The power of direct selling

Article by Javier Loya

The direct selling or multilevel marketing (MLM) in the U.S. generates $28.5 billion annually for the direct selling industry. They carry vitamins, cosmetics and weight-loss supplements door to door or sell at organized promotional events. Direct sellers also make money by recruiting new sellers, training materials and supplies.

The Division of Marketing Practices of the Federal Trade Commission (FTC) oversees the direct selling industry. The FTC has introduced rules in 2006 requiring, among other things, one page disclosure containing support for earnings claims, a list of previous legal action against the company, cancellation and refund policy. Even though, the controversy over direct selling is abundant. Since 1994, the FTC has brought more than a dozen actions against multilevel marketers. However, so far the FTC is reluctant to fully implement its policies.

The industry makes over $28.5 billion in revenue every year. Amway is the best-known as well as the largest direct sales marketer. Other marketers include Avon, Herbalife, and Tupperware. The Direct Selling Association (DSA) claims it has over 200 member companies.

The direct marketing industry is under heavy criticism for misleading its marketers. Amway agreed to settle a class action suite with its marketers in California for $56 million.

Javier Loya is the CEO of OTC Global Holdings.  He is a businessman, sports team owner, and former college football linebacker and defensive end for the Columbia Lions. Javier Loya is also one of the owners of the Houston Texans, a professional football team that plays in the National Football League