Using Compliance And Regulation Rules To Benefit Direct Sales Companies

Using Compliance And Regulation Rules To Benefit Direct Sales Companies

In any industry, there are a number of compliance and regulation rules that companies must follow. Although they can seem tedious at times, they are there for a reason, and people should view them favorably no matter what side they are on. 

That is particularly true in the direct sales industry, as a few companies not abiding by rules and keeping up with compliance have sullied the reputation of many others. Even if 99 companies are enjoying great success and following every rule, one bad company can make consumers skeptical of direct sales in general.

Are too many direct sales regulations and compliance rules a bad thing? Those playing by the rules will not find it to be a hindrance at all. In fact, we at DSDefenders feel new rules provide a boost to companies doing everything the right way when it is all said and done. To better understand why all these rules and regulations are needed in the first place, we first look at the major negatives of an unregulated industry.

Understanding the FTC’s Compliance and Regulations Rules

Competition is fierce in direct sales, and some companies are trying to grab the ultimate headline when bringing in new customers. That means putting out false claims, a link that appears more as clickbait than anything, and so much more. The Federal Trade Commission (FTC) has been noticing direct sales companies using these tactics, and they are doing the best they can to clean things up. This allows the companies putting in the proper effort to push to the forefront, building up a level of trust for skeptical consumers.

Although false claims can come from just about any industry using a direct sales method, the health industry has really seen a lot of promises that are not exactly backed up by actual medical studies. False promises can frustrate consumers at the very least, but they could put them at a serious health risk at worst.

The FTC recently created a harsher penalty for companies focusing more on marketing, and less on actual studies before releasing their product. Marketers providing false claims can face fines of over $40,000 per violation. Repeat offenders can have a product completely barred from sales online forever.

Direct Sales FTC

Enticing New Recruits

Ultimate headlines seem to target consumers quite a bit in direct sales to sell a product. However, headlines can also grab those who might be trying to make money themselves. The FTC has also focused the last few years on examining promises of huge paydays for anyone who becomes a seller for a company. This type of false advertising has long been a negative mark on direct sales. With more regulation rules in place, potential sellers have a much clearer picture on expectations.

The process of luring sellers in to move product for a company comes in a couple of steps. First, empty promises of being able to make “____ amount of dollars in just _____ weeks” sounds too good to be true. In order to make money, sellers must spend money, and they often are forced to buy a certain amount of product to get started.

At the FTC, they have a name for this tactic. It is referred to as “inventory loading,” and it is ultimately how a lot of these companies are making money. However, this only helps with short-term gains, not as a way to grow the company legitimately. That is why stiffer rules and regulations are going in place to curtail this as much as possible.

People wishing to sell for a direct sales company should have a realistic view of earning potential. There will always be extreme earners, but a clearer path will make for a better direct sales industry in general. Companies already being realistic with potential sellers will have a better time bringing in genuinely passionate people about selling a product. Too often, direct sales companies with empty promises entice sellers who are not always in it for the right reasons. They are only hoping to get rich quickly, and when they fail, no one wins.

Why the Future of Direct Sales is Still Bright

Some might think that with compliance and guidelines being such a focal point now, direct sales companies might take a hit. In actuality, it is the opposite. It is weeding out the poor companies that have always tried to skate by and make money before they are caught doing something wrong. More scrutiny will ultimately create more opportunities for companies to normalize direct selling and make it a bit more of a true alternative to traditional shopping methods.

There are a few reasons why the future is very bright for direct sales. As long as local sellers and consultants pay attention to all rules and regulations, they have a chance of connecting with a small niche market that is very loyal to them. By creating more personal relationships, shopping becomes a better overall experience.

Shoppers online love searching for the best deal possible, but service and satisfaction go a long way as well. Instead of looking at the best value as only being the cheapest price, some are willing to pay more to have stress-free shopping. This is where direct sellers can come in and be a lot more personalized than just going to the cheapest website possible to buy whatever a person needs. Direct sales companies still find ways to offer affordable prices since there is no middleman, but there is no need to always be the cheapest.

The truth is, there is not anything fancy a direct sales company needs to pull off to have success. So many starting out feel like they need to lure customers and sellers in by being so much better than everyone else. That usually leads to trouble with compliance issues of some sort. Everyone is collectively becoming smarter and more skeptical in general when something appears too good to be true. Regulation rules for direct sales companies, with stiff penalties in place, keep everyone in check.

Direct Selling Reputation Management

How DSDefenders can help with Compliance and Regulation Rules

Compliance is a tricky issue for a lot of people in the direct sales industry. They might not know exactly what they need to do to ensure that they do not find themselves in a sticky situation later on. A negative ruling by breaking regulation rules or not complying can crush a business trying to take it to the next level.

Our team at DSDefenders is focused on consistently providing accurate, quality assistance every step of the way. Instead of feeling intimidated by all the information out there, people can have experts to help guide the way. Anything from reputation management to building brand identity can prove to be a little challenging at first, but laying the proper foundation can pay huge dividends later.

Curious about how new compliance and regulation rules could affect a particular direct sales company? Reach out to us at [email protected] for more information. We are happy to review companies already up and running. We also help companies about to launch to ensure that they follow all the rules and set up for as much success as possible.