What is direct selling?
Direct selling is the sale of consumer goods and/or services in a person-to-person manner away from a fixed retail location.
What products and services are marketed through direct selling?
Virtually every consumer product or service can be purchased through direct selling. People who purchase through direct selling cite product quality, uniqueness and money-back guarantee as the top reasons for shopping through direct selling.
What is Multi-level Marketing?
Multi-level Marketing is a popular way of retailing in which consumer products are sold, not in stores by sales assistants, but by independent businesspeople or Direct Sellers, usually in customers’ homes or offices. As a Direct Seller, you can set your own hours and earn money by selling consumer products supplied by an established MLM company.
How does Multi-level Marketing work?
In a Multi-level Marketing structure, you can build and manage your own sales force by recruiting, motivating, supplying and training others to sell products. Your compensation then includes a percentage of sales of your entire group as well as earnings on your own sales to retail customers. This opportunity has made Multi-level Marketing an attractive way of starting a business with relatively low start-up cost.
What is the difference between direct selling and multi-level marketing?
Direct selling refers to a distribution method, whereas Multi-level Marketing refers specifically to a type of compensation plan found in direct selling. A direct selling company that offers multilevel compensation plan pays its Direct Sellers based not only on one’s own product sales, but also on the sales of one’s downline*.
*A downline is the person a Direct Seller has brought into the business.
What is the difference between single level and multilevel compensation plans?
Single level compensation plans means a Direct Seller is compensated solely on one’s own product sales. In a multi-level compensation plan, Direct Sellers are compensated not only on one’s own product sales but also on the product sales of one’s downlines.
What are the responsibilities of a Direct Seller from a Member company?
As a Direct Seller of a Member company, you are responsible for upholding the DSAS Code of Ethics and Conduct as well as the same high standards of business ethics your company has pledged to uphold, which are embodied in the DSA Code of Ethics (provide link: http://www.wfdsa.org/world_codes/code.asp). The cornerstone of the World Federation of Direct Selling Association’s (WFDSA) commitment to ethical business practices and consumer service is its World Codes of Conduct. As a Direct Seller, your responsibilities include the following: Tell your potential customers who you are, why you’re approaching them and what products you are selling. Explain how to return a product or cancel an order Respect the privacy of your customers by calling at a time that is convenient for them. Promptly end a demonstration or presentation at the request of your customers. Provide accurate and truthful information regarding the price, quality, quantity, performance and availability of your product or service. Offer a written receipt in a language your customers can understand. Provide your name and contact information, as well as the contact information of the company you represent. Offer a complete description of any warranty or guarantee.
What is a pyramid scheme?
A pyramid scheme is one which profits from the act of recruitment and not from the sale of products. Pyramid schemes are illegal scams in which people pay large sums of money for the chance to participate in the scheme. The money they pay to participate will entitle them to start at the bottom of the pyramid while the money then goes to a few people at the top. Each new participant pays for the chance to advance to the top and profit from payments of others who might join later. With time, the pyramid may collapse long before you reach the top you’ll eventually run out of a never-ending supply of new and willing participants. If there are any products sold as part of the pyramid scheme, they are usually of low quality and often without a buy-back guarantee. In addition, these products do not have an intrinsic value of their own and is only purchased as a requirement to participate in the scheme.
How do we differentiate between a legitimate business and a disguised pyramid scheme?
Pyramid schemes seek to make money from you (and quickly). Multi-level Marketing companies seek to make money with you as you build your business (and theirs) selling consumer products. Before you sign up with a company, investigate carefully. A good way to begin is to ask yourself these three questions: How much are you required to pay to become a distributor? The start-up fee in Multi-level companies is generally small (usually for a sales kit sold at or below company cost). These companies want to make it easy and inexpensive for you to start selling. Pyramid schemes make nearly all of their profit on signing up new recruits. Therefore, the cost to become a distributor is usually high. Will the company buy back unsold inventory? Legitimate companies which require inventory purchases will usually “buy back” unsold products if you decide to quit the business. The DSA Code of Ethics require buy-backs for at least 90% of your original cost. Are the company’s products sold to consumers? Multi-level Marketing (like retailing) depends on selling products to consumers and establishing a market. This requires quality products at a competitive price. Pyramid schemes, on the other hand, are not concerned with sales to end-users. Profits are made on volume sales to new recruits, who purchase the products not for their value but because it is required in order to participate. Inventory purchases should never be more than you can realistically expect to sell or use yourself
What is DSAS?
DSAS stands for Direct Selling Association of Singapore. It is a trade association founded by a small number of legitimate and reputable direct selling companies. The association was gazetted on 8th October 1976 and serves to represent the interest of legitimate direct selling companies operating in Singapore. It is also a platform for member companies to meet regularly and to discuss matters of mutual interest as well as to interact with other similar organizations in other countries.
How are MLM activities governed in Singapore?
Multi-level Marketing activities in Singapore are governed by the Multi-level Marketing and Pyramid Selling (Prohibition) Act. The Ministry of Trade and Industry administers the Act. The original Multi-Level Marketing and Pyramid Selling (Prohibition) Act was first passed in 1973. In June 2000, Parliament approved an amendment to the Act to widen the definition of pyramid selling to catch all business schemes that were multi-level in nature. However, as not all multi-level marketing techniques are undesirable, the Government concurrently enacted the Multi-Level Marketing and Pyramid Selling (Excluded Schemes and Arrangements) Order (hereafter, referred to as the ‘Exclusion Order’) to exclude legitimate businesses from the Act, such as insurance companies, master franchises, and direct selling companies which fulfill certain criteria. This Exclusion Order came into effect on 1 January 2002. For more information about the Multi-Level Marketing And Pyramid Selling (Prohibition) Act and the Exclusion Order, please refer to www.dsas.org.sg and click “Singapore Laws?
What would happen to innocent victims? who participated in pyramid schemes unknowingly,and who did not benefit in any way before the scheme closed down?
Under the Act, all persons who participate in pyramid selling will be guilty of and liable to conviction to a fine not exceeding $200,000 or imprisonment for not more than 5 years, or both. Members of the public should be practice due diligence when considering whether or not to join a direct selling company. They should be especially wary of get-rich-quick schemes and promises of fast and easy money.
Are retail customers able to get a refund if they are not satisfied with the product?
The DSAS Code of Ethics and Conduct offers customers a 7-day “Cooling-off period?where they may, on reasonable commercial terms, have the option to cancel an order, or contract and receive a full refund of their money. This means that the Direct Seller must, for any reason and upon request, give a full refund of the purchase price to the customer. The 7-day “Cooling-off period?is valid for unused or unopened products returned within seven business days of purchase.
Can Direct Sellers request for product refunds?
Direct Sellers are entitled to a full refund or buy-back guarantee on unsold inventory purchased based on reasonable commercial terms and within a period of at least 60 days from the date of distribution or sale of the product to the participant.
Can Direct Sellers make product and business comparisons between direct selling companies?
Companies and Direct Sellers shall refrain from using comparisons which are likely to mislead and which are incompatible with principles of fair competition. Points of comparison shall not be unfairly selected and shall be based on facts which can be substantiated. Companies and Direct Sellers shall not unfairly denigrate any firm or product directly or by implication. Companies and Direct Sellers shall not take unfair advantage of the goodwill attached to the trade name and symbol of another firm or product.
Can a Direct Seller advertise his products?
Promotional literature, advertisements or mailings shall not contain any product description, claims or illustrations which are deceptive or misleading, and shall contain the name and address or telephone number of the company or the Direct Seller.
Where can I obtain the full member list of the DSAS?
To get the full list of the Direct Selling Association of Singapore member companies, you may go to: http://www.dsas.org.sg/dsas/Html/afterlogin.htm
How can I find out more about the DSAS Code of Ethics and Conduct?
To find out more, you may visit us at www.dsas.org.sg . The website also contains the World Direct Selling Code Of Conduct Toward Direct Sellers, Between Direct Sellers And Between Companies and the World Direct Selling Code of Conduct towards Consumers .
If a Direct Seller or consumer would like to lodge a complaint against a member company’s products, sales compensation plan or service, who should they contact?
First, contact the direct selling company to give them an opportunity to address your concern. All DSAS member companies have in place a proper and effective mechanism to handle customer complaints in an efficient and expeditious manner with the objective of achieving customer satisfaction. As an alternative, any complaints, feedback or concerns may also be addressed to the Direct Selling Association of Singapore: Direct Selling Association of Singapore Address : P.O.Box Newton 0127, Singapore 912205. Tel : 6333 3225 Fax : 6333 3225 Email address : email@example.com
Which agency should a member of the public report to, if they suspect that certain business schemes are actually illegal multi-level marketing or pyramid selling schemes?
The Commercial Affairs Department (CAD) investigates pyramid selling schemes. If you suspect a scheme has contravened the MLM Act, you can report to the CAD at 63250000 or lodge a report at 391 New Bridge Road, #06-701 Block D, Police Cantonment Complex, Singapore 088762.