Top Desk
January 2010
Time to take a stand!
Penny Farish is General Manager of Mary Kay Cosmetics UK and also Chairman of the UK Direct Selling Association. Here she puts the spotlight on the impact EU legislation can have on the direct selling industry and explains why members ignore latest EU proposals at their peril.
IN this day and age, the European Commission has a huge infl uence on all new laws in EU Member States. Within the direct selling industry we now need to be even more proactive when important EU decisions regarding legislation are being considered.
My work as Chairman of the UK DSA enables me to keep an eye on all developments within Europe which have an influence on our industry. I have two major concerns at the moment over proposals which could have a significant negative effect on all direct selling businesses in Europe.
We need to lobby against them.
One cause for concern is that the EU has recently proposed a significant change in Customs Valuations for Importers which could result in significantly higher dutiable values and increased customs liability for importers involved in multi-tiered transactions. While under the current rules importers are often entitled to use a sale earlier in the chain of transactions as a basis to establish the customs value for imported merchandise (often referred to as the ‘first sale’ rule), proposed changes will eliminate this option and will provide that only the last sales transaction may be used for the purpose of establishing the EU customs value.
Because the last sales transaction is generally the highest priced in the chain of sales, the EU proposal is likely to result in higher import values and thus, higher duties for importers who have previously relied on the ‘first sale’ rule.
Another matter that concerns me is the proposed Consumer Rights Directive that would represent a potentially serious problem for many direct selling companies, particularly those in those EU states where consumer protection legislation is rigorously enforced.
The proposed legislation has been described by FEDSA, which is regarded in Brussels as a respected voice of the direct selling industry, as being ‘unreasonable and unjustified’. It would involve direct sellers having to conform to a complicated ordering process and paperwork, both for every occasional order obtained away from sales parties and for small value repeat orders from regular customers. The UK DSA and FEDSA are currently seeking exemption for low value direct sales, where there is no evidence of consumer detriment. This proposed legislation affects everybody in Europe involved in direct selling and I would urge everybody, both national DSAs and major companies, to lobby their MEPs as the fate of this directive is now in the hands of the European Parliament, not EC officials in Brussels.'
Currently, we have a 60 threshold for regulated ‘off premises’ direct selling transactions. At the very least, we need to maintain this threshold to avoid new direct sellers being deterred by unreasonable bureaucracy.
Through my role with the UK DSA, I work quite closely with Richard Berry, Chairman, of FEDSA. Fortunately, Richard is a powerful lobbyist for the interests of the direct selling industry. If Richard wasn’t there to protect the interests of DSAs and their members, throughout Europe, I am quite sure that damaging legislation could easily be railroaded through under pressure from extreme consumer lobbyists.
On the other hand, I believe direct selling regulations that help to maintain standards are extremely important, as long as they are based on well documented facts.Unfortunately, in many EU member states, there is still a lot of ignorance about our industry and a lot of negative perception, particularly among those who are making the laws. Setting the record straight and promoting the benefits we all have to offer in promoting enterprise and self employment is, it seems to me, a challenge for us all.
“Unfortunately, in many EU member states, there is still a lot of ignorance about our industry and a lot of negative perception, particularly among those who are making the laws.” |
Sadly, a lot of people are still under the misconception that direct selling is associated with illegal pyramid schemes.
To some extent, this is understandable when companies use the term multilevel or network marketing to describe the way their business is organised. At Mary Kay, Avon Cosmetics, (which was established way back in the 1880s), and in many other long established and well regarded direct selling businesses, we have adopted a modern and efficient structure for a direct selling business, one which meets the aspirations of today’s direct sellers and which is now recognised and well regulated under UK law.
Another significant step forward in enhancing the reputation of direct selling in the UK, was the endorsement of the UK DSA’s Consumer Code by the Office of Fair Trading. These standards have now been adopted by other industries such as the Society of Motor Manufacturers and Estate Agents’ Ombudsman. There is now a long list of other trade bodies seeking this endorsement. All those that are successful, have to offer a level of consumer protection that exceeds that demanded by law. This is what we are proudly able to do in the DSA.
The DSA codes are basically all about an ethical way of doing business, selling products to the general public and fairly promoting the business opportunities we have to offer. If you are a member of the DSA, you sign up and agree to abide by these consumer and business codes. Any member that does not, faces the prospect of expulsion.
At the moment, we have 41 full members, 58 supplier members and 18 prospective full members. They are all key players in the direct selling channel who all take a pride in what they do and want to uphold the highest standards.
Ethical behaviour is crucial within this business. This is why our Code of Conduct is so important. If you offer good products, good value and good customer services you are on a winning ticket. Direct selling companies should be up front and truthful in all activities. It is particularly important that companies don’t overstate potential earnings.
In the past, people have not always been totally honest about the potential earnings opportunities. Sometimes people are good at selling the dream but don’t always deliver the goods in terms of income. I am convinced that the most important aspect of direct selling is to do business in a fair, honest and professional way.
Though the impact of the Internet on direct selling has been huge and beneficial in many ways, I am concerned about the loss of the personal touch. There is nothing more impersonal than ticking a box or pressing ‘send’.
I believe it is important to make that first connection face to face on a personal level. Face to face is also more financially successful than the Internet because on the Internet you don’t get the opportunity to cross promote.
People are also often worried about fraud on the Internet but if you have met your Consultant face to face that fear is largely taken away. Party plan situations also enable our Consultants to offer one to one advice which can’t be done on the Internet.
Mary Kay Cosmetics Inc has 34 subsidiaries worldwide, including nine in Europe and I work very closely with my colleagues in the European region. Years before I joined Mary Kay Cosmetics, I had read the autobiography of its founder, Mary Kay Ash and was thoroughly impressed by the ethics and value system at the heart of her business, so joining the Company, for me, was a dream come true.
The UK operation has been open for 15 years but the US Corporation was originally established in Texas in 1963, a time when women were to be seen and not heard. When she founded her company, Mary Kay Ash set out to enrich women’s lives, by offering quality products to consumers, financial opportunities to the independent sales force and fulfilling careers to the employees, and this continues to this day.
The best thing about direct selling today is that it is still open to everyone. For those with modest financial resources and who are prepared to work hard in a professional and ethical way, the opportunities for financial reward and self fulfilment remain unrivalled.
