimate direct selling companies, such as Fuller Brush, Tupperware, World Book Encyclopedia, etc., in an earlier time period when information about products and efficient transportation to get them to consumers was lacking. However, as advertising and transport developed, and supermarkets and other retail outlets flourished, price competition led to the demise of most legitimate direct selling, and on the almost total elimination of door-to-door selling. Then – following the 1979 Amway decision, a plethora of new MLMs literally exploded in the marketplace, like a fast-growing cancer.
MLM rescued the DSA, and the DSA enhanced the image of MLM. MLM leaders soon saw an advantage to joining the DSA to give them an air of legitimacy as a form of “direct selling”. “Multi-level marketing” sounded too much like a pyramid scheme, and “network marketing” wasn’t much better. The situation was like a farmer who gets more money selling horses than pigs. So he fastens horse hairs on the buttocks of the pigs and marches them into the horse corral and announces, “See there, they are no longer pigs, but horses because they are in the horse corral.”
This move to join the DSA helped the MLMs by their laying claim to be legitimate direct sellers. It also helped the DSA because it gave new life to a decaying membership. The majority of DSA members now are MLMs, who provide most of its support. And not surprisingly, the DSA promotes the interests of its MLM members, not the interests of consumers.
Below is a chronological breakdown of the gradual takeover of the DSA by MLMs :
• In 1970, less than 5% of U.S. DSA members were multilevel (as opposed to traditional single-level)
• In 1990, 25% of U.S. DSA members were multilevel;
• By 1996, over 70% of U.S. DSA members were multilevel;
• By 1999, 77.3% of U.S. DSA members were multilevel;
• By 2000, 78% of U.S. DSA members were multilevel;
• And by 2009, over 90% of U.S. DSA members classified themselves as multilevel.
DSA: “Direct Selling Association” – or “Deceptive Selling Alliance”?
The DSA has endeared itself to the MLM industry by becoming chief articulator of the litany of misrepresentations that sustain the whole industry – over 100 of which were listed in Chapter 8. DSA could just as appropriately stand for “Deceptive (MLM) Selling Alliance.”
This is not to excuse their actions, but DSA officials face a tough challenge. They must work hard to defend MLM, a system that is so inherently flawed and dependent on a litany of deceptions to survive.
DSA’s deceptive lobbying efforts.
As discussed above, I witnessed DSA representatives at committee hearings at the Utah State Legislature for both the 2005 and 2006 sessions testify for proposed bills obviously crafted by the DSA to exempt MLMs from prosecution as pyramid schemes. Their arguments were full of deceptions, including the statement in 2005 by Neal Offen, president of the DSA, that the DSA represented 90,000 direct sellers in the state of Utah (translation: 90,000 votes). What he didn’t say was that they were 90,000 victims of product-based pyramids, over 99% of whom lose money.
Then in 2006, DSA representative Misty Fallock quoted FTC attorney James Kohm out of context to suggest that internal consumption by participants in an MLM satisfies the retail requirement to exempt it from the definition of a pyramid scheme. The DSA had managed to get eight state senators as co-sponsors and even saw that Utah’s Attorney General received large contributions from DSA members to assure his support.
I was shocked at the utter corruptness of the whole proceeding. The DSA had no small part in assuring passage of the bill, in spite of eleven emails I sent to each of the senators and representatives in hopes of truth prevailing. I and other consumer advocates appealed to the Governor for veto of the bill, to no avail. The DSA/MLM cartel had gotten to him with significant campaign contributions to assure his support.
Using similar deceptive tactics, DSA-initiated (or influenced) bills appear to have been passed in several other states, including Georgia, Idaho, Kentucky, Louisiana, Maryland, Montana, New Mexico. North Dakota, Oklahoma, South Dakota, and Texas. Such bills typically amended existing statutes that protected consumers against recruitment-driven MLMs. In statutes influenced by DSA lobbying, consumers are deprived of what little consumer protection they had against product-based pyramid schemes. By now other states may have passed such laws as well while critics weren't looking — or were conveniently ignored.
The DSA even attempted to get a bill passed in the U.S. Congress that would officially legalize the non-retailing, endless chain recruitment model of MLM. Fortunately, that effort failed.
The DSA's latest gambit has been to convince the Federal Trade Commission that MLMs should be exempt from having to comply with its new Business Opportunity Rule – which requires sellers of packaged business opportunities to disclose average earnings, references, etc. – because it would be "too great a burden" to hand out a one-page sheet of paper to prospective recruits.