Federal Trade CommissionCross-Border Codes of Conduct Forum

Joseph N. MarianoPresident, United States Direct Selling Association

Chairman, World Federation of Direct Selling Associations Global Ethics Committee

November 29, 2012

Direct Selling: A Definition

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The sale of a consumer product or service, in a person to person manner, away from a fixed retail location, where the company offers opportunities to an independent contractor salesforce.

Protect

Promote

Police

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U.S. Direct Selling Association

U.S. Direct Selling Association

• Founded in 1910

• Almost 200 member companies

• One-Year Screening Process

• Code of Ethics Compliance

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U.S. DSA, Self-Regulation and Ethics

1978: “The Most Progressive Trade Association in the Nation”

Membership Application Process Active Member Review Process Consumer Advocates within the Business Community Standards Setting (Transparency, Cooling-off, Buy-back) Consumer Protection-Oriented

Source: Direct Selling Association

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U.S. DSA and Ethics

The DSA Code of Ethics− Originally a Consumer Code

– Coverage expanded in 1993 to “Consumers of Our Opportunity”

− Now prohibits Unfair or Deceptive Recruiting and Sales Practices

– Prohibits Pyramid Schemes

− Prohibits Unsubstantiated Earnings Claims

− Requires a 90% Buyback of Inventory

− Prohibits Inventory Loading

Source: Direct Selling Association

To build understanding and support for direct selling worldwide. The Federation supports direct selling companies and associations by:

• Developing, maintaining and promoting the highest global standards for responsible and ethical conduct.

• Advocating the industry's positions and interest with governments, media and key influencers.

• Serving as a trusted global resource for information on direct selling.

• Facilitating interaction among direct selling executives on issues of importance to the industry.

World Federation of Direct Selling Associations (WFDSA)

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World Federation of Direct Selling Associations (WFDSA)

• Founded in 1978• 62 National DSAs• CEO Council• Seldia• Business conducted in 170-plus countries

World Federation of Direct Selling Associations

The WFDSA wanted to ensure that all member companies were not only acting ethically within the jurisdictions where they were members of a DSA, but in all countries they operated within.

World Federation of Direct Selling Associations

World Federation Code of Ethics - 2008 Extraterritorial Provision

Every national DSA pledges that it will require each member as a condition to admission and continuing membership in the DSA to comply with the WFDSA World Codes of Conduct for Direct Selling with regard to direct selling activities outside of its home country, unless those activities are under the jurisdiction of Codes of Conduct of another country’s DSA to which the member also belongs.

U.S DSA Extraterritorial Provision

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.

U.S DSA Extraterritorial Provision

As long as a direct selling company is a member of any one of the 60 plus country DSAs, then they are accountable to the Code of Ethics everywhere in the World.

If there is a US complaint against a USDSA member, then the USDSA will handle that complaint.

If there is a Russian complaint against a USDSA member and that direct selling company is also a member of the Russian DSA then that DSA will handle that complaint, if the direct selling company is not a member of the Russian DSA, then the USDSA or another DSA where the company is a member will handle that complaint. This scenario has taken place.

If there is a complaint from a country that doesn’t have a DSA against a USDSA member then the USDSA or another DSA where the company is a member will handle that complaint.

Federal Trade CommissionCross-Border Codes of Conduct Forum

Joseph N. MarianoPresident, United States Direct Selling Association

Chairman, World Federation of Direct Selling Associations Global Ethics Committee

jmariano@dsa.org202-416-6419