Avon Writes Open Letter to DSA Members Regarding Its Decision to Leave

Hi everyone, Kevin Thompson here, MLM attorney and managing partner at Thompson Burton. And I'm here to talk about probably the biggest news update I've done in quite a while. Avon has made a decision to leave the Direct Selling Association. So I've got the full text of their letter in this post and it's significant and I'm going to go ahead and just this stream of consciousness. I just want to do one take on this thing. So it might not be as precise as you want, but this is a big deal because Avon is one of the biggest companies in the network marketing industry and they've been a long standing member of the dsa. And for them to leave based on the reasons that they've stated in an open letter, it's pretty significant and it confirms a lot of the things that I've been saying, by the way, for about six years. So I know I'm a nobody and I'm just one person, but when you have an entity like Avon, which is, which is a multi billion dollar business, make this kind of decision, maybe I'm onto something. And this video by the way, is not intended to. I gotta be careful with my words here because I don't want the DSA to throw me out. I don't think they will. It's a candid discussion about what needs to happen. And I, and I've said this in the past and I mean it. Joe Mariano is the, the leader at dsa. He's got a very difficult job because he has to manage the needs and the expectations of over a hundred different companies. Each one of these companies, they have different sales cultures, different strategies, different pay plans, a different set of needs. And it's hard to get a consistent, it's hard to get everybody on board with a strategy, with a vision as far as what needs to happen to protect the industry going forward. And if you look at the DSA successes over the past few years, they've been significant. They do really well when it comes to independent contractor issues and of course they do really well lobbying at the federal level explaining how direct selling works. But when you look at the comments made by Avon regarding their reasons for leaving, there's a problem. And I was looking at an old post I did two years ago, April of 2012, and a couple things occurred to me and the title of the post was called Self Deception, A Cancer holding the Industry Back. And this idea that the article was about the idea that everything is fine, that we don't need any sort of policing. And I said that's Bad. Because in that void of enforcement, in that no holds barred environment, scams do proliferate. And it's a problem. Rewind. Six years ago, in the ebook that I wrote, it was titled saving the industry by defining the gray, that gray that separates good companies from bad companies. I was advocating that it needs to be minimized. That having an ocean of gray, having ambiguity, it allows people to masquerade as legitimate network marketers. And it allows companies to masquerade as network marketing companies when in fact they're scams. They can essentially be wolves in sheep's clothing. Now, I will say this. That gray has shrunk. The Burn Lounge case came out in June of 2014. And we have a better idea now, as far as, you know, going forward, how to distinguish good from bad. But still, my point is, after looking at that video that I did in April 2012, a couple things occurred in number one, I've gained a lot of weight and I've got to fix that. My face is a little fatter. Number two, I predicted, I said things are going to get worse. And because I knew that there was a storm brewing. So that was in April of 2012. What's happened since? Zeke Rewards happened. That was August of 2012. They went down. Telex Free happened. Cyber kids happened. Fortune high tech got sued as a pyramid scheme. Wcm, I think that's the name of the company in California. What else? I feel like I'm missing some regulatory actions that have been filed against various network marketing programs. Wings network. So there has been a plethora. Just mega scams. They all call themselves network marketing companies. And there's been an increase in an uptick in regulatory. Also, I'm ashamed to say that I didn't mention this earlier. Bill Ackman. So he shorted Herbalife in December of 2012, which was several months after my post in April. So, yeah, things. Things have gotten worse. I think Burn lounge is a step in the right direction. It's. It's going to be harder for stams to operate going forward. But what have we seen out of the dsa? And again, I'm not trying to beat up these guys. They've got a difficult job. Let me reference this letter written by Cheryl. Sorry if I mispronounced your name, miss Cheryl. They're leaving. Because I'm quoting right here. We believe the association's agenda in the US Is overly focused on the issues of a few specific brands. I think what she means is the DSA is focusing mainly on companies that rely heavily on internal consumption. Companies like Amway, Herbalife, Nu Skin, those are the big ones. Also, she says, we believe the US Code of Ethics requires update to better reflect the current state of the industry. Essentially, the DSA needs to. What she's saying, not me. Not, not me this time, although I've been saying this for six freaking years. The DSA needs to do a better job at publishing very clear rules. Better rules, tighter rules to help consumers choose good from bad. Because right now, the code of ethics, that they're pretty ambiguous. And by the way, I used to be on the Code of Ethics committee, and I'm not anymore. So as of several months ago, myself and all of the other outside MLM attorneys, and that includes Spencer Reese, Jeffrey Padner, and all of my other competitors, we're off. So you think about that. We've all represented well over probably 2,000 companies in the industry. And that collective wisdom, the Ethics committee, they don't want their decision. I respect the decision. I don't understand it. I didn't pretend to understand it then. I do not understand it now. And I've been an advocate for tightening the screws for a long time now. With that being said, sorry I had to complain there for a second. I see Avon's point. One thing I've always thought I've always been, when it comes to party plan companies, do they need the protection and the credibility offered by the dsa? And when there's so little. What's the word I'm looking for? When there's so little movement with respect to creating better standards, when the DSA isn't advocating for tighter rules, more quality controls, instead the DSA is kind of advocating for status quo. Again, going back to my initial comment, I'm not blaming anybody. It's a very difficult job because they've got all these different member companies that have influence. And me, I don't. Thompson, Burton, we're just a supply member. We're a firm. We have no voice, no influence. I get it. But the point I'm trying to make is that the standards and the quality, the quality control measures aren't improving. Even though we've seen a tremendous amount of pressure from outside forces. People want to see improvements. And it's not, you know, the negative lies don't hurt. And there are some lies out there by critics, but what really hurts is the negative truth. And in some respects, the critics were right. I try to spend some time understanding how they think. I want to understand their points because it helps me solidify my own. It helps me. It helps me see things from a different perspective, which is very valuable when it comes to education. So I try to read their comments, I try to read their articles and get a sense for what's driving the frustration and what needs to happen. The reality is that they are right in some respects. And in this situation of, you know, maintaining the status quo, which is the state of the DSA now internally, they might be doing things that I'm unaware about because again, I'm not all. But Avon doesn't see enough movement. Avon. Avon's out. Since the standards aren't improving, I've always wondered, why do party plant companies need the protection or the credibility offered by the dsa? Why don't more of them like Tupperware to say we're not getting a whole lot out of this thing? In fact, a lot of these shady companies over here are harming our credibility. I look at the DSA membership and a lot of them are really great companies, but some slip through the cracks like, so what's going to happen here? I like to make predictions. Sometimes I'm right, sometimes I'm wrong. In April of 2012, I think I was right. Avon is just the first, that there will be others that say, you know what, we need to reconsider whether or not we want to be part of this vision of the dsa. My advice, who am I to advise these people? I like Mariano, I like dsa, I enjoy the events and I learn a lot. This is serious. And I hope the DSA's response isn't to be, you know, we regret to hear that Avon decided to voice their frustrations publicly. And I hope they don't get defensive. I hope they're respectful, they wish Avon well and that they welcome Avon to come back. Once the DSA can prove itself in the future, the code of ethics do need to be updated. The question is how? What is an update that people will buy into this idea of, well, hey, as long as you have a 12 month refund policy, the space needs to do better than that. There needs to be more to it than just a 12 month refund policy. Because we can sell $10,000 Bubba juice and people will drink it with the expectation of recovering their investment down the line. And there's a refund policy, so tough shit, you're out of luck. We can do better than that. Now, I've always looked at from a legislative standpoint, Tennessee, we passed the VSA model legislation and that's what the rule is. As long as there's a refund policy, it's okay. When it comes to legislation, you take what you can get. Code of ethics. Internally, what we value most in the industry, we need to see customer sales. We need to require customer sales. I'm not suggesting that we have a required amount. That companies need to have 50% plus of customer sales. But we need to make sure that activity is happening. Otherwise, and this is what I've been saying for a long time, The DSA focuses on its member companies. Reality is, by advocating the current rule set, which is pretty ambiguous, it allows other companies to pop up and proliferate. And you can't ignore those companies. They're peeing in the pool. To steal a quote by bk Barako, they're peeing in the pool, and everybody else is swimming in. You can't ignore those companies. So by tightening up your own rules, you make it more difficult for the other companies to masquerade as legitimate network marketing companies like other DSA companies. So a level needs to rise. A level needs to rise. This doesn't affect my judgment with herbalife. I think herbalife is going to be fine long term with respect to this ftc investigation. But this whole discussion has led to. Is leading to some very important decisions that need to be made of the future of the space. It is powerful, and with social media and with networking, People more connected now than ever. For these companies are launching all over the place. And we need some rules. We don't need some aggressive congressional oversight or any kind of garbage like that. But internally, from the association that is charged with protecting the space. It needs to acknowledge the problem, have an honest assessment of the problem. And number two, it needs to make decisions and clearly communicate those decisions and ways that it is improving. So far, I haven't seen those kinds of communications about how the industry is improving. How the industry or how the DSA is tightening up. Its. Its application to call out the scams. And that might be partially due to the fact that I've been kicked off all the committees. But, look, take it for what's worth. Avon left and say it's a big deal. And they left because they felt like their interest and their needs were not being met. They left because they felt like the DSA wasn't doing a good enough job protecting the space in general. They feel that the dsa is primarily focused on. I don't know. So how's that for an ending? All right. That's your conclusion? One take. I did it. And I hope you guys are doing well. It's been a long time since I've done a video share this. It's important. We got to talk about this stuff. I know it's 16 minutes, but share the video. It's very, very important. Share the letter. It's interesting. It'll make you think. Take care.