WASHINGTON--(BUSINESS WIRE)--The Direct Selling Association applauds yesterday’s decision by the Ninth Circuit Court of Appeals in the case of FTC v. BurnLounge, ridding the marketplace of this fraudulent scheme. DSA is gratified by the court’s affirmation of long-standing legal principles, including the legitimacy of compensation to direct sellers based on their consumption and use of products, and a prohibition on such compensation based primarily on recruitment.
As a strong supporter of clear, effective consumer protection standards with regard to pyramid schemes, DSA believes the Court's decision will further consumer interests by eliminating misinformation and misunderstanding of these standards as raised by the recent actions of stock market manipulators.
We are optimistic that today's decision will assist consumers by reaffirming what constitutes a pyramid scheme. We applaud the court's thoughtful analysis regarding who is an "ultimate consumer," the acceptance of DSA's position on these issues as expressed in its friend of the court brief filed in this case, and the clear reliance on established standards, including the 1979 Amway decision and the FTC’s 2004 Staff Advisory letter to DSA.
About Direct Selling
Direct selling is a business model that offers entrepreneurial opportunities to individuals as independent contractors to market and/or sell products and services, typically outside of a fixed retail establishment, through one-to-one selling, in-home product demonstrations or online. Compensation is ultimately based on sales and may be earned based on personal sales and/or the sales of others in their sales organizations.
Direct sellers may be called distributors, representatives, consultants or various other titles. They may participate in various ways, including selling the products themselves or through their sales organizations, providing training and leadership to their sales organizations, referring customers to the company, and purchasing products and services for personal use.
About the Direct Selling Association
DSA is the national trade association of the leading firms that manufacture and distribute goods and services sold directly to consumers. Among its more than 240 active members and pending applicants are companies selling both via a party-plan method and in the traditional person-to-person style. In 2012, U.S. direct sales were more than $31.6 billion with nearly 16 million direct sellers nationwide. The vast majority are independent business people—micro-entrepreneurs—whose purpose is to sell the product/service of the company they voluntarily choose to represent. Approximately 90 percent of direct sellers operate their business part-time.
For more information on direct selling, DSA and its Code of Ethics, please visit DSA’s website, www.dsa.org.