Recently, the Federal Trade Commission (FTC) announced an enforcement of action was to be initiated by the FTC and several state attorneys general against Fortune Hi-Tech Marketing (FHTM). The action is related to the company being considered a pyramid scheme.
The Direct Selling Association (DSA), Southwestern Advantage’s trade association, was contacted numerous times to find out if FHTM was a member of the association. They were not.
The reason why is because, while the company had applied for membership, the application process is rigorous and specifically put in place to only accept legitimate direct selling companies as members. FHTM withdrew their application for membership in 2011. In addition to a review of the company and its business practices, the marketing and compensation plan is also reviewed.
Throughout the review process, any companies who are operating as pyramid schemes are discovered and their application is denied. DSA President, Joe Mariano, says “well over half of the companies that apply for membership in the Association withdraw their applications for a variety of reasons including failure to come into full compliance with the requirements of the DSA Code of Ethics.”
Neither the DSA nor its member companies endorse any corporate actions that are in violation to the established Code of Ethics or do not stand up to the standards of review. As well, member companies are regularly audited to ensure they are in compliance. Southwestern Advantage has continually been recognized by the DSA for their involvement in ethics training.
As of 2011 in the U.S., there were approximately 15.6 million direct sellers with retail sales of nearly $30 billion. Direct sellers choose to run their own business for the income they can generate, the quality products they can use and sell, the personal growth and the flexibility the business offers them. For each company operating in a shady fashion or through a pyramid scheme, there are hundreds of thousands of people in our communities running their own business in a legal, ethical manner.
As I sit here and reflect – yesterday, September 11, marked the 11th anniversary of the most devastating terrorist attack in U.S. history. It is the day four commercial aircraft were hijacked and used as weapons against unsuspecting civilians.
While the victims and their loved ones were changed forever, all Americans were united by tragedy and could not help but feel helpless and heartbroken. This act of terrorism brought a nation together – in mourning and in the unification of bringing those responsible to justice. This was an unintended consequence from the terrorist’s perspective. Though there were some other things I recall from 2001 that 9/11 brought about – one of them was an intended consequence the terrorists had. They created a wave of fear that washed over our country.
From the tree-lined neighborhoods of America’s suburbs to the farmland of the Midwest and everywhere else, a feeling of safety was taken away. Our confidence was shaken because we were sucker punched in our own backyard. People all the sudden trusted few others. Kids could not play outside. Terrorist alerts were issued on a daily basis like smog alerts. In this way, the terrorists won. They put fear and panic in our lives. They made us put up our guard. And who knows, we probably should have our guard up… just too bad it started to be against each other.
I know this firsthand because Southwestern Advantage had college students From America and other nations, all of various cultures who were running their own sales business that summer. This included students who were of Middle Eastern descent who ended up not completing their summer business that year. They were asked to cut their summer just short because of the fear of the unknown. What was unknown at the time was how people in these neighborhoods and communities would react. Some people who did not have a leash on their emotions or were stirred up enough to take inappropriate action could do something they might later regret. Who knows? Safety first, always safety first.
I think back to the weeks after 9/11 and how it affected everyone I know. It affected everyone I work with. It affected this great nation. It drew us close and it, at the same time, created a divide – one where everyone was a stranger and drew suspicious looks because of how they looked or what theydid for a summer business. The ramifications of how 9/11 changed us have not subsided. We still think the worst of people – especially someone who comes to our door. With social media now, we are able to spread our suspicions, fears and assumptions at break-neck speed. We can start a rumor that will end a young person’s dream faster than we can start our car. Oh, it happens. And it happens to the type of people we should be fighting for, not against – our young people who have the initiative to make something of their lives.
Yes, 9/11 was a devastating blow to our country, our economy, our confidence… and our sense of safety. Everyone’s a stranger now. The question is, how will you remember the victims? How will you remember the heroes? How will we treat others? And how will we continue to move forward? Let’s not forget what our country is all about. Live free, die free. But in the meantime, let’s be understanding and nice to each other. Take the time to get to know others so our freedoms stay protected – from commercial free speech to our rights to liberty and the pursuit of happiness.
Earlier this year, the Better Business Bureau of Middle Tennessee (BBB) published a report regarding trust, integrity and ethics in the marketplace. Included in this information were some interesting numbers and statistics.
Southwestern Advantage is a charter member of the BBB of Middle Tennessee, having become a member when they started in 1961. Southwestern is accredited as well. There are 13 Standards for Trust set up by the BBB in which all companies who are accredited must adhere to.
From January 1 – December 30, 2011 (data from the previous year), the BBB recorded the following:
- 2,760,179 consumer visited the BBB of Middle TN website
- 106,458 visited BBB’s national website for companies in Middle TN
- 241,318 times consumers asked for a list of accredited businesses
- Consumers read over 1.1 million Business Reviews of Middle TN companies
- BBB provided complaint assistance 10,082 times with a 86% resolution rate
Consumers often look to the Better Business Bureau as a means of information and recommendation about a particular company and their past business habits. The following Top 10 Lists are interesting, as they rank the top consumer inquiries and complaints. It’s important to note there is a distinct difference between inquiries and complaints. Inquiries are asking about a company, perhaps to make sure they have reputable business practices and complaints are made against the particular company for their business practices.
Industries with the most consumer inquiries:
- Roofing Contractors
- Insurance Companies
- Auto Dealers
- Heating & Air Conditioning
- Contractors – General
- Home Builders
- Auto Repair & Service
- Mortgage Brokers
- Searchers of Records
- Home Improvements
Industries with the most consumer complaints:
- Insurance Companies
- Auto Dealers
- Roofing Contractors
- Nurseries – Plants, Trees
- Auto – Manufacturers & Distributors
- Internet Selling Services
- Auto Repair & Services
- Audio-Visual Equipment – Dealers
- Searchers of Records
- Publishers – Book
As a volunteer mediator and arbitrator for the BBB, I have seen firsthand how the best companies operate and the worst. As a consumer, look to see what rating the BBB has assigned to the company based on a BBB assessment and review process. These accredited businesses have been recognized as upholding ethics and values in line with positive consumer experiences.
The Direct Selling Education Foundation (DSEF) had a recent blog I thought had some very good information about how to identify a pyramid scheme. Most people throw around the term “pyramid scheme” not knowing what one really is. They use it in a derogatory sense to describe network or multilevel marketing, business models they do not understand or sales-based businesses. It’s really a matter of not being educated about either the company or business model they are talking about or what a pyramid scheme really is.
The DSEF has provided a few tips to discern between the companies you can trust and the ones you can avoid. Here is a summary:
1. PRODUCTS COME FIRST. The way a pyramid sceme works, you are compensated for selling the business opportunity, not the product. People make money when people join, not when they sell. In a legitimate, ethical company, you make money when sales are taking place.
2. DON’T BELIEVE IT IF IT SOUNDS TOO GOOD. Establishing a business and making money do not happen overnight. You have to actually work at it.
3. IT DOESN’T JUST HAPPEN. Just like you would build any other business, you have to do the same in direct sales. You must build relationships and generate a customer base. I always tell the college and university students who participate in the Southwestern Advantage sumemr sales program (not a pyramid scheme, by the way…), “If you are not knocking on doors and showing the product… you are not making any money.”
4. IS THE COMPANY A MEMBER OF THE DIRECT SELLING ASSOCIATION (DSA)? The DSA has a strict Code of Ethics members follow and the association has a regular review of compliance for member companies. These companies follow best practices and work together as an industry to create a postive engagement between the independent wholesale buyer and the end retail consumer.
The fact is, there are lots of scams in any industry. Always protect yourself and check into a company if you have questions. But don’t label it unless you know what it is you are talking about.
The full DSEF blog can be read at: http://www.dsef.org/2012/06/18/is-the-company-a-scam-how-to-identify-a-pyramid-scheme/.
To learn what a pyramid scheme actually is, find it on the DSA site at: http://www.directselling411.com/for-sellers/who-can-help/pyramid-schemes/.
Something not heralded enough about door-to-door sales people is the fact that they are in the neighborhood. Too often it is the opposite.
The industry takes a negative hit because the solicitors are perceived as a nuisance or are “up to no good.” “Surely, if there is no fixed retail location, it must be a scam!” Bull. This has no bearing on legitimacy or not. While it may not be as common as in years past, it is still one of the noblest ways to earn a living. Hard work is a lost art. The fact is, the negative press is a very small sample of those going door-to-door. It is an infinitely small representation and unfortunate at that.
I will say the industry could do without the bad media exposure generated by the traveling magazine sales crews (actually, we could do without them period) and the unwanted attention put on it by the alarm sales companies. But… there are companies and individuals – and lots of them – who are making a difference in communities and with individuals.
I always train the first-year student dealers participating in the Southwestern Advantage sales program that sales is an opportunity. It is an opportunity for them, as the sales person, and for the family or individual they come into contact with who may have a need for the product they are selling. I have heard on numerous occasions how 20 minutes spent with the high school kid in the family’s home by a Southwestern Advantage dealer helped them decide to go to college. Now, that is how you impact others!
We often find ourselves in places we are led to and don’t know why. This happened in Timonium, MD. A door-to-door
Door-to-door salesman Chris Owen helped three children escape from a house fire in Timonium, MD
salesman rescued three children from a house fire. See a news story from CBS-WJZ here.
I, for one, am glad this man was in the neighborhood and was able to lend a hand to save those children. The door-to-door salesperson still has a place in society… and in this case, he has a place in the hearts of the parents of those children.
Working for a company that trains college students to run their own business selling an educational learning system to families door-to-door, I engage with communities on a frequent basis regarding their solicitation ordinances.
Most communities are receptive to the Southwestern Advantage student dealers – as long as they follow existing ordinances. If the ordinances are within reasonable means of not infringing on the First Amendment Right of Commercial Free Speech, this is certainly not a problem. The student dealers are allowed in many communities other solicitors may not be because of the excellent track record of the student dealers who were previously in the area.
Recently, the town of Riverlea, OH has taken a different approach. They are no longer requiring permits and background checks. Rather, they are asking residents to display a “No Soliciting” sign if they choose.
The reasoning behind this move was to prevent future lawsuits. A Federal Appeals Court in Cincinnati ruled just this past February that a restrictive time in Englewood, OH was a violation of both the First and Fourteenth Amendments. The city of Englewood said no sales could take place after 6 pm. They were sued by Ohio Citizens Group, a nonprofit anti-pollution group.
The attorney for the Ohio Citizens Group, Daniel T. Kobil, says this is something the homeowner is “perfectly capable of dealing with in a civil and polite way.”
Other cities have had to evaluate how they regulate solicitation in their own backyard, while making decisions on what is best for the community and still recognizing an individual’s right to Free Speech. It is a fine line.
I know the college students who will make Ohio their home for the summer of 2012 appreciate being there and meeting so many wonderful families. It would be a shame to deprive those students of such an experience and the families of Ohio the ability to welcome a student to their home if they have a need for educational products. Maybe some other towns will follow Riverlea’s example to open their community rather than shut it off.
With 244 years gone by, Britannica says good-bye to the print version of their encyclopedias.
At Southwestern Advantage, we have a great deal of respect for the company and their encyclopedias. After all, we know what it means to be successful selling books door-to-door. So it is with sadness we bid that part of their business model a fond farewell.
Britannica was the oldest continuously published encyclopedia in the English language. The set was first sold to families door-to-door in 1932. While Southwestern Advantage had a number of years over Britannica on the direct selling market, the lore of having a set of Encyclopedia Britannica on your bookshelf was a source of family pride. We know because we often sold our educational resources to the exact same customers. Families are tuned in to the educational needs and resources in the home. And they still are!
There’s some debate about what format families prefer the educational resources in their homes to be. With the Internet and Wikipedia, some people feel printed material is winding down in popularity. In fact Britannica cited this as a reason for their decision to shut down the printed edition of the popular encyclopedias.
While Southwestern Advantage has adapted to technology by incorporating a website, books and CD-ROMs into a learning system, the value of books to the home can not be understated. Do children curl up with their parents at night to read a bedtime story on the internet? I hope not. For the same reasons, children enjoy having something tangible to get their hands on to look at.
The true value of a book is in the results or entertainment you get from reading it. So long print-version of Encyclopedia Britannica! You will be missed.
When soliciting door-to-door – you have to have a two things: a sense of humor and an appreciation for irony.
According to the Fairlawn-Bath Patch, two door-to-door salesmen were selling steaks. When they knocked on the door of one of the homes in the area they were working, a little girl answered the door. When she opened it, a German Shepherd rushed out and promptly bit one of the solicitors on the calf.
The steak-sellers called the police to file a complaint only to be cited and given a summons because… wait for it… they did not have a permit to sell in the township.
To sum this up: Two men selling steaks door-to-door, one gets bitten in the leg by a big dog, they call the police to file a complaint and end up in trouble themselves… and just like the article points out – the road the home was on: Bittersweet Road. Irony.
Moral of this blog post: always do the right thing by getting a solicitation permit where required and watch out for big dogs! This is something we do at Southwestern Advantage. (The permit part, not the get bit by dogs part….)
Southwestern Advantage has consistently promoted the importance of doing things the right way when it comes to selling to families door-to-door. As one of Nashville’s oldest companies and the oldest direct selling company in the nation, our longevity is proof of our comittment to excellence in all areas. One of those areas is the continued safety of both the college students who sell our products and the families who purchase them in our homes. Because of this, I am disheartened to see stories like the one below, especially so close to my home and the headquarters of Southwestern Advantage.
A van crew with Texas plates was stopped in Maury County, Tennessee. WKRN, a Nashville-based ABC affiliate, caught up with the Maury County Sheriffs Office to find our more.
It turns out the five occupants of the van were selling magazines door-to-door and had a variety of arrest records ranging from theft and weapons to solicitation of a different kind – prostitution. Some had no form of identification. Currently, there is no solicitation permit required in Maury County. The business the van crew was selling magazines for has an “F” rating from the Better Business Bureau.
I hope these young people are able to turn their life around and focus on helping people rather than the activities their records show they have been involved in. As a homeowner, be safe by asking questions to know who the person at your door is, what company they are with and look for red flags to see if they are ligitimate or not. If you are ever uncomfortable, it is okay to tell them “no.” Also leep in mind, there are way many legitimate door-to-door salespeople than there are bad ones. You just don’t hear about all of the good ones because they are operating the way they should be.
DOOR-TO-DOOR SAFETY TIPS FROM SOUTHWESTERN ADVANTAGE!
In researching traveling sales crews, I often find a commonality with them: many of their paying customers don’t get the magazine subscription they ordered.
To me, that’s a problem. That is one of the many problems and is a contributing factor as to why rogue door-to-door sales companies tarnish the door-to-door direct selling business model.
In fact, like many others, a Sacramento, California homeowner was scammed out of $134. Fifteen months later, she has still not been made whole. The person who solicited the her spoke of having financial woes and how selling the subscriptions door-to-door helped feed her family. RED FLAG! Anytime someone uses this type of sales tactic to invoke an emotional response of apathy, there’s a good chance they are playing on one’s sympathies to collect more sales.
When attempting to contact the traveling sales crew company, Freedom Sales, she gets nowhere. This, by the way, is also a RED FLAG. These companies change names and numbers more than Lady Gaga changes outfits during a concert. In a news feature from CBS Sacramento, “Call Kurtis: Is My Door-to-Door Salesman Legit?“, it was pointed out this particular company had some sort of disclaimer that “refunds will no be issued.” More or less, this amounts to the company not really having a refund policy. I can tell you if they do not honor the three-day cooling off period, they are in violation of Federal law.
It’s also noted in that Freedom Sales has never been granted the required solicitation permit in Sacramento. This is a big deal, as it is also another frequent reason as to the tarnished reputation door-to-door has.
1) Be careful of door-to-door solicitors who have an emotional story attched to their sales talk.
2) Ask about the refund policy.
3) Ask to see a solicitation permit if required in your town (may not be)
Don’t be afraid to do business with a door-to-door solicitor. The majority are just trying to make an honest living. Southwestern Advantage has been helping college students run their own business in this way for well over a century. there are honest people and honest companies out there doing it the right way. Never let up your guard, but never give up hope, and hopefully you will not be let down.