DTI issues rules on grant of seals to direct selling, MLM companies

MANILA, Philippines — The Department of Trade and Industry (DTI) has issued guidelines on the issuance of seals for legitimate direct selling and multi-level marketing (MLM) firms as part of efforts to promote consumer protection.

In a statement yesterday, the DTI said it issued Department Administrative Order (DAO) 21-09 or the Guidelines on the Grant of the DTI Seal of Legitimacy for Legitimate Direct Selling and MLM  to protect consumers against trade malpractices.

Under DAO 21-09, companies engaged in legitimate direct selling and MLM may be granted a seal by the agency to distinguish them from those with questionable practices.

A direct selling company distributes products through an independent sales person who sells to consumers on a commission basis.

MLM, meanwhile, refers to the distribution or supply of goods through independent agencies, contractors or distributors at different levels wherein such participants may recruit others and commissions, bonuses, refunds, discounts, dividends or other considerations may be given as a result of the sale of goods or recruitment of additional participants.

By issuing the Seal of Legitimacy, the DTI hopes to protect the public from becoming victims of companies that implement chain distribution plans or pyramiding scams that are prohibited under Article 53 of the Consumer Act of the Philippines.

The seal will be displayed in a conspicuous and visible place, as well in the company’s landing page on its website, where applicable, to be easily seen by the public.

Interested companies may file their applications for the seal with the agency’s  Consumer Policy and Advocacy Bureau.

To apply, companies have to submit the following: certificate of registration issued by the DTI or Securities and Exchange Commission or Cooperative Development Authority; business permit/license applied with the local government unit; General Information Sheet or list of officers or members including their Tax Identification Number; certificate of Bureau of Internal Revenue registration; and compensation and marketing plan.

Applications will be reviewed by an evaluation committee before being approved by the DTI Undersecretary for Consumer Protection Group.

To ensure compliance, companies granted the seal would be subject to periodic and random audits.

“Through the DTI Seal of Legitimacy, we hope to guide the public in choosing the direct selling and MLM companies they will engage with so they will not fall prey to pyramiding schemes masked as MLM,” Trade Undersecretary Ruth Castelo said.