July 2005



The DSAS e-News


Issue 3


Dear Friends of DSAS,

The Direct Selling Association of Singapore is making a bid to host the World Federation of Direct Selling Associations' World Congress XIII in 2008. This triennial event which had its first congress in Colorado Springs , USA , in 1978 is a prestigious forum for direct sellers from all over the world to meet and exchange ideas. The next World Congress (XII) will be held in London this October.

A delegation of DSAS members will be heading for London to make the presentation to the Board of Directors. Founder past chairman Thomas Heng who chairs the pro-tem committee for the bid said, “We face a strong challenge from Hong Kong but we are confident that with our good track record from hosting World Congress VI in 1987, we will receive the support we need. We have already received written support from the DSA in Australia, New Zealand, India, Thailand, Indonesia, Taiwan, the Philippines as well as verbal endorsements from a few other countries.'

DSAS Chairman Rahman Johar feels confident that our proposals made in the bid document will be well received by the Board of Directors. "Our choice of Raffles City Convention Centre which was the same location used by the recent IOC meetings will be another plus factor," added Rahman.

DSAS would like to congratulate one of our member Nu Skin Enterprises Singapore Pte Ltd for been awarded the CaseTrust ACCREDITATION from Consumer Association of Singapore (CASE) in July 2005. Nu Skin Enterprises Singapore hope with this endorsement, they are able to assure customers on the integrity and trustworthy toward direct selling companies and gain their confidence in engaging mutually beneficial business transactions.

History of MLM in Singapore
The original Multi-Level Marketing and Pyramid Selling (Prohibition) Act was first passed in 1973. In June 2000, Parliament approved an amendment to the Act to widen the definition of pyramid selling to catch all business schemes that were multi-level in nature.

However, as not all multi-level marketing techniques are undesirable, the Government concurrently enacted the Multi-Level Marketing and Pyramid Selling (Excluded Schemes and Arrangements) Order (hereafter, referred to as the ‘ Exclusion Order ’ ) to exclude legitimate businesses from the Act, such as insurance companies, master franchises, and direct selling companies which fulfill certain criteria. This Exclusion Order was implemented in June 2000.

Exclusion Order
 After the Exclusion Order was enacted in 2000, the Government received feedback that the provisions in the Exclusion Order were not sufficiently clear. Some members of the public were also confused by claims of legitimacy by companies and often requested for the Government to clarify if particular schemes were legitimate.

In response to the feedback, the Government reviewed the Exclusion Order , and subsequently amended the Order in 2001.

The Exclusion Order 2001 continued to maintain that insurance companies and master franchises would be excluded from the MLM Act.

However, it also introduced the following rules for direct selling companies:

  • Safeguards - A participant cannot be required to provide any benefit or acquire any commodity in order to become a participant in the scheme. Other than the purchase of demonstration equipment which is not for resale, and for which no commission can be given out. A legitimate multi-level marketing scheme would not impose a financial risk on salespersons. For example, salespersons should be entitled to full refunds, under reasonable commercial terms, for any inventories kept or purchased by them which are not sold to end consumers, so long as the inventories are returned within a period of 60 days.

  • Behavioural checks - The companies must not misrepresent the scheme as get-rich-quick opportunities, and should not use fraud, coercion, harassment, or unconscionable means to force people to join the scheme. Instead, the companies should focus their efforts on promoting the quality and features of the products.

  • Sharing of commission - It is all right for a salesperson to share commissions from several layers of salespersons recruited by him. However, such commissions must be generated by sale of the product or service in question, and not through the recruitment of additional participants into the scheme.

The amendments to the Exclusion Order were published on 14 December 2001 , and came into effect on 01 January 2002.

The DSAS Code of Ethics & Conduct is in line with the rules set forth in the Exclusion Order. It is all the more important for DSAS members to ensure that their direct sellers follow the guidelines in the Code in order to maintain the image of the direct selling industry.

http://www.mti.gov.sg/public/LEG/frm_LEG_Default.asp?sid=3&cid=1205


Issue 3


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