Multilevel companies benefit Utah trade

Jon Taylor has launched a vicious attack on multilevel marketing companies, most recently in an op-ed piece in this paper that decries the inclusion of such companies on Gov. Jon Huntsman Jr.'s recent trade mission to China. Taylor uses fabrications and misinformation to malign a thriving industry that brings thousands of jobs to Utah.

At the core of his misrepresentations is Taylor's inaccurate assertion that 99 percent of direct sellers lose money from being involved in multilevel-compensation direct-selling companies. For the record, based on nearly 2,000 completed interviews with randomly selected direct salespeople representing the entire industry, the following are the facts:

1. Most direct sellers are involved in direct selling on a part-time basis. Some 50 percent work less than 10 hours per week and 40 percent work less than five hours. They do this for supplemental family income and join our companies with very modest goals, often to replace an old appliance, earn extra money for Christmas presents and the like.

2. However, about 7.5 percent of the almost 14 million U.S. direct sellers are career/full-time salespeople — many of whom earn $50,000 or more annually. They are earning a wonderful living without any significant capital investment.

3. A large portion of our salespeople sign up only so they can buy products they want at wholesale or discount prices. This is possible because of the low cost of becoming a salesperson.

4. The average annual gross income of a direct seller in our last survey was $14,680, and the median (50 percent earning above, 50 percent earning below the amount) gross income was $2,420 — very consistent with the modest goals of most direct sellers.

Utah-based direct-selling companies accompanied Huntsman on his recent trip because China is a very important market for our industry — just as it is for almost every U.S. industry. China is working to establish rules and regulations that will protect consumers from pyramid schemes and other scams — an effort the U.S. direct-selling industry fully supports.

The Direct Selling Association, to which all the companies mentioned in Taylor's op-ed piece belong, recommends potential sales representatives ask themselves two simple questions to distinguish a legitimate multilevel direct-sales firm from a pyramid scheme:

Do you risk financial loss by being involved in the company? If yes, be very careful — this is a red flag. Start-up fees should be reasonable, and the company should offer a buyback policy.