LegalShield: DSA does not enforce its code of ethics
LegalShield has leveled a series of scathing criticisms at the Direct Selling Association and its member companies.
A press-release published on LegalShield’s website on March 2nd cites “concerns about the lack of enforcement of the DSA’s Code of Ethics for its members” as the primary reason LegalShield has revoked its DSA membership.
As an example, the FTC filed lawsuits against Vemma Nutrition Company, a DSA member, and other companies, such as Fortune Hi-Tech Marketing. The DSA failed to enforce its own Code of Ethics against either company.
Vemma was sued by the FTC mid last year, with the regulator accusing it of being a $200 million dollar pyramid scheme.
Fortune Hi-Tech Marketing was shut down by the FTC in 2013, again for being a pyramid scheme.
Another point of contention between LegalShield and the DSA is the recent admittance of Nerium, who LegalShield are involved in active litigation against.
Furthermore, the DSA admitted to membership Nerium International.
LegalShield’s lawsuit against Nerium centers around ‘claims of cross-recruiting and infringement of intellectual property and trade secrets‘.
LegalShield feels the DSA does not stand up for or strictly enforce its Code of Ethics with these companies, therefore weakening the direct selling industry as a whole.
BehindMLM reviewed Nerium back in April, 2014 and found that, not unlike Vemma, much emphasis was placed on affiliate autoship recruitment.
LegalShield differentiate themselves from the affiliate autoship recruitment model, claiming
(LegalShield) sales associates do not sell physical products, but rather sell professional legal and identity monitoring/restoration services to retail customers.
Associates are compensated for each membership they sell. Additionally, associates do not receive compensation for recruiting new sales associates.
In observing Prepaid Legal’s nam- change to LegalShield back in 2011, I noted LegalShield do not provide a copy of their compensation plan on their website. As such there’s no formal LegalShield review on BehindMLM.
I re-checked LegalShield’s website earlier today to see if the company had corrected this red flag over the past four years, only to see they still do not provide this crucial information to the general public.
Visitors to the LegalShield website attempting to conduct independent due diligence into the company are presented with a contact form, via which
you’ll be contacted by an independent LegalShield associate in your area.
They can answer your questions and invite you to an upcoming event where you can learn even more about this great opportunity.
Despite the lack of compensation disclosure, LegalShield maintain they are
clearly separated from some of the most troublesome issues with the direct selling industry: inventory-loading, including auto-ship of product to be compensated; paying for recruitment versus product sales; and sales only to distributors (few or no retail customers).
Currently the company has more than 30,000 active sales associates and more than 1.5 million retail members.
Citing a need to “protect the integrity of the (MLM) industry and those who operate in direct selling”, effective immediately LegalShield is no longer a member of the DSA.
“Direct selling has helped countless individuals start their own successful businesses and has helped many important products come to market,” Jeff Bell, CEO, LegalShield said.
“We believe in the industry and will gladly rejoin the DSA once these issues are addressed.”
As at the time of publication, the DSA have yet to respond to LegalShield’s announcement.