Direct Sellers Association
Code of Ethics

Forward

These Codes are the outgrowth of an initiative sponsored by the Direct Sellers Association (DSA). They are intended to be an expression of the high standards of business conduct, which are subscribed to by each member company within the Association and, further, are devoted to the enhancement of relations between member companies, their direct salespersons and the ultimate consumer.

They are undertaken as part of an overall effort by active DSA members to protect and enhance the position of direct selling within the Canadian consuming public's purchasing habits and shopping mode preferences. Additionally, all active DSA members seek to make the industry a welcome and attractive place to earn a living. These Codes are a reflection of the commitment of all active DSA members and salespersons to these goals.

Introduction

Direct Selling refers to the marketing of consumer products directly to consumers, generally in their homes or the homes of others, at their workplace and other places away from permanent retail locations, usually through explanation or demonstration of the products by a Direct Seller.

Direct sales involve several participants: the direct seller, the direct salesperson and the purchaser of the product offered. The relationship between them must be based on fair and ethical principles.

The strength of direct selling lies in its tradition of independence and its commitment to a free-market system. Each active DSA member recognizes, however, that this freedom of enterprise carries with it the obligation to consider not only one's personal well being, but also that of others, and of the industry as a whole.

To achieve this goal, the active DSA members commit themselves to abide by these Codes in order to ensure a high level of ethical conduct on the part of active DSA members and DSA salespersons, individually and collectively, when dealing with each other under competitive conditions.

Definitions

"ACTIVE DSA MEMBER SALESPERSON" refers to any individual engaged on his/her own behalf or on behalf of an active DSA member, selling active DSA member products through personal sales contacts, which may also include contacts via telemarketing and/or direct mail, and in this context also includes distributors, agents, representatives, employees and any intermediaries (including independent sales contractors) associated with the sale and/or distribution of active DSA member products (hereinafter referred to as "DSA SALESPERSON").

"CODE ADMINISTRATOR" refers to an independent person or body appointed by the DSA to monitor member companies' observance of the DSA's Code and to resolve complaints under the Code.

"CONSUMER" refers to any individual to whom direct sales activities are directed for the purpose of promoting the consumption or use of a particular product.

"DAY" in the Code Enforcement/Complaints Procedure section refers to a business day.

"DSA" (Direct Sellers Association) refers to the national association of Canadian direct-selling companies that market and distribute products directly to the consumer.

"OFFER" refers to any solicitation of/or communication or interaction with a consumer by an active DSA member or a DSA salesperson either in writing or verbally, directly or by telemarketing or direct mail, and/or any agreement of purchase and/or sale arising from same.

"PRODUCT" includes goods and services.

"RECRUITING" refers to any activity conducted for the purpose of inducing a person to become a Direct Seller.

Code of Ethics

Scope

The purpose of the Code is to emphasize the sense of responsibility toward the consumer and toward the general public by all active DSA members. The Code applies to direct sales practices used in the marketing of products and refers only to the relationship of active DSA members and their salespersons with the ultimate consumers who purchase products from them.

The Code is to be applied in spirit as well as to the letter, bearing in mind the varying degrees of knowledge, experience and discriminatory ability of those to whom direct sales are directed.

Basic Principles

All active DSA members shall conform to the principles of fair competition as generally accepted in business, with particular regard to:

• the terms of the offer and the methods and form of the contact with the consumer;
• the methods of presentation and demonstration of, and information about the product;
• the fulfilment of any obligation arising from the offer or any operation connected with it, including delivery.

This Code reflects the pledge of all active DSA members to carry out their activities in conformity with the laws of Canada, its provinces and territories.

This Code is a measure of self-regulation by the Direct Sellers Association. It is not a law, and its obligations may require a level of ethical behaviour which exceeds existing legal requirements. Non-observance does not create any civil responsibility. With termination of its membership in 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 a company was a member of the DSA.

All active DSA members believe that their business dealings should be carried out at a level well above the minimum required by law, and that integrity and customer satisfaction are their two most valued objectives.

Active DSA members shall voluntarily assume responsibility toward their consumer with respect to fair sales methods and product value, and shall make every effort to ensure consumer satisfaction.

All active DSA members recognize their responsibility to fully inform salespersons as to the characteristics of the products offered to enable them to give the consumer all necessary information.

Active DSA Member Responsibilities

The Terms of the Offer

Accuracy

Article 1 The terms of the offer shall be clear, so that the consumer may know the exact nature of what is being offered and the commitment involved in the placing of an order and, in particular, shall be accurate and truthful as to any representation made and as to price, delivery, payment terms, grade, quality, make, value, performance, quantity, currency of model, and availability.

Price & Credit Terms

Article 2 Whether the offer is on a cash or instalment basis, the price and terms of payment, a description of the product and quantity purchased, as well as any agreed delivery date, shall be clearly stated on the order form together with the nature of any additional charges (such as postage, handling, taxes, etc.) and, wherever possible, the amounts of such charges.

In the case of a sale by instalment, the credit terms, including the amount of any deposit, the number, amount and periodicity of such instalments and total price as compared with the cash price, shall be clearly shown on the order form.

Any information required by Canadian and applicable provincial or territorial laws, or needed by the consumer to understand the cost, interest and terms of any other form of credit, shall be specified either in the offer or when the credit is offered.

Cooling Off

Article 3 The active DSA member shall make sure that any order form, contract or annexed document used by it in sales to consumers for cash or credit will contain, as required, by provincial or territorial laws, the appropriate "Buyers Right to Cancel" permitting the consumer to withdraw from the contract within a specified period of time, and to obtain reimbursement of any down payment.

Guarantees

Article 4 Offers may contain the words, "guarantee," "guaranteed," "warranty" or "warranteed," or words having the same meaning, only if the terms of the guarantee, as well as the remedial action open to the purchaser, are clearly set out in the offer, or are available to the purchaser in writing, during display and with the products. Such guarantee shallin no way diminish the rights that a purchaser would enjoy under Canadian and applicable provincial and territorial laws. The name and address of the guarantor and the duration of the guarantee shall be clearly stated.

After-Sales Service

Article 5 When an after-sales service is offered, details and limitations of such service shall be included in the guarantee or stated elsewhere in the offer. When an otherwise customary after-sales service is not offered, the customer shall be informed and the offer will so state.

The Presentation of the Offer

Identity of the Seller

Article 6 The full name, the permanent address, and the telephone number of the active DSA member or DSA salesperson and any other information as may be required by provincial or territorial laws, shall be given in any sales document or any sales literature distributed to the consumer, so as to enable the consumer to remain in touch directly with the active DSA member. Sales documents and other sales literature containing only an accommodation address or a post office box number are not acceptable.

Clarity

Article 7 Print that by its size or other visual characteristics is likely to affect substantially the legibility and clarity of the offer shall not be used and, where set by provincial or territorial laws, the type size shall be specified therein. All photography or artwork used in promotional literature must accurately illustrate the actual product or be properly qualified.

Safety

Article 8 Whenever necessary to ensure safety, printed information shall be provided with the product and shall include proper directions for use and full instructions covering safety.

Article 9 Products and, where applicable, samples shall be packaged in such a way as to be suitable for delivery to the consumer and for possible return, all in compliance with valid safety norms.

Complaints

Article 10 Should any consumer complain that a DSA salesperson has engaged in any improper course of conduct pertaining to the sale of the product, the active DSA member shall promptly investigate the complaint and take any steps appropriate and necessary in the circumstances to redress any and all wrongs disclosed by such investigation.

DSA Salesperson Responsibilities

The Presentation of the Offer

Article 11 All DSA salespersons shall immediately and truthfully identify themselves to the prospective consumer, indicate the purpose of their approach to the consumer, and identify the active DSA member or manufacturer with whom they are associated and the product line with which they deal. The name and telephone number of the DSA member shall appear on any sales documents given to the consumer. In party plan selling, DSA salespersons shall make clear the purpose of the occasion to the hostess and the participants.

Article 12 DSA salespersons shall make every effort to assist the consumer to evaluate the nature of the sale. Direct sales shall be organized and operated so as not to:

• create confusion in the mind of the consumer, or
• abuse the trust of the consumer, or
• exploit the lack of experience and knowledge of the consumer.

The explanation and demonstration of the product offered shall be accurate and complete, in particular with regard to price and, if applicable, credit price, terms of payment, "Buyers Right to Cancel" and/or return rights and delivery as specified by federal, provincial or territorial laws.

Information

Article 13 DSA salespersons shall give sufficient time for the consumer to read the entire contract form thoughtfully and without harassment.

Where DSA salespersons notice the consumer has difficulty understanding the real meaning of clauses in the contract or of any aspect of the offer or sale in general, they shall, wherever possible provide the required explanations, or allow the consumer time to obtain other assistance for proper understanding prior to the signing of the order or contract. The demonstration or explanation of the product shall, as far as possible, be responsive to the needs of the individual consumer.

DSA salespersons shall make known to the consumer at the time of sale all aspects of the company's guarantees, warranties, and other after-sales service.

Salespersons Operations

Respect of Privacy

Article 14 Direct sales shall not be intrusive. The right of the consumer to refuse further discussion shall be scrupulously respected. Contacts (whether personal or by telephone) should be made during reasonable hours.

Honesty & Fairness

Article 15 DSA salespersons shall not abuse the trust of individual consumers or exploit their lack of experience or knowledge, nor play on superstition or on fear, thereby exerting undue pressure on consumers.

Veracity

Article 16 DSA salespersons shall not, in the course of a sales presentation, or completion of the sales contract with any consumer, make any statement or take any demonstration measure that, directly or by implication, omission, ambiguity or exaggeration, is likely to mislead the consumer with regard to the terms of the offer.

Article 17 DSA salespersons shall give accurate and clear answers to questions concerning the product and the offer.

Active DSA Member & DSA Salespersons Joint Responsibilities

Testimonials & Endorsements

Article 18 Neither the active DSA member nor any DSA salesperson shall refer to any testimonial or endorsement that is:

1. not authorized by the person quoted, whether in a private or public capacity;
2. not genuine or is unrelated to the experience of the personn giving it;
3. obsolete or otherwise no longer applicable;
4. used in connection with any product other than that for which the testimonial or endorsement was originally furnished;
5. not authorized for certain categories of products;
6. used in any way likely to mislead the consumer.e.g., falsely listing one's customers, falsely indicating prior consumer satisfaction.

Comparisons & Fair Competition

Article 19 The active DSA member and the DSA salesperson shall refrain from using comparisons that are likely to mislead and that are incompatible with the principles of fair competition. Points of comparison shall be fairly selected and shall be based on facts that can be substantiated.

Article 20 The active DSA member and the DSA salesperson shall not discredit any firm or product directly or by implication. Accurate and truthful product comparisons, however, are acceptable.

Article 21 The active DSA member and the DSA salesperson shall not induce any consumer to cancel a contract with another seller.

Article 22 The active DSA member and the DSA salesperson shall not take unfair advantage of the goodwill attached to the trade name and symbol of another firm or product.

Article 23 Neither the active DSA member nor any DSA salesperson shall mislead or otherwise create any confusion in the mind of the consumer about the identity of the represented active DSA member, its promotion campaigns or trade mark, and those of its competitors.

Article 24 The active DSA member and the DSA salesperson shall ensure that all terms of the offer are communicated to the consumer in writing in a clear and understandable manner.

Article 25 Active DSA member offers shall be accurately and truthfully presented to the consumer, in particular with regard to:

• the characteristics of the product;
• price and credit terms;
• other terms of purchase;
• delivery, exchange, return, after-sales service (i.e,. if any);
• terms of guarantee or warranty;
• official recognition or approval, awards, prizes and diplomas, with respect to the offered product;
• any other information required to be provided to the consumer by Canadian and applicable provincial and territorial laws.

Referral Selling

Article 26 Active DSA members and DSA salespersons shall not induce a consumer to purchase goods or services based upon the representation that a consumer can reduce or recover the purchase price by referring prospective consumers to the sellers for similar purchases, if such reduction or recovery is contingent upon some unsure future event.

Delivery

Article 27 Active DSA members and DSA salespersons shall fulfill the consumer's order in a timely manner.

Responsibility for Code Observance

Article 28 The prime responsibility for the observance of this Code rests with the active DSA member who recognizes the importance of promoting the principles contained herein. Every DSA member shall pledge to abide by the Code as a condition of admission and continuing membership in the DSA.

In addition, the Code shall be duly observed by

1. the authorized DSA salesperson, whether acting as an agent or otherwise on behalf of the active DSA member;
2. the authorized DSA salesperson acting as an independent sales contractor.

Code of Business Practices

Scope

The purpose of this Code is to emphasize the sense of responsibility among active DSA members, and among active DSA members and their DSA salespersons, and to encourage the highest level of ethical business conduct among all participants in the direct-selling industry.

The success of every direct seller rests in the ability to offer the best opportunity possible and recruit the most promising candidates. To meet this competitive challenge, the ethical principles and practices of this Code shall be carefully observed.

This Code is to be applied in spirit as well as to the letter, bearing in mind the varying degrees of knowledge, experience and discriminatory ability of those concerned. All active DSA members are committed to abide by all Canadian and applicable provincial and territorial laws. Notable among active DSA members, however, is the belief that all business dealings must be carried out at a level well above the minimum required by law. Integrity and customer satisfaction are the two most valued objectives of all active DSA members.

Basic Principles

All active DSA members and DSA salespersons commit themselves to the high standards of ethical conduct as contained in the Code of Ethics.

All active DSA members shall conform to the principles of fair competition as generally accepted in business, with particular regard to:

• their methods and approach used to recruit DSA salespersons;
• their efforts and obligations to train and educate;
• their DSA salespersons;
• their general approach to and treatment of all participants in the direct-selling industry.

This Code is a measure of self-regulation by the Direct Sellers Association. It is not a law and its obligations may require a level of ethical behaviour that exceeds existing legal requirements. Non-observance does not create any civil law responsibility. With termination of its membership in 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 a company was a member of the DSA.

General

Article 1 All active DSA members and their DSA salespersons shall adopt the highest level of ethical standards in their dealings with consumers and shall abide by the spirit and letter of the Code of Ethics. Every DSA member company pledges to abide by the Code as a condition of admission and continuing membership in the DSA.

Article 2 To guide DSA salespersons in dealing with the consumer, and with each other, and with all direct-selling industry participants, every active DSA member shall make available to their DSA salespersons the Code of Ethics and this Code of Business Practices. Each active DSA member shall ensure that each DSA salesperson becomes familiar and complies with the contents of these Codes.

Article 3 To guide employees and executives in dealing with the consumer, their DSA salespersons, and all direct-selling industry participants (including DSA salespersons of other direct-selling companies), each active DSA member shall, by way of a compliance statement from the Chief Executive Officer or senior operating officer, ensure that the employees and executives become familiar with, understand and comply with the Code of Ethics and this Code of Business Practices.

Article 4 Each active DSA member shall establish procedures to ensure that it is sufficiently informed of the sales activities and practices of its DSA salespersons.

Recruiting

Article 5 An active DSA member shall refrain from business recruiting practices directed at DSA member company salespersons, whether directly or through third parties that do not comply with the provisions of applicable federal and provincial laws, including the Civil Code of Quebec and the applicable common law that may, among other things, deal with wrongful or malicious interference with contractual relationships in effect between companies and their independent contractors.

Education

Article 6 Sales educational programs offered to DSA salespersons by active DSA members shall conform to the principles of fair competition as generally accepted in business and law, particularly concerning:

• the methods and forms of the contract with the consumer;
• the methods of presentation and demonstration of the product;
• the information on the product to be given to the consumer.

False or Misleading Statements

Article 7 An active DSA member shall not make statements nor condone statements, by inaction or otherwise, of any of its DSA salespersons that contain false, misleading, unwarranted or exaggerated claims, either directly or by implication. For example, if a competitor's name is used, it shall be used only in the context of a factual comparison and significant terms of value:

• If a testimonial and endorsement is used, it must represent the honest opinion of a competent endorser.
• If a competitor's product is used, it shall be used only in comparison with a product that is actually competitive and of significant terms of value.

Disparaging Claims

Article 8 An active DSA member will not make claims or condone claims being made by others in relation to the sales or marketing plan of other direct sales companies that do not comply with the provisions of applicable federal and provincial laws, including the Civil Code of Quebec and the applicable common law.

Active DSA Member Obligations to their DSA Salespersons Sales Policies and Salesperson Relations

Active DSA Members shall give their DSA salespersons either a written agreement to be signed by both the company and the salesperson, or a written statement containing all essential details of the relationship between the salesperson and the company. Active DSA members shall inform their DSA salespersons of their legal obligations, including any applicable licenses, registrations and taxes.

Article 9 An active DSA member shall not require or encourage its DSA salesperson to purchase inventory or to assume other expenses in connection with the exercise of its business that are unreasonably high.

The facts of each particular case, including the following, will determine whether the expenses assumed or inventory purchased are unreasonable:

1. the relationship of the expenses or inventory to the possible earnings expectation;
2. the nature and competitiveness of the producers held and the market environment;
3. the active DSA member's product return and/or inventory restocking policies and the established sales record of the salesperson.

Active DSA members shall provide their DSA salespersons with periodic accounts concerning, as applicable, sales, purchases, details of earnings, commissions, bonuses, discounts, deliveries, cancellations, and other relevant data, in accordance with the company's arrangement with the salespersons.

All monies due shall be paid and any withholdings made in a commercially reasonable manner.

Article 10 Notwithstanding Article 9, an active DSA member shall permit its DSA salespersons to return products in saleable condition on reasonable commercial terms.

An active DSA member must inform its DSA salespersons of the right to return products and how it can be exercised. DSA salespersons must be given the option of returning product to the person from whom they purchased it, or to the company.

The factors to be considered in determining what constitutes reasonable commercial terms include:

1. the nature of the product;
2. the time period given to return product;
3. the percentage of money returned;
4. the procedures to be followed in returning the product; and
5. a comparison of other product return policies of similar companies.

Recruiting

Article 11 An active DSA member shall present the advantage of the selling opportunity to any prospective recruit in an honest and forthright manner.

Article 12 Active DSA members and DSA salespersons shall not misrepresent the actual or potential sales or earnings of their DSA salespersons. Any earnings or sales representations made shall be based upon documented facts and where applicable be in compliance with federal, provincial or territorial laws.

Article 13 An active DSA member shall not make statements to any prospective recruit that cannot be verified, and shall not make promises that cannot be fulfilled.

Education

Article 14 An active DSA member shall inform its DSA salespersons fully as to each of the following:

1. the importance of compliance with these Codes;
2. the recourse available through the DSA for a violation of these Codes;
3. the characteristics of the products offered to enable them to give the consumer all necessary information;
4. the applicable price and credit terms associated with each product or offer;
5. the "cooling-off" requrements in their province;
6. the applicable "guarantee" or "warranty" associated with each product or offer;
7. the inventory buy-back;
8. any applicable after-sales service associated with their company.

Observance

Article 15 The prime responsibility of the observance of the Code toward DSA salespersons and toward other direct sellers rests with the active DSA member.

General Responsibility

Article 16 An active DSA member shall be considered responsible for practices by its DSA salespersons where a violation of this Code has occurred and where the active DSA member company has either authorized, condoned, or in any way supported such practice.

Article 17 If the active DSA member was negligent by failing to establish procedures whereby the active DSA member would be kept informed of the sales practices of its DSA salespersons, that DSA member shall be considered responsible for the violation.

Code Enforcement/ Complaints Procedure

A. Interpretation and Execution

The Board of Directors of the DSA shall appoint a Code Administrator to serve for a fixed term to be set by the Board prior to appointment. The Board shall have the authority to discharge the Administrator for cause only. The Board shall provide sufficient authority to enable the Administrator to properly discharge the responsibilities entrusted to the Administrator under these Codes.

The Administrator will be responsible directly and solely to the Board. The Board of Directors will establish all regulations necessary to administer the provisions of this Code.

B. Code Administrator

The Administrator shall ideally be a person of recognized integrity, knowledgeable in the industry, and of a stature that will command respect by the industry and from the public. He/she may appoint a staff adequate and competent to assist him/her in the discharge of his/her duties. During his/her term of office, neither the Administrator nor any member of his/her staff shall be an officer, director, employee, or substantial stockholder in any member or affiliate of the DSA.

The Administrator shall disclose all holdings of stock in any member company prior to appointment and shall also disclose any subsequent purchases of such stock to the Board of Directors. The Administrator shall also have the same rights of indemnification as the Directors and Officers have under the bylaws of the DSA.

The Administrator, in accordance with the regulations established by the Board of Directors, shall hear and determine all charges against member companies affording such members or persons an opportunity to be heard fully. The Administrator shall have the power to originate any proceedings, and shall at all times have the full co-operation of all members.

C. Procedure

The Administrator shall determine whether a violation of the Code has occurred in accordance with the regulations established hereunder and the Code Enforcement/Complaints Procedure on file at the DSA office. The Administrator shall answer as promptly as possible all queries posed by members and Direct Sellers relating to the Codes and their application, and, when appropriate, may suggest, for consideration by the Board of Directors, new regulations, definitions, or other implementations to make the Code more effective.

D. Extra-Territoriality

Every National DSA pledges that it will require its members, as a condition to admission and continuing membership in the DSA, to comply with the codes with regard to direct-selling activities outside of its home country, unless those activities are under the jurisdiction of Codes of Conduct of another country's DSA to which the member also belongs.

E. Amendments

These Codes may be amended by vote of two-thirds of the Board of Directors.