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Direct-sales industry misrepresented

Deseret News (Salt Lake City), Apr 2, 2008 by Neil H. Offen

In reading Jon Taylor's attack on the direct selling industry (My View, March 19), I was struck by a strong sense of deja vu. Eventually I realized I'd read many of the same words by Mr. Taylor in a 2006 Deseret Morning News piece attacking the industry.

That's unfortunate for two reasons. First, Mr. Taylor's attacks do a great disservice to the hard-working men and women involved with direct selling companies -- particularly those that contribute significantly to Utah's economy. Second, his frequent access to this forum may convince some that he is a credible, unbiased observer of direct selling companies rather than someone whose agenda is to destroy the industry regardless of the facts. At the core of Mr. Taylor's misrepresentations is his inaccurate assertion that 99 percent of direct sellers lose money from being involved with a company using a multilevel compensation plan. The facts and common sense say otherwise.

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For example, most direct sellers are involved in direct selling on a part-time basis. Most work fewer than 10 hours per week, with a goal of earning supplemental income. Some are stay-at-home moms who join direct selling companies with very modest goals, often to replace an old appliance, earn extra money for Christmas presents and the like. However, about 7.5 percent of the more than 15 million U.S. direct sellers are career/full-time salesmen -- many of whom earn $50,000 or more annually. They are earning a wonderful living without any significant capital investment.

Another important segment of direct sellers sign up only so they can buy products they want at wholesale or discount. This is possible because of the low cost of becoming a salesmen. Most of these "sellers" will never see a commission check because their goal isn't to make money. However, they are still success stories.

With a median gross income of about $2,400, it's true that most direct sellers aren't getting rich this way, but a majority are achieving their goals and are pleased with their direct selling experience. It also amazes me that Mr. Taylor would have people believe that on a consistent basis, 60 million people around the world are losing money in direct selling and continue to do so because they don't want to admit defeat. Tell that to the millions of Americans who have improved their quality of life by earning extra income that helps pay the bills or buys a precious family vacation.

Mr. Taylor also criticizes direct selling companies for recruiting. Recruiting is, in fact, an important part of direct selling, but it's really no different than a traditional business expanding to additional locations. And the bottom line remains that compensation is based on sales of products and services, not on the mere act of recruiting others.

The Direct Selling Association advocates practice of the highest possible levels of consumer protection and enforces a code of ethics designed to protect the consumer and the seller. We encourage those considering a direct selling opportunity to ask questions to distinguish between a legitimate multilevel company and a pyramid scheme. For example, start-up costs should be minimal, you should be able to return unused inventory, and the money you earn should be based on the sale of products or services. With Mr. Taylor's Web site suggesting that even gambling in Las Vegas is a preferred way to make money, it's obvious he is not reasonable when it comes to direct selling. Unfortunately, his arguments are not supported by the facts, and his tactics unfairly taint a legitimate industry that's very important to the state of Utah and the millions of people who shop and sell through the direct selling channel.

Neil H. Offen is the president and chief executive officer of the Direct Selling Association.

Direct-sales industry misrepresented

Deseret News (Salt Lake City), Apr 2, 2008 by Neil H. Offen

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