Compilation of Direct Selling

8/8/2019 Compilation of Direct Selling

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identify the company and the Direct Seller and contain the full name, permanent address andtelephone number of the company or the Direct Seller, and all material terms of the sale. Allterms shall be clearly legible.

f. Verbal Promises

Direct Sellers shall only make verbal promises concerning the product which are authorised by the company.

g. Cooling-off and Return of GoodsCompanies and Direct Sellers shall make sure that any order form contains, whether it is alegal requirement or not, a cooling-off clause permitting the customer to withdraw from theorder within a specified period of time and to obtain reimbursement of any payment or goodstraded in. Companies and Direct Sellers offering an unconditional right of return shall

provide it in writing.

h. Guarantee and After-Sales ServiceTerms of a guarantee or a warranty, details and limitation of after-sales service, the name andaddress of the guarantor, the duration of the guarantee and the remedial action open to the

purchaser shall be clearly set out in the order form or other accompanying literature or provided with the product.

i. LiteraturePromotional literature, advertisements or mailings shall not contain any product description,claims or illustrations which are deceptive or misleading, and shall contain the name andaddress or telephone number of the company or the Direct Seller.

j. TestimonialsCompanies and Direct Sellers shall not refer to any testimonial or endorsement which is notauthorised, not true, obsolete or otherwise no longer applicable, not related to their offer or used in any way likely to mislead the consumer.

k. Comparison and DenigrationCompanies and Direct Sellers shall refrain from using comparisons which are likely tomislead and which are incompatible with principles of fair competition. Points of comparisonshall 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 byimplication. Companies and Direct Sellers shall not take unfair advantage of the goodwillattached to the trade name and symbol of another firm or product.

l. Respect of PrivacyPersonal or telephone contact shall be made in a reasonable manner and during reasonablehours to avoid intrusiveness. A Direct Seller shall discontinue a demonstration or sales

presentation upon the request of the consumer.


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m. Fairness

Direct Sellers shall not abuse the trust of individual consumers, shall respect the lack of commercial experience of consumers and shall not exploit a consumer's age, illness, lack of understanding or lack of language knowledge.

n. Referral Selling

o.

Companies and Direct Sellers shall not induce a customer to purchase goods or services based upon the representation that a customer can reduce or recover the purchase price byreferring prospective customers to the sellers for similar purchases, if such reductions or recovery are contingent upon some unsure future event.

Delivery

Companies and Direct Sellers shall fulfil the customer's order in a timely manner.

Conduct Towards Direct Sellers

a. Direct Sellers' ComplianceCompanies shall require their Direct Sellers, as a condition of membership in the Companies'distribution systems, to comply with the Code or with rules of conduct which meet itsstandards.

b. RecruitingCompanies and Direct Sellers shall not use misleading, deceptive or unfair recruiting

practices.

c. Business InformationInformation provided by the company to its Direct Sellers and to prospective Direct Sellersconcerning the opportunity and related rights and obligations shall be accurate and complete.Companies shall not make any factual representation to a prospective recruit which cannot beverified or make any promise which cannot be fulfilled. Companies shall not present theadvantages of the selling opportunity to any prospective recruit in a false or deceptivemanner.

d. Earnings ClaimsCompanies and Direct Sellers shall not misrepresent the actual or potential sales or earningsof their Direct Sellers. Any earnings or sales representations made shall be based upondocumented facts.


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e. RelationshipCompanies shall give their Direct Sellers either a written agreement to be signed by both thecompany and the Direct Seller or a written statement, containing all essential details of therelationship between the Direct Seller and the company. Companies shall inform their DirectSellers of their legal obligations, including any applicable licences, registrations and taxes.

f. FeesCompanies and Direct Sellers shall not ask other Direct Sellers to assume unreasonably highentrance fees, training fees, franchise fees, fees for promotional materials or other fees relatedsolely to the right to participate in the business.

g. TerminationOn the termination of the Direct Seller's relationship with a company, companies shall buy

back any unsold but saleable product inventory, including promotional material, sales aidsand kits, and credit the Direct Seller's original net cost thereof less a handling charge to the

Direct Seller up to 10% of the net purchase price and less any benefit received by the DirectSeller based on the original purchase of the returned goods.

h. InventoryCompanies shall not require or encourage Direct Sellers to purchase product inventory inunreasonably large amounts. The following should be taken into account when determiningthe appropriate amount of product inventory: the relationship of inventory to realistic sales

possibilities, the nature of competitiveness of the products and the market environment, andthe company's product return and refund policies.

i. Remuneration and AccountsCompanies shall provide Direct Sellers with periodic accounts concerning, as applicable,sales, purchases, details of earnings, commissions, bonuses, discounts, deliveries,cancellations and other relevant data, in accordance with the company's arrangement with theDirect Sellers. All monies due shall be paid and any withholdings made in a commerciallyreasonable manner.

j. Education and TrainingCompanies shall provide adequate education and training to enable Direct Sellers to operateethically. This may be accomplished by training sessions or through written manuals or guides, or audio-visual materials.


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Conduct Between Companies

a. PrincipleMember companies of DSAM are requested to conduct themselves fairly towards other

members.

b. EnticementCompanies and Direct Sellers should not entice away or solicit any Direct Sellers bysystematic enticement towards other companies' Direct Sellers.

c. DenigrationCompanies shall not unfairly denigrate nor allow their Direct Sellers to unfairly denigrateanother company's product, its sales and marketing plan or any other feature of that company.

Code Enforcement

a. Companies' ResponsibilityThe primary responsibility for the observance of the Code shall rest with each individualcompany. In case of any breach of the Code, companies shall make every reasonable effort tosatisfy the complainant.

b. DSAM ResponsibilityDSAM shall provide a person responsible for complaint handling. DSAM shall make everyreasonable effort to ensure that complaints are settled.

c. Code Administrator DSAM shall appoint an independent person or body as Code Administrator. The CodeAdministrator shall monitor companies' observance of the Code by appropriate actions. TheCode Administrator shall settle any unresolved complaint of Direct Sellers based on breachesof the Code.

d. ActionsActions to be determined by the Code Administrator against a company regarding complaintsof a Direct Seller concerning breaches of the Code may include termination of the DirectSeller's contract or relationship with the company, refund of payments, issuance of a warningto the company or its Direct Sellers, or other appropriate actions and the publication of suchactions or sanctions.

e. Complaint HandlingDSAM, Companies and Code Administrators shall establish complaint handling proceduresand ensure that receipt of any complaint is confirmed within a short time and decisions aremade within a reasonable time.


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I. DOOR-TO-DOOR/SIMPLE COMMISSION PLAN

In this type of plan, the agent or dealer obtains an immediate discount from the company, at the point of purchase. He then makes a profit by selling the product to the consumer at therecommended retail price. The line of distribution in such plan is simple, involving the direct

sales company, the dealer and the consumer.

In some cases, the dealer or agent is a salaried employee of the company.

II. THE HOSTESS/PARTY PLAN

Under this type of plan, the direct seller or retailer arranges with a friend who shall act ashostess to invite a group of friends for demonstrations of a product or products. In the courseof this party, orders are received for products. The hostess receives merchandise/products ascompensation for the use of her home and her help in getting their friends together.


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III. MULTI-LEVEL MARKETING OR DISTRIBUTOR NETWORK PLAN

This plan allows the direct seller to manage and service a large direct retail network or distributor

network. Those interested in this plan must first be sponsored by an existing distributor of thecompany. With the help of this distributor, he then builds his monthly sales volume to qualify for higher monetary incentives and higher level of recognitions.

At direct distributor level, he functions both as a wholesaler and retailer, purchasing products in bulk from the company and distributing them to his distributors who in turn sells them to thecustomers. All income earned by a distributor is based upon the volume of sales and no other considerations. There is one standard distributor price for products to distributors and onestandard retail price for products to customers.


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IV. PYRAMID PLAN

In this plan, commissions are earned for the mere act of recruiting more new members to the plan, sometimes called head hunting. New members are normally charged a substantial entryfee, often obscured by large up-front investments in inventory. (usually low quality products of

little value).

Because of legislation overseas, pyramid companies are now more sophisticated and nowdisguise up-front loading with either higher membership fee, mandatory purchase of productsand various other impositions like payment for computer and other information services, trainingmaterials

Offences in Direct Selling

a)

e-Pyramid scam b) scratch-and-win activities: The scratch & win activity by any licensed or not licenseddirect selling company is not allowed under the direct selling act 1993. Now evolved to

become peel and win. c) credit card paymentsd) cooling-off period (time given to consumers to reconsider the purchase)e) get-rich-quick schemes.


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Documents

Compilation of Direct Selling