Direct Selling and Affiliate/Attraction Marketing

There has been a recent proliferation of online marketing-based schemes operating in Australia which purport to be ‘’affiliate or attraction marketing’’. Direct Selling Australia is deeply concerned by the legitimacy of some of these models and urges that extreme caution be exercised by anyone looking to join a scheme that claims to use attraction marketing as the primary form of marketing a product offering.

Of particular concern is whether these schemes may be misleading and at risk of breaching the Australian Consumer Law. Globally, the direct selling industry is committed to preventing illegal activity and to protect individuals from scams. Work is on-going in many jurisdictions to track the use of attraction marketing models within our channel so that we can issue best practice guidance.

For marketing-based schemes that lead with attraction marketing, DSA perceive the following major risks for participants:

• Transparency:This is often a sign of a particular business’s desire to win your trust. Constant mystery, and long and winding roads toward a big reveal are often employed by company’s who do not trust their recruits to stay if the whole truth were revealed up-front.  DSA’s Code of Practice requires its Members and their direct sellers to state at the outset of any presentation / webinar etc the product which is being marketed.  There should be no requirement to sign up to a training course in order to sign up to one of our members companies.

Ask yourself: does the affiliate/attraction marketer clearly state the products that they are affiliated with and encourage you to do your own research before you decide to join?

• Income claims: Red flags for any scheme should be claims relating to large income claims that purport to support, for example, “financial freedom”. DSA’s Code of Practice for example, provides that direct sellers must not make false or exaggerated claims about the amount or timing of earnings from involvement with a member company’s products.

Ask yourself: Does the amount of money the scheme states or implies I could make seem too good to be true?  Chances are that it is.

• Consumer Centric: Consumers more than ever are discerning when it comes to spending their money and time but also what companies share their alignment on issues of ethics, eco friendliness, etc. Consumers / Consultants can often acquire the product or service directly and avoid added costs by aligning with affiliate/attraction marketers particularly when affiliate/attraction marketers are not adding value to the proposition.

Ask yourself: Is the Affiliate/Attraction Marketer merely a “shop front” or a gateway to another organisation that is often never mentioned during the recruitment process?

• High Income Returns: Individuals who are encouraged to join a scheme based on the expectation of high returns when not understanding how those returns are made should be extremely vigilant.

Ask yourself: Do you understand the basis of how you will be making money?

• The Product: The direct selling channel of today, prides itself in leading with premium products. Gone are the days of promising the dream life, a get rich quick way to achieve your goals.

Ask yourself: what is the product that I will be selling? And remember the saying;

“if you think it’s too good to be true, it usually is”

• The Network Marketing Industry: as an industry body we are proud of our members who provide genuine opportunities for entrepreneurs to grow a business. Under the DSA code members are not allowed to denigrate another member.

Ask yourself: Am I being asked to denigrate an industry that has served so many so well for over 100 years?

• Credit: Applying for finance to start a business is a big decision and should not be taken lightly. Ask yourself: Whether the person is advising you on financial products which may legally require a financial services license.

Direct Selling Australia will continue to conduct further research in this area and seek advice from our counterparts in other countries. In the meantime, we urge you to proceed with extreme caution.

We Recommend You Review the Following Links:

How to Determine if a Direct Selling Company is a Good One to Join

What to Look for in a Good Affiliate Marketing Programme

REMEMBER:

• Remember that family members and friends may try to involve you in conduct that breaches Australian best practice without realizing that they are doing so.