I bet you haven’t been asked this question before.
At the Direct Selling Association Annual Meeting in Orlando this month, President Joe Mariano talked quite a bit about bad actors. A bad actor is a direct selling company that is operating illegally or unethically, or both.
How do you know if your business is a “get rich quick” pyramid scheme or a legal and ethical direct selling income opportunity? One way to find out is to thoughtfully evaluate your company using our “Don’t Do” list.
Don’t Do List
- Pay commissions on mandatory enrollment fees.
- Pay commissions on starter kits that contain products, while not offering at least one starter kit option that contains no products upon which no commissions are paid.
- Describe your income opportunity as an investment or permit your independent representatives to do this.
- Have no products or services available for purchase.
- Sell products or services that without a compensation plan would have very little or no value.
- Before one can buy your products or services, one must first be a representative.
- Encourage customers to enroll as representatives to receive product discounts.
- Ignore cooling off laws.
- Have a non-existent or unfriendly refund policy, or a refund policy that violates laws.
- Require a personal purchase to be active or for eligibility for any portions of your compensation plan.
- Have a mandatory autoship policy to get paid through any part of your compensation plan.
- Require large inventory purchases.
- Make illegal income claims or permit your independent reps to do so.
- Make illegal product claims or allow your independent reps to make them.
How Do You Score?
Give yourself one penalty point for every activity on this list that your company currently does. Scores greater than zero are not good.
Note your penalty point items as targets for immediate action, and for now, consider yourself a bad actor until you’re not one anymore.
Beyond Legal and Ethical
What Do Good Actors Do?
Good actors refrain from the activities on my Don’t Do List. Instead, they do other things.
Our special report, 20 Secrets of Successful Direct Selling Companies, provides an excellent list of good strategies to follow if you wish to learn from those who have come before you.