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.
Pot calling the kettle black, it seems.
But then, DSA has been about preserving the status quo, instead of moving the industry forward. DSA has already been a lobbying group, not a leadership group as some advocates claim it is.
MLM attorney kevin thompson’s take on legal shield exiting the DSA:
this is the DSA’s take on cross recruiting or proselyting:
the DSA asks MLM companies to resolve the fights over cross recruiting by dialogue, mediation or as a final resort- litigation.
in light of the DSA’s stand, legal shield going into a pout over DSA’s acceptance of nerium international as a member, does seem like an over reaction.
but, legalshield is right to complain about vemma, and the DSA’s inability to enforce its ethics code on its members.
dsa.org/consumerprotection/proselyting
Perhaps the reason why DSA never called out the pyramid schemes is you can’t really tell those apart from some of the so-called “legitimate” MLMs… without them revealing more they want shown to the public.
KT had previously helped draft a bill in a Tennessee’s legislature about pretty simple and responsible disclosure. That bill never left committee, killed by lobbyists who claimed even minimal disclosure is “undue burden” on the DSA member companies.
DSA also has a problem that it refused to acknowledge that “product-based pyramid schemes” is virtually inseparable from MLM without deeper disclosure of corporate stats, and its spokes-attorneys (such as JB) have followed the rhetoric.
Let’s be blunt: the only thing separating a MLM from a product-based pyramid scheme is the MOTIVATION of an affiliate’s purchase of products, and motivation can only be inferred, thus huge gray area, esp. when MLM companies claimed they CANNOT track sales made by affiliates (even when most MLMs require referral codes to order direct) and thus have NO sales data (Herbalife has no such data to refute Ackman, YEARS after the allegation, what are they afraid of that they will find?) to prove sales are indeed to customers (and that 70% rule are being enforced).
When affiliates are basically incentivised to lie (tell the truth and lose commission or lie and keep the commission and bonus) there is no truth in the system. Garbage in, garbage out.
Legal-shield may or may not be legal enough, but it’s tired of being associated with some limp-**** lobbyist organization primarily busy to maintain status quo for the big boys (Herbalife, Amway, etc.) than to speak up for the little guys or even the affiliates.
yes the DSA has very vocally supported herbalife, because they are sure that the herbalife model will pass the MLM legal test. in a press release in oct,2015, this is how the DSA referred to critics of herbalife:
the DSA has reserved its opinion on vemma, and is waiting for the case to make its way through the courts, this is because [IMO] the question of personal autoship is hanging in the air. in its oct 2015 letter, this is how the DSA indirectly referred to the vemma litigation:
dsa.org/news/individual-press-release/letter-from-dsa-president-joseph-n.-mariano-to-direct-selling-caucus
as far as legal shield is concerned, i don’t think the DSA will support its stance, that the DSA has wrongly included nerium in its member ranks, as the DSA does not ‘prohibit’ proselyting.
i agree with KT when he writes:
i mean, legal shield claims to provide legal services to customers, but cant put out a technically and legally correct press release on the important subject of exiting the DSA?
since they are so worried about ethics all of a sudden, they’ll be giving the boot to tabarsi and the like that are associates to them?
ICCA indeed does not lobby or profit. The fact that they publish opinions on Seeking Alpha is irrelevant to both. The common public is easily fooled with propaganda. Accredited investors have more at stake and does far better due diligence than your average MLMseeker.
For DSA to stoop so low when it and its members spent far more money on lobbying and campaign contributions…
Searching online should tell you that DSA has at least one PAC contributing 50K to 2012 campaign.
Herbalife outspent Ackman 8 to 1 in 2012 on lobbying. It’s believe to be well over 2 million by 2014.
theverge.com/2014/4/8/5590550/alleged-pyramid-schemes-lobbying-ftc
well, in that case fitzpatrick and his ICCA have been rejected by accredited investors roundly and soundly, because inspite of all the negative campaigning against herbalife on seeking alpha, the stock has held up.
so, now we know that the DSA don’t like ICCA, and neither do accredited investors who flock to hoity toity investment portals like seeking alpha.
lobbying is legal in the US.
who cares who lobbied more.
DSA accused ICCA for “influencing investors” without spending a dime.
Yet DSA and its member companies spent MILLIONS influencing politicians via lobbying.
Thus the irony.
Personally I think Legal Shield woke up and realized using a DSA membership as a shield, a sham, a cover story, was not going to work and would have the opposite effect in action, i.e. expose them.
The prepaid legal services concept is a good concept but it has not after over 40 years been ironed out. Consistency is a huge issue as well as is customer service.
Consider the price point. $20 a month for legal services? Not very much is really covered. No publication of income or other numbers?
C’mon would you buy a business without getting this vital information and vetting it? There is a lot lurking beneath the surface here. Ask the tough questions first.
Personally I love the new Legalshield philosophy. Call it whining or whatever, If people love the company they will join.
Whether you publish what you pay or not, it’s your business.. Don’t like it, don’t join. It’s called freedom of choice.
I was able to get all my answers before joining this company. So far, they do exactly as promised, and much more.
That’s more than the published numbers I’ve joined over the pass 40 years.
Thanks Legalshield.. Stick to your guns and keep changing the lives of those that believe and support your cause. Awesome product for a troublesome time.