As defined by the World Federation of Direct Selling Associations, direct selling refers to the selling of products and services directly to consumers, usually in their homes or at their working places, or places away from a fixed retail location. Sales are typically made through presentations or demonstrations by direct selling representatives.
Through direct selling, customers may sit back and relax at home and still enjoy quality goods. Unfortunately, isolated unethical companies may make use of the direct selling approach to deceive customers. These kinds of fraudulence greatly tarnish the reputation of the direct selling industry and erode customers' confidence in direct selling companies.
In fact, there are great differences between bona fides direct selling companies and illegitimate pyramid scheme companies. The former provide excellent service and products to satisfy customers' needs, while the latter only aim at short term profit.
You can easily distinguish the bona fides from the fraudulence according to the following guidelines set by the World Federation of Direct Selling Associations.
| BONA FIDES | FRAUDULENCE | |
|---|---|---|
| Entry Fee | Requires a minimal entry fee and it is not mandatory to buy a product inventory. | Requires participants to pay a large sum as entry fee and buy a huge amount of products as prerequisite for joining the company. |
| Sales & Marketing Plan |
The sales and marketing plan is based on product sale. Distributor income is derived from the sale of high quality products at retail. | Neglects product sale and derives income from recruiting and entry. |
| Buy Back from Distributors |
Does not require distributors to buy a product inventory and allows return of saleable merchandises within a reasonable period of time or upon resignation. | Prohibits return of merchandise or impose stringent rules on product return. |
| Customer Satisfaction Guarantee |
Accepts product return from customers who are not satisfied with a product within a certain period of time. | Refuses reasonable request for product return. |
| Product Quality | Offers products of high quality and value. These products are competitive in the market and upon which distributors can develop their business. | Does not guarantee product quality. The products are difficult to sell because they are marked up beyond market prices. |
| Claims | Will not make unjustifiable claims or unrealistic commitment. | Always overstates products' effectiveness, retail profit and bonus income so as to lure people to join the company. |
| Distributor Training |
Has a comprehensive sales and marketing plan and professional management and provides training for distributors to assist them in developing their business. | Ignores distributor training or makes use of training as a means to generate income. |