This Code is aimed at achieving the satisfaction and protection of consumers, the promotion of fair competition between members and the provision of gainful income earning opportunities and the protection of persons contracted as direct sellers to represent members. These objectives are to be achieved within the framework of free enterprise, and the enhancement of the public image of the Direct Selling Industry.

The Code is intended to govern the conduct of all member organisations of the Direct Selling Association of South Africa (DSA) and all persons contracted either as employees or independent contractors acting as Direct Sellers of such member organisations. The Code embodies established principles that have been observed by the majority of members of the Direct Selling Industry for many years. The principles set out do not interpret, qualify or supplant the law of the land, and are not intended to be applied to non-consumer sales. These principles do not replace the rights or remedies a consumer may derive by virtue of any agreement, the common law or any legislation. It is nevertheless conceivable that conduct which is the subject of a contract and which may not be in conflict with statutory or common law, may still amount to an unacceptable business practice in terms of the Consumer Affairs (Unfair Business Practices) Act, 1988.

This Code is published in accordance with requirements as set out in the world code of conduct as published by The World Federation of Direct Selling Associations (WFDSA).

When considering complaints regarding non-compliance with this code the DSA will take the provisions set out in the Code in to account. This applies only to complaints involving members of the DSA and their employees or direct sellers. In this respect, the Code is therefore more than a voluntary code of conduct, as compliance with the Code and its provisions, is a condition of continued membership of the DSA.

It should not be overlooked that consumers also have a role to play. They must fully appraise themselves of their rights and obligations as they are set out in any relevant contract that they may conclude with a DSA member.

“Board”

 Refers to the Board of Directors of the DSA as duly elected from time to time.

“Business owner”

An individual who is contracted as a Network Marketer for the purpose of establishing their own business as a Distributor or Direct Seller and who represents a member organisation.

 “Code Administrator”

An independent person, who may be an employee of a member, appointed by the DSA to monitor together with the Ethic’s sub-committee members’ compliance with the DSA’s code and to assist in the resolving of complaints under the code. It is also the function of the code administrator to ensure that the code is maintained and kept current taking into account changing market conditions and legislative updates.

“Direct sellers”

Are individuals who are members of the sales distribution arm of a member. They may be independent commercial agents, independent contractors, independent dealers or distributors, employed or self-employed representatives, franchisees or the like.

“Direct selling”

The marketing of consumer products directly to the consumer generally in their homes or the homes of others, at their workplace, by way of group presentations and other place’s away from permanent retail outlets, usually through explanation, demonstration and audio visual presentations of the products by a direct seller.

 “DSA”

The Direct Selling Association of South Africa which is a National body representing the interests of the Direct selling Industry and offering protection to the general consumer community and direct sellers alike.

“Member Organisation”

A member organisation (Member) is a business entity which utilises a Direct Selling model for the marketing of products and services and is associated with the DSA trademark (DSA Logo) and which is a fully paid up member. A member may be a company, Closed Corporation or individual business.

“Multilevel Marketing”

A unique method of marketing also referred to as Network Marketing or Referral Marketing where business owners introduce others into their network to assist with the distribution of products and in doing so share in the income of those that they have introduced.

  “Order form”

 Includes printed or written orders, receipts and sales contracts.

“Party selling”

Selling through explanation and demonstration of products to a group of prospective customers by a Direct Seller, usually in the home of a hostess who invites others for this purpose.

“Product”

 Product includes goods and services, both tangible and intangible.

“Pyramid Scheme”

Pyramid schemes are illegal money making schemes outlawed in terms of Consumer Affairs (Unfair Business Practices) Act, 1988. Such schemes generally involve large numbers of people at the bottom of the pyramid who pay money to a few people at the top for a chance to advance up the pyramid and profit from others they recruit below them. Pyramid schemes generally have no product and are disguised as legitimate multi-level marketing programmes.

“Recruiting”

Any activity conducted for the purpose of inducing another person to become a direct seller or business owner.

“Representatives”

 Another term for a ‘Direct Seller”.

“Selling”

Selling includes contacting potential customers, presenting and demonstrating products, taking of orders and delivery of goods and the collection of payment

“WFDSA”

The World Federation of Direct Selling Associations to which all Direct Selling Associations worldwide belong and are required to subscribe to the World Direct Selling Code of Ethics (See www.wfdsa.ord for details)

    3.1  Identification.  

Direct sellers shall immediately and truthfully identify themselves to their prospective customers. They shall also identify the member organisation that they represent as well as the nature of their products and purpose for the approach.

3.2 Information.

Explanation and demonstration of the product offered shall be accurate and complete, in particular with regard to price and, if applicable, credit price (any interest rate charged on an annual compounded basis should be clearly stated in the original agreement), terms of payment, cooling-off period or return rights, terms of guarantee and after-sales service and delivery.

An order form or invoice shall clearly identify the Member Organisation and the direct seller and contain full name, permanent address and telephonic contact details of the member organisation and the direct seller. All terms shall be clearly set out on the order form or invoice and be legible.

The emphasis must be on placing the consumer in a position to make an informed decision having been given all the relevant details on the product and relevant pricing.

3.3 Verbal promises

Direct sellers shall not make any verbal promises that are not backed by the member office and are not printed in official literature issued by the organisation that they represent.

3.4 Cooling-off period

Member Organisations and direct sellers shall make sure that any order form contains details of a cooling-off clause permitting the customer to add, reduce or withdraw from the order within a specified period of time, which shall be no less than 5 working days from receipt of the products, and to obtain reimbursement of any payment without any form of penalty for such withdrawal. The customer shall be responsible for returning any products and/or paying any costs thereto.

Where the goods are of a customised nature or are covered by copyright affecting returns during any cooling off period this must be clearly communicated to the customer during the sales process and details be included on the order form in simple language.

 3.5 Guarantee or warranty

Terms of a guarantee or a warranty, details and limitations of after-sales service, the name and address of the guarantor, the duration of the guarantee or warranty and the remedial action open to the buyer shall be clearly set out in the order form or other accompanying literature. The guarantee or warranty shall clearly state the nature and extent of the said guarantee or warranty and shall not diminish any common law rights that the customer may have.

3.6 Literature

Promotional literature, or mailings, shall not contain any description,
claims or illustrations, which directly or by implication are misleading about the organisation the opportunity or the product. They shall contain the full name, address and telephone number of the organisation.

3.7 Advertisements

Advertisements shall not contain any descriptions, claims or illustrations, which directly or by implication, are misleading about the products, service or financial earnings potential. All advertisements shall conform to the Code of Advertising Practice as laid down by the Advertising Standards Authority of South Africa (ASA) and the Consumer Code for Advertising of the Business Practice Committee.

3.8 Testimonials
Member Organisations and direct sellers shall not refer to any testimonial or endorsement which is not authorised, not true, obsolete or otherwise no longer applicable, not related to their offer or used in any way likely to mislead the consumer.

3.9 Comparison and denigration

Member Organisations and direct sellers shall refrain from using comparisons, which are likely to mislead, and which are incompatible with principles of fair competition. Points of comparison shall not be unfairly selected and shall be based on facts, which can be substantiated. Members and direct sellers shall not unfairly denigrate any firm or product directly or by implication. Members and direct sellers shall not take unfair advantage of the goodwill attached to the trade name and symbol of another member or their products.

 3.10  Complaints and responsibility

In the event of a consumer complaining that a direct seller, in offering for sale the products of a member, has engaged in any improper course of conduct pertaining to the sales representation of its goods, the member shall promptly investigate the complaint and shall take such steps as it may find appropriate and necessary under the circumstances to assist with the redress of any wrongs which its investigation discloses to have been committed.

In all instances a consumer retains the right to refer any complaint to the Consumer Affairs Committee should a member and/or the DSA be unable to resolve the complaint to the complete satisfaction of the consumer.

3.11  Fairness

Direct Sellers shall not abuse the trust of individual consumers, shall respect the lack of commercial experience of consumers and shall not exploit a consumer's age, illness, lack of understanding or lack of language knowledge. Direct sellers shall not induce a customer to buy only in order to do the Direct Seller a favour or to terminate a demonstration.

3.12  Referral selling

Direct sellers and member organisations shall not induce a customer to purchase goods or services based upon the representation that a customer can reduce or recover the purchase price by referring prospective customers to the sellers for similar purchases, if such reduction or recovery are contingent upon some unsure future date. Members and direct sellers shall not promise or grant customers unreasonably high financial advantages for the recommendation of another customer.

3.13  Direct sellers’ compliance
Members shall require their direct sellers, as a condition of membership in the members' distribution systems, to comply with the Code or with rules of conduct, which meet its standards.

 4.1 Recruiting

Members and direct sellers shall utilise only the highest level of ethics in recruiting direct sellers. Information provided by the member to its direct sellers and to prospective direct sellers concerning the opportunity and related rights are to be true and complete. Members shall not make any statement to any prospective recruit which cannot be verified or make any promise, which cannot be fulfilled.

 4.2 Information

Information provided by the member to its direct sellers and to prospective direct sellers concerning the opportunity and related rights and obligations shall be accurate and complete. Members shall not make any factual representation to a prospective recruit which cannot be verified or make any promise, which cannot be fulfilled. Members shall not present the advantages of the selling opportunity to any prospective recruit in a false or deceptive manner.

 4.3 Earnings Claim
Members and direct sellers shall not misrepresent the actual or potential sales or earnings of their direct sellers. Any earnings or sales representations made shall be based upon documented facts.

  4.4 Agreement/Mandate

Members shall give their direct sellers a written agreement to be signed by both the organisation and the direct seller containing all essential details of the relationship. Members shall inform their direct sellers of their legal obligations, including licences, registrations and taxes. On the legal termination of a direct seller’s contract, firms shall not demand extra financial obligations by way of penalties and the agreement shall not absolve the firms from fulfilling their legal obligations towards the direct seller, including their obligations under common law.

 4.5 Fees
Members and direct sellers shall not ask other prospective direct sellers to assume high entrance fees training fees, franchise fees, fees for promotional materials or other fees related solely to the right to participate in the business.

 4.6 Returns

Members shall permit all direct sellers, including at termination, to return unsold, but resalable goods, for resale in good condition within 90 days of
purchase for their purchase price less a reasonable handling charge of not more
than 25 per cent of their original purchase price. However where the goods are of a nature where expiry dates are applicable the return time period must be appropriate to the use-by dates of the individual products

4.7 Inventory
Members shall not require or encourage direct sellers to purchase product inventory in unreasonably large amounts. The following should be taken into account when determining the appropriate amount of product inventory: the relationship of inventory to realistic sales possibilities, the nature of competitiveness of the products and the market environment, and the company's product return and refund policies.

 4.8 Recruiting rewards

No member or direct seller shall represent that benefits can be gained solely by introducing others and must promote the business as an opportunity for every participant to retail bona fide products to consumers at a realistic profit. Compensation must be tied to ultimate sales. Reasonable cash rewards and other incentives for bringing in new recruits are acceptable. Recruiting can be rewarded by offering incentives based on another recruit’s sales.

 4.9 Compensation and accounts

Members paying compensation to direct sellers shall provide active direct sellers, within reasonable periods, with accounts on earnings and details on earnings (bonuses, discounts, deliveries, cancellations and others). All monies due shall be paid without delay and without unjustified withholdings.

 4.10 Training

Basic training for direct sellers is obligatory and members shall provide for
their direct sellers comprehensive training in both selling methods and product
knowledge. The training programme shall include such subjects as extent of
personal involvement, amount of work necessary for certain returns, expected
expenses and be provided without charge. Any charges imposed for further training shall be reasonable. 

 4.11 Regular payments

Should any regular payment or purchase be required to a marketing programme, the direct seller shall be given the right to cancel the arrangement without any notice period. Should any notice period or penalty be required this shall be clearly stated in the original agreement. The cancellation shall be given in writing.

 5.1 Poaching

The DSA views any form of poaching by members of either full time staff and/or direct sellers from another member in a very serious light and on 25 March 1983 agreed to outlaw the practice.

Any member found guilty of ‘poaching’ will have its membership of the association reviewed should it not refrain from this practice if so instructed to do so by the board of the DSA.
 5.2 Principle
Members are requested to conduct themselves fairly towards other members
 5.3 Denigration
Members shall not unfairly denigrate nor allow their Direct Sellers to unfairly denigrate another members product, its sales and marketing plan or any other feature of that organisation.

 6.1 Self regulation

The Code is a measure of self-regulation by the Direct Selling Industry. It is not law, and its obligations may require a level of ethical behaviour, which exceeds existing legal requirements. Non-compliance does not create any civil law responsibility. With termination of its membership of the DSA, a company is no longer bound by the Code, the provisions of which remain applicable to events or transactions occurring during the time an organisation was a member of the DSA.

 6.2 Law
 
Members and direct sellers are presumed to comply with the requirements of law and the specific Acts which regulate their respective industries and therefore the Code does not restate all legal obligations.

 6.3 Standards

The Code contains standards of ethical behaviour for members and direct sellers and is to be seen as evidence of industry standards for the Direct Selling Industry.

 6.4 Extra-territorial Effect

The DSA requires of its members as a condition to admission and continuing membership, to comply with the WFDSA World Code of Conduct for Direct Selling with regards to selling activities outside of South Africa, unless those activities are under the jurisdiction of Codes of Conduct of such other country’s DSA to which the Member also belongs.

 6.5 Compliance

Every DSA member pledges to comply with the code of conduct as a condition of admission and continuing membership of the Association.

a) Exercise responsibility for compliance of this Code over each of their direct sellers.

b) Be able to impose disciplinary measures on those direct sellers who violate
their policies.

c) If necessary, remove those direct sellers who continue to infringe their policies and rules.

d) And, ensure that effective methods are employed to handle customer Complaints.

7.3 Code Administrator
The  DSA shall appoint an independent person or body as Code Administrator. The Code Administrator shall monitor member companies' observance of the Code by appropriate actions. The Code Administrator in conjunction with the DSA Ethics sub-committee shall settle any unresolved complaint of consumers based on breaches of the Code.
7.4 Actions
Actions to be decided on by members, the DSA or the Code Administrator may include cancellation of orders, return of goods purchased, refund of payments or other appropriate actions, including warnings to Direct Sellers, cancellation or termination of direct sellers' contracts or other relationships with the company, warnings to companies, exclusion of companies from DSA membership, and the publication of such actions and sanctions.
7.5 Complaint Handling
Members, the DSA and Code Administrators shall establish complaint-handling procedures and ensure that receipt of any complaint is confirmed within a short time and decisions are made within a reasonable time. Handling of consumer complaints shall be free of charge to the consumer.
7.6 Publication
The DSA shall publish the Code and make it known as widely as possible by putting it on the official website. Printed copies shall be made available free of charge to the public on request.
7.7 Member complaints
Complaints of a member about another member or the DSA shall be resolved either by the Code Administrator or an independent arbitrator. 

All correspondence for the DSA should be addressed to:

The Chairman
Direct Selling Association
Private Bag X34
Auckland Park
2006

Tel: (011) 726 5300

And that for the Consumer Affairs Committee to:

The Secretary
Consumer Affairs Committee
Private Bag X84
Pretoria
0001

Tel: (012) 310 9569