Many people become concerned when they are approached with the concept of “Network Marketing” or “Multi-Level Marketing”. This is primarily as a result of certain illegal schemes that have led to financial loss on the side of the consumer. 

These schemes, known as pyramids or chain-letters, typically involve people recruiting others into a system whereby a monthly contribution is paid and distributed, after deduction of an administration fee, to sponsors higher up in the pyramid or further down the chain. No product, or service, of value is offered and often a large upfront investment is required to participate is such schemes.  

The real problem with these systems is that those who join early enough make huge amounts of money at the expense of those who were unfortunate enough to join at a later stage. The ethics of such systems have been questioned by the Consumer Affairs Committee and these activities were declared to be illegal on 14th April 1999. 

Network Marketing on the other hand is a truly legitimate way of doing business, offering consumers the opportunity to share in the revenue of the company. Cost savings from what would otherwise be expensive marketing and advertising campaigns are passed on to the members of these companies.  

Endorsed by the Direct Selling Association of South Africa, Network Marketing can easily be distinguished from a pyramid system by the mere fact that a true product or service is offered at a reasonable price to the consumer.

The World Federation of Direct Selling Associations is a worldwide body established for the protection of consumers and members of the direct selling industry. In South Africa, the WFDSA is represented by the local Direct Selling Association which was established in 1972. The DSA obliges members to observe the guidelines of the Direct Selling Code of Conduct which was launched in December 1995. The code, which was developed in conjunction with the Consumer Affairs Committee, is now administered by an Independent Code Administrator.