By Peter Marinello

For over a century, American businesses have embraced the belief that industries should be accountable for maintaining their own ethical standards. This principle is especially ingrained in the direct selling channel, where consumer trust and entrepreneurial opportunity have long gone hand in hand.

Since the 1970s, the Direct Selling Association (DSA) has upheld this commitment through a comprehensive Code of Ethics, overseen by an independent administrator, which governs everything from marketing practices to income disclosures.

Even before the rise of social media and digital advertising transformed the marketplace, DSA member companies recognized that trust is not imposed by regulation—it’s cultivated through consistent, principled behavior. Strengthening trust in the direct selling channel requires companies and their independent salesforce members to uphold ethical, transparent, and substantiated marketing practices.

Central to this effort is BBB National Programs’ Direct Selling Self-Regulatory Council (DSSRC), an independent oversight program created in 2019 in partnership with DSA. DSSRC offers a robust and technologically advanced self-regulatory model that builds on the channel’s existing business ethics foundation. Leveraging modern internet-wide monitoring tools, DSSRC reviews online direct-selling promotional content to identify potentially misleading product and income claims and engages with companies to resolve issues quickly before they escalate.

In an era where digital misinformation travels at lightning speed, the channel’s continued support for independent, proactive self-regulation is not only prudent—it is essential to preserving trust and credibility.

This article explores the value of industry-led self-regulation as a tool for promoting business accountability, protecting consumers, and strengthening public trust. In the direct selling sector, DSSRC exemplifies this commitment, working independently, but alongside companies, trade associations, and compliance professionals to up-hold ethical standards and proactively address emerging challenges. By complementing government oversight, self-regulatory initiatives like DSSRC demonstrate how independent monitoring and accountability can support sustainable business practices to reinforce confidence in the industry over the long term.

Understanding Industry Self-Regulation

At BBB National Programs, industry self-regulation refers to a structured, voluntary process in which industries adopt and adhere to standards of conduct that promote responsible business practices, protect consumers, and address potentially deceptive or misleading behavior—often before regulatory action becomes necessary.

Effective self-regulation is rooted in independent oversight, transparent procedures, and a credible commitment to accountability. It empowers industries to lead in shaping ethical norms while building a culture of compliance.

Self-regulation initially emerged in the US as a proactive response to consumer protection challenges. In 1971, the National Advertising Division (NAD) was established by leaders in the advertising industry to set a new benchmark for independent review of truth-in-advertising claims. Administered by BBB National Programs, NAD has long served as a reliable and efficient forum for resolving advertising disputes and upholding standards of truth and accuracy—offering an alternative to the time and expense associated with litigation.

It is important to recognize that self-regulation is not a replacement for government enforcement. Rather, it acts as a complementary safeguard, offering a proactive approach that allows industries to identify and correct problematic practices early. Regulatory agencies such as the FTC have recognized the value of credible independent self-regulation, often referring matters to self-regulatory programs or factoring voluntary compliance into their enforcement decisions.

Self-regulation delivers substantial benefits to businesses, consumers, and regulators alike.

• It promotes consumer confidence by signaling that companies are committed to ethical, transparent, and credible business practices. This assurance is particularly critical in industries such as direct selling, where independent salesforce members are on the front lines of customer engagement.
• For government stakeholders, self-regulation can reduce the burden on regulatory agencies by independently resolving routine or lower risk matters.
• Self-regulation can serve as an early-warning system for regulators, flagging and addressing emerging issues before they become widespread.
• It provides flexible, real-time guidance informed by industry expertise, ensuring that compliance expectations keep pace with innovation and evolving business practices.

Ultimately, industry self-regulation—when done right—bridges the gap between the industry stakeholders and public accountability, reinforcing ethical standards that benefit the marketplace as a whole. By allowing businesses to reconcile misleading or unsubstantiated claims early, advertising self-regulation programs help prevent consumer harm, level the playing field for reputable business to engage with consumers and support the broader public interest.

The Direct Selling Industry: Scale, Reach, and Challenges

Direct selling is a global method of marketing and retailing goods and services that takes place outside of a fixed retail location. It typically involves independent salesforce members—often referred to as distributors, consultants, or ambassadors —who engage in person-to-person sales, whether through in-home demonstrations, online platforms, or social networks. Beyond selling products, direct selling offers individuals the opportunity to build a business with low entry barriers, flexible hours, and the potential for supplemental income.

The industry operates at significant scale. According to the World Federation of Direct Selling Associations, the global direct selling market surpassed $167 billion in sales in recent years, with more than 100 million independent sellers participating worldwide. In the US alone, DSA reports that tens of millions of individuals are engaged in the channel.

DSSRC’s Oversight Role

The creation of DSSRC in 2019 was driven by the direct selling channel’s recognition of the need and desire to demonstrate continued commitment to ethical conduct and to modernize business compliance practices for companies across and outside of DSA membership. Rooted in the belief that integrity and responsible conduct drive sustainable growth, DSA and its member companies recognized the importance of enhancing consumer and regulatory trust through transparent, responsible business and marketing practices.

DSSRC was established as a proactive initiative to reinforce the industry’s values expressed in the DSA Code of Ethics and ensure that direct sellers’ product and income claims align with high standards of integrity and accountability— reinforcing the central role that trust and transparency play in the direct selling channel’s long-term success.

To create concrete impact, DSA partnered with BBB National Programs to create DSSRC as an independently administered self-regulatory program. Serving as an impartial monitor of the marketplace and independent of DSA, DSSRC reviews income and product claims made by companies and their independent salesforce members, addresses complaints, and refers matters to regulators when appropriate. This initiative provides a transparent and effective mechanism for accountability.

Pillars of Effective Self-Regulation

For self-regulation to be a meaningful force in promoting trust and integrity in the direct selling channel, it must be built on four foundational pillars: credibility, transparency, accountability, and an objective standard of review.

Credibility begins with independence. To be most effective, a self-regulatory program should be administered by a third party that is free from industry influence, ensuring that decisions are impartial and grounded in established principles rather than business interests. This independence lends weight to its findings and garners respect from both industry participants and regulators.

Transparency is often the most challenging and important component in establishing a credible self-regulatory framework. Processes must be clearly defined, publicly accessible, and include the publication of decisions or outcomes to demonstrate how standards are applied. This openness not only builds confidence among stakeholders but also serves as a guiding framework for industry-wide compliance. DSSRC maintains program transparency through publicly available case decisions, annual reports that highlight the basis for DSSRC’s findings and the companies’ responses and the publication of industry guidance.

Accountability ensures that businesses are held responsible for their conduct. A self-regulatory program must have effective mechanisms to address non-compliance and, when necessary, escalate unresolved matters to government agencies. Accountability is achieved by DSSRC through a structured referral system: when companies fail to respond, refuse to make the recommended changes, or cannot be located, DSSRC refers these matters to the FTC or the appropriate state attorney general.

Finally, an objective standard of review requires that all marketing claims, particularly those concerning income opportunities and product efficacy, are communicated truthfully and accurately and are substantiated by reliable evidence.

As Drs. Linda and O.C. Ferrell of Auburn University outline in their article featured in this journal, self-regulation allows industries to proactively establish standards, build public trust, and maintain credibility without relying solely on external enforcement. This principle is demonstrated across a range of sectors.

• The Financial Industry Regulatory Authority (FINRA) plays a vital role in safeguarding market integrity by enforcing ethical rules among broker-dealers and educating investors.
• In the child-directed food marketing industry, BBB National Programs’ Children’s Food and Beverage Advertising Initiative (CFBAI) ensures that its participants only advertise foods to children that meet strict nutrition criteria and provides companies with a unique opportunity to regularly collaborate and engage with other like-minded industry leaders.
• The Distilled Spirits Council of the U.S. (DISCUS) has implemented a rigorous code that governs advertising and marketing across the alcohol industry, setting standards that often exceed legal requirements.

Through these efforts, businesses demonstrate that self-regulation is not only a tool for compliance but also a commitment to ethical leadership and public accountability.

DSSRC similarly exemplifies these principles through a rigorous and impartial process. DSSRC proactively monitors the marketplace, identifying potentially problematic claims across digital platforms, including social media and independent salesforce communications. These findings trigger formal inquiries in which DSSRC reviews the claim in the context of the advertising, engages with the company, and issues a public case decision with recommendations for corrective action, when necessary.

Since its inception, DSSRC has identified over one million pieces of online content across various platforms related to direct selling companies and their independent salesforce members. DSSRC inquiries have resulted in the removal or substantial revision of more than 4,000 product and earnings claims disseminated by almost 500 different direct selling companies, significantly reducing the presence of misleading or unsubstantiated information in the marketplace.

A recent study conducted by Dr. Sandy Jap of the Goizueta Business School at Emory University examining the effectiveness of DSSRC found that the self-regulation program provides substantial benefits to DSA-member companies. An article highlighting Dr. Jap’s findings is also featured in this journal. Compared to non-member organizations, DSA members exhibit stronger adherence to responsible marketing practices. Dr. Sandy Jap’s independent analysis of DSSRC case data shows that DSA members make fewer product and income claims, respond to compliance concerns more promptly, and are less likely to require additional enforcement to resolve violations.

The study also revealed that DSA members resolve inquiries more efficiently and show higher levels of cooperation with DSSRC’s final decisions. Moreover, DSA members are significantly more proactive in modifying or removing problematic claims and addressing compliance issues, distinguishing them from non-DSA member companies.

Credible self-regulation promotes a level playing field by holding companies to consistent standards, discouraging bad actors, and reinforcing the integrity of the broader industry. For responsible businesses, self-regulation is not a shield against external scrutiny—it’s a strategic commitment to long-term sustainability, transparency, and public confidence.

Building a Foundation for Responsible Business Practices

Sustaining consumer trust in the direct selling channel requires more than reactive enforcement—it demands a long-term commitment to transparency, ethics, and responsible business practices. Since 2019, DSSRC has played a pivotal role in helping the channel establish and uphold these principles. By working collaboratively with companies and offering guidance grounded in legal and regulatory expectations, DSSRC has helped shift the channel toward a more proactive and preventative compliance culture.

A key component of this shift has been DSSRC’s focus on education and outreach. Through webinars, guidance, one-on-one consultations, and published case decisions, DSSRC provides companies and their independent salesforces with practical tools to identify and avoid problematic claims.

A cornerstone of this effort has been the development of practical compliance guidance for direct selling companies and their salesforce. DSSRC collaborated with industry stakeholders to produce the Guidance on Earnings Claims in the Direct Selling Industry and the Guidance on Income Disclosure Statements in the Direct Selling Industry. These resources serve as clear, objective frameworks for ensuring that income-related representations are presented in a way that avoids ambiguous or unsupported projections of expected income for prospective salesforce members interested in the direct selling business opportunity.

Through company education, DSSRC has also contributed to the decline of outdated and potentially misleading terms, such as “financial freedom,” “unlimited income,” and “career-level income,” which were once common in the channel. Today, companies are more mindful of the language used in promotional materials, leading to improved claim substantiation and enhanced consumer protection, building a stronger foundation for ethical growth across the channel.

As the direct selling channel continues to evolve, so must the standards that govern it. Emerging challenges from digital marketing, social media, influencer promotion, and international expansion require adaptive oversight. DSSRC has expanded its monitoring scope to include influencer content, global claims, and even AI-generated promotional materials.

By embracing new technologies and staying ahead of marketplace trends, DSSRC ensures that self-regulation remains relevant, effective, and responsive—providing timely guidance that helps companies navigate complexity while upholding consumer trust and ethical standards in a rapidly shifting environment.

As policymakers consider the future of consumer protection in the direct selling channel, several core principles of effective self-regulation should be reinforced.

1. Self-regulation is most effective when it is truly independent and enforceable, with clear standards and consequences for non-compliance.
2. Ongoing marketplace monitoring—such as that conducted by DSSRC—helps deter misconduct early, preventing consumer harm before it escalates.
3. Collaboration between self-regulatory bodies and government agencies strengthens enforcement efforts, enabling a more efficient and responsive system of consumer protection.
4. Education is essential; empowering companies and their salesforce with clear guidance fosters a culture of proactive compliance.

Conclusion

Robust, independent self-regulation is a powerful tool for reinforcing trust, credibility, and long-term success—particularly in dynamic distribution channels like direct selling. By taking ownership of high standards and ethical business practices, direct selling companies can demonstrate accountability, protect consumers, and elevate the reputation of the entire channel.

The work of DSSRC exemplifies how industry-led oversight—rooted in transparency, education, and proactive monitoring—can effectively reduce the need for reactive enforcement and align business practices with public expectations. As direct selling continues to evolve, sustained collaboration among industry leaders, regulators, and consumer advocates will be essential to strengthening marketplace trust.

Dr. Sandy Jap

The direct selling channel seems to be a favored target for Federal Trade Commission (FTC) scrutiny. In 2019, the Direct Selling Self-Regulatory Council (DSSRC) was established by the Direct Selling Association (DSA) in partnership with the BBB National Programs (BBBNP). The mission of the DSSRC is to enhance consumer and regulatory confidence in the advertising and marketing practices of the direct selling channel through independent, third-party review of claims disseminated by or on behalf of direct selling companies. Since its founding in 2019, the job of the DSSRC has been to educate and encourage direct selling companies to follow and comply with ethical sales and advertising practices.

Has this self-regulation effort in the direct selling channel been effective? Industry self-regulation is an important, yet under-studied phenomenon in business of which we know little. And whether self-regulatory organizations are truly successful at curbing marketing misbehavior is an open question that I seek to answer. To this end, we conducted an evaluation of the effectiveness of the DSSRC’s efforts and case outcomes since its inception in 2019 through February 2024. This analysis was based on their internal reports as well as those represented in the BBB and DSSRC database. Here is the evidence, by the numbers. For the full report, please click here.

Self-monitoring reduces inappropriate marketing practices. First and foremost, there is substantial support for the DSSRC’s value in promoting self-regulation and ethical sales and marketing practices in the direct selling channel. Over the five-year period, the DSSRC accomplished the following:

• The DSSRC addressed more than 3,600 product and income earning claims involving over 236 different direct selling companies. These inquiries involved an almost identical number of DSA member companies and non-DSA member companies, which might suggest a lack of bias towards DSA members in program administration and self-regulatory efforts.
• The DSSRC brought about a wide range of claim responses from direct selling companies ranging from product and income claim removal and modification, additional disclosures or substantiation to social media posts, changes in company policies, increased monitoring and education, and consultant actions such as the removal/modification of misleading or false claims or termination/suspension.
• DSSRC inquiries have resulted in over 400 instances of expeditious resolutions, formal administrative closures, additional education, and dialogue, as well as 25 referrals to the FTC.

This leads to the conclusion that the DSSRC’s self-regulation efforts represented a substantial workload that did not land on the FTC’s desk, require an intervention by a state attorney general office or persist unaddressed.

DSA membership matters. DSA members showed clear evidence of better and more compliance with ethical marketing practices than non-DSA members. While the full report details a substantial number of statistically significant differences between the behaviors, claims and investigative outcomes of inquiries brought against DSA member companies and non-DSA member companies, I highlight a few here:

1) DSA member companies (compared to non-DSA member companies) have fewer product and earning inquiries than non-members. Moreover, their DSA member company consultants are more responsive at removing and modifying problematic product and income earning claims.

2) DSA member companies also average fewer problematic product and income earning inquiries than non-member direct selling companies, and when the problematic inquiries arise, they are removed or resolved significantly faster than the problematic inquiries of non-member companies.

Specifically, DSA members average 3.4 product inquiries versus 7.7 for non-DSA members and will remove 87% of those problematic product inquiries versus 69% for non-DSA members. Additionally, DSA members average 6.4 earning inquiries versus 7.4 for non-DSA members and will remove 81% of those problematic earning inquiries versus 67% for non-DSA members.

3) DSA member companies are less likely to require actions to remedy non-compliance and have a greater number of expeditiously resolved inquiries.

4) DSA direct selling companies demonstrate greater compliance with DSSRC final decisions than non-member direct selling companies.

This suggests that DSA membership is very meaningful in terms of encouraging appropriate sales and marketing practices among direct selling companies. This is likely because DSA members adhere to a written Code of Ethics which established industry standards for consumer protection, receive access to additional educational materials, get updates on the “rules of the road,” and the opportunity to engage in and acclimate to supplementary regulatory and compliance dialogue than non-DSA member companies.

Is self-regulation working in the direct selling channel? Absolutely! I find substantial support for the DSSRC’s value in promoting self-regulation and ethical sales and marketing practices in the direct selling channel. Through February 2024, the DSSRC has accomplished the following:

• The DSSRC has addressed more than 3,600 product and income earning claims in 450 inquiries involving over 236 different direct selling companies. These 450 inquiries involved almost an identical number of DSA member companies and non-DSA member companies.
• It has brought about a wide range of claim responses ranging from removal and modification, additional disclosures or substantiation to social media posts, changes in company policies, increased monitoring and education and consultant actions such as the removal/modification of false claims or termination/suspension.
• The DSSRC’s investigations have resulted in over 400 instances of expeditious resolutions or administrative closures, additional education, and dialogue, as well as 25 referrals to the Federal Trade Commission (FTC). An administrative closure means that the direct selling company has made a bona-fide, good faith effort to address DSSRC’s concerns (i.e., by removing the claims at issue or showing that they have attempted to contact the individual responsible for the claims to have the claims removed or significantly modified).

How can the direct selling channel continue to build trust? The research highlights potential next steps in self-regulation of the direct selling channel. Along with publishing this report in its communications and on its website, the DSSRC and the direct selling channel should consider the following:

1) Pool this data report with other findings from the academic self-regulation task force and promote a direct selling white paper that assesses self-regulation efforts since the DSSRC was established.

It is critically important that the DSA and the DSSRC continue to publicize and make available aggregate data on the number of cases, companies, and inquiries that are regularly investigated through its self-monitoring efforts. This has been a constant source of criticism from both the FTC and groups such as Truth in Advertising (TINA) at annual DSA compliance and legal events. These statistics should be regularly shared through social media and prominently displayed on the DSSRC and DSA websites.

2) Standardize reporting to the DSSRC. The DSA’s Ethics and Self-Regulation Committee and General Counsel Committee should standardize internal reporting activities to the DSSRC. The goal is annual reporting of aggregate measures of their self-policing activities and enforcement efforts over time.

3) The DSSRC should collect anonymized aggregate data from compliance officers at direct selling companies on the nature, and effectiveness of their company and consultant education efforts.

4) A survey of DSA-member company compliance officers should be conducted to:

a) Measure and validate the perceived value of the DSSRC.

b) Identify additional support needed from the DSSRC in self-regulation efforts and education.

DSA members should continue to work together to learn best practices from each other regarding policy compliance, as well as shaping and developing corporate policies and monitoring encouraging salesforce compliance. Such roundtable groups have been shown to be particularly effective in a wide range of industries and are a useful template that could be fruitfully applied to the direct selling channel as well.

5) The DSSRC would benefit from receiving regular feedback from DSA members on what type of policy information, education content, and other actions that would be of most use to direct selling companies and their employees.

6) Collect data on education efforts and outreach effectiveness. Such data should be regularly collected on how often its education content is being shared or presented to DSA member companies and with which employees. It is not enough for compliance officers and team members to be educated. Company leadership, marketing teams – all direct sales corporate employees – as well as independent sales consultants need to be regularly instructed and informed on appropriate marketing sales practices and product and income earning claims. Moving forward, information on the number, names, and positions of attendees at DSSRC education events should be retained. Efforts should also be made to provide education in a wide range of formats including synchronous and asynchronous media forms, at industry events, in blog forms, and in podcasts.

Importantly, the value of self-regulation is not solely evidenced by casework, but by education regarding appropriate sales and advertising practices, ongoing dialogue with direct selling companies, and program socialization of industry commitment to meaningful and effective self-regulation. Establishing the DSSRC is not enough. Continuing this commitment and building upon it as evidenced by DSA members working together to build consumer and FTC trust, disseminating the quantitative evidence of these efforts, and ongoing education, is the path forward to building and sustaining trust in the direct selling channel.

By Dr. OC Ferrell and Dr. Linda Ferrell

Industry self-regulation exists when members of an industry, trade association or sector of the economy establish and monitor adherence to legal, ethical and/or other standards (best practices) to reflect effective consumer protection, ethical industry performance and meet public policy requirements. Self-regulation provides a mechanism to respond to legal, regulatory and ethical issues that provide fair competition and enhance the reputation of an industry. Compliance with these standards is not just for industry trade association members, but all participants in the industry or channel. Self-regulation, using third party oversight, facilitates addressing non-compliance of the entire industry by working with government agencies such as the Federal Trade Commission (FTC) (Soft Law Summit: Activating Industry Self-Regulation, 2023). This research provides an overview of the objectives of self-regulation and reviews the activities and components of leading self-regulatory programs to provide a template for evaluating the Direct Selling Self-Regulatory Council (DSSRC), which serves as an industry-wide self-regulation program for the direct selling channel.

Overview of Self-Regulation

There has been a general movement against government-imposed rules globally. The main focus of government deregulation is to promote economic efficiency, competition, and innovation in the business sector. While deregulation initially reduces costs and increases profits for business, critics often claim it can lead to unintended social costs. For example, deregulation in the energy sector has generally led to increased competition, innovation, and market openness, but its short-term effects on lowering electricity prices are inconsistent, and it can expose consumers to higher risks and reduce regulatory protections (Necoechea-Porras, López, & Salazar-Elena, 2021). Politicians, both left and right, globally, have embraced deregulation. The European Commission (EC) pledged to cut reporting requirements by at least 25%, and 35% for small and medium-sized firms. Vietnam is in the process of abolishing 25% of government agencies. In the United States (US), President Donald Trump issued an Executive Order to eliminate 10 regulations for every new regulation added (Economist, Feb 1, 2025. “The War on Red Tape (Rule Breakers)”.

Nowhere has there been a greater reduction in government regulation than in Argentina. The country has taken 800 steps to reduce regulation with more structural reforms to come. Certain imports into Argentina have seen a significant drop in prices as a result of the government’s efforts. These examples illustrate that self-regulation coupled with government deregulation can improve the efficiency of economic systems. Since taking office, Argentine President Javier Milei has issued roughly two deregulation reforms per day on average, including weekends (Vasquez, 2025). As government deregulation continues, industry self-regulation can shift some monitoring and oversight responsibilities to the private sector, including industry trade associations.

Regulation is even more problematic for the small businesses and independent contractors that typically drive market innovation because they often lack the resources to address complicated regulatory rules. Many small businesses say that dealing with regulation hinders growth and takes up too much of their time (Swanek, 2024). Small businesses and new firms are typically most impacted by inefficient regulation (Cordes, Dudley, and Washington, 2022). Additionally, regulation can reduce incentive to innovate. A study of mandatory financial disclosures in Europe found that requiring companies to publish detailed financial reports discourages innovation, particularly among smaller firms, by exposing proprietary information, which reduces their incentives to innovate (Breuer, Leuz, & Vanhaverbeke, 2025).

Complex regulations can stifle flexibility, making it harder for companies to adapt to changing market conditions, distribution methods, technology or consumer behavior. Additionally, rapid changes in technology can make some regulations obsolete. There is no doubt that resources used to monitor, report and comply can increase costs and prices to consumers. It is difficult to eliminate regulations that are obsolete and a cost to society, and the United States seems to fall behind many other developed countries in actively working to cut red tape and speed up regulatory processes (Cordes, Dudley, and Washington, 2022). In addition, regulation can limit consumer and business options and decrease competitiveness. On the other hand, government regulation, such as antitrust laws, are essential for maintaining a level playing field, promoting fair competition and ensuring markets remain competitive (Sokol & Zhou, 2024). Regulations also protect consumers from criminals who engage in fraud and exploitative practices. Some regulations are necessary to protect general public interests, including health and safety, environmental issues, unsafe products and workplace safety. Self-regulatory bodies do not have the authority to enforce laws, regulatory rules or legal actions to stop misconduct in most cases. Self-regulation programs, hand-in-hand with government regulation can work together to promote responsible business conduct.

Industry members committed to ethical and socially responsible conduct have the potential to provide more insights into the efficiencies of practical standards, more than those developed by governments. Government regulation is often developed to restrain a few rogue firms that have engaged in misconduct, but it can result in costly compliance with rules that impede the efficiency and effectiveness of the entire industry. Effective self-regulation with independent third-party oversight can help educate members of an industry about compliance and misconduct as well as educate participants on ethical conduct and best practices. Self-regulation tends to be more effective when outside groups, like industry organizations, independent auditors, nonprofit watchdogs, and government partners, are involved to provide oversight and support (Maman & Feldman, 2025). Firms that refuse to stop engaging in misconduct can be referred to government regulatory agencies such as the US Federal Trade Commission (FTC) to protect consumers as well as other industry participants. Self-regulation can fill gaps in areas where even the government is limited due to resource shortfalls and the need to focus on the most egregious of cases. This illustrates how self-regulation and government regulation can work together to assure responsible conduct. Effective self-regulation involves monitoring and addressing the conduct of all members of an industry.

The Case for Industry Self-Regulation

Self-regulation has many advantages over government regulation. First, it can educate the industry on standards to prevent and correct misconduct. Self-regulation offers flexibility and allows organizations to respond quickly to evolving practices, including new technology (Platt Majoras, 2025). Gaining cooperation with government agencies and other stakeholders provides a balance of responsibilities and most effectively addresses challenges. All stakeholders gain from the resources an industry invests in self-regulation. The industry benefits through proactive risk management and enhancing its reputation with key stakeholders and government regulators can use their limited resources more effectively.

Self-regulation can take place within individual companies, across entire industries, or within the broader business community as part of the economic system (Hemphill, 1992). Trade association self-regulatory initiatives provide guidance beyond legal requirements. Companies with high ethical standards go beyond legal compliance. These ethical standards and expectations create a buffer zone to prevent employees or representatives from engaging in misconduct. All firms have mandated requirements from laws and regulations. Business ethics programs and industry standards go beyond just compliance with the law. In business, states often have conflicting regulations and specific laws for an industry. Therefore, while these laws and regulations must be obeyed, holding firms to a higher standard can be helpful in avoiding legal issues.

Industry participants develop core practices that account for the legal dimensions while also incorporating self-regulatory standards and addressing the concerns of stakeholders. For example, the BBB National Programs (BBBNP) is an important self-regulatory body that provides directions for managing disputes, and the National Advertising Division (NAD) reviews advertising cases involved in disputes. Core practices in industry self-regulation programs evolve as they gain acceptance and reflect the expectations of key stakeholders. Core practices could also be considered norms that are behavioral expectations not legally required. The US government encourages industries and firms to establish proactive ethical standards that are core practices. Chapter 8 of the Federal Sentencing Guidelines for Organizations requires the board of directors to be responsible for ethics and compliance activities. If misconduct occurs, firms are given incentives, such as reduced penalties, if they can demonstrate an effective ethics and compliance program (United States Sentencing Commission, 2024).

Trade associations play a role in shaping industry-wide corporate social responsibility, especially in highly regulated and scrutinized sectors (Schaefer & Kerrigan, 2008). In addition to setting ethical expectations and advocating on behalf of members, trade associations may also establish voluntary standards or promote practices that go beyond the legal requirement. This includes engaging in philanthropic activities, giving back to communities and supporting employee development and retention through education, training and benefits. When an entire industry faces stronger outside pressure to act responsibly, its trade association is more likely to take an active role in addressing social and ethical concerns (Schaefer & Kerrigan, 2008).

The FTC recognizes the importance of self-regulation in an industry and encourages the adoption of self-regulatory practices (Rosch, 2007). If businesses focus on self-regulation, this allows the government to use its resources on significant competition issues and give best practices advice on issues where the government cannot intervene with its existing resources. The FTC does provide guidance on how businesses can develop effective self-regulatory programs. The FTC also recognizes that business has the necessary hands-on experience that enables it to address many issues more capably than a government agency. Since self-regulation is a quicker, more flexible and less adversarial means to establishing and enforcing standards, the benefits to society are significant. The FTC is very active in assisting and supporting industry self-regulation and establishing standards.

Better Business Bureau and BBB National Programs Leadership in Self-Regulation

One of the most visible and comprehensive industry-level, self-regulatory organization is the Better Business Bureau (BBB), founded in 1912. Through the International Association of BBBs (IABBB), there are more than 180 local offices in the United States, Canada and Mexico. Each bureau, through its offices, provides community oversight for ethical business, but there is limited enforcement of codes and rules. The bureau uses the mass media to warn businesses and consumers of the offending firms. If this firm is a member of the BBB, then membership can be revoked. These programs influence the future of government regulation in a firm’s industry and demonstrates its commitment to being accountable.

By contrast, BBB National Programs is an independent, nonprofit organization with a shared history, but not affiliated with, the International Association of Better Business Bureaus. BBB National Programs, is home to the independent, industry self-regulation programs that were a part of the Council of Better Business Bureaus since the 1970’s.

Industry standards and dispute resolution protect consumers and promote fair competition (BBB National Programs, 2022). These programs not only reduce the need to expand government regulation, but also help firms maintain an ethical interface with their stakeholders. BBB National Programs provides third-party oversight to companies and industries. BBB National Programs has helped many industries develop effective self-regulatory programs. This research overviews the BBB National Programs’ Direct Selling Self-Regulatory Council (DSSRC), focusing on product and earnings claims compared to other industry self-regulation programs.

An example of one of the oldest and most well-known national programs is the National Advertising Division (NAD). While the FTC is in charge of enforcing consumer protection in advertising laws that aim to prevent deception, many of the cases are handled by the NAD. While the NAD operates independently, it takes its cue from the FTC. The FTC could not monitor and enforce advertising deception without the resources of the NAD (Federal Trade Commission, 2009). One reason the FTC supports self-regulation is the number of complaints received each year. In 2024, the FTC received 6.5 million complaints from consumers (Consumer Sentinel Network Data Book, 2024). The most common complaints are related to credit bureaus and information furnishers, identity theft, imposter scams, online shopping and reviews, and banking. It is clear that self-regulation contributes to reducing the FTC involvement in the need for enforcement of laws. Self-regulation can prevent misconduct and gain efficient results with respect to questionable conduct.

Evaluating Self-Regulatory Programs

The FTC prioritizes key elements and characteristics of self-regulatory organizations. These include: the authority to create and enforce its own policies; governance-including independent boards, transparency and a defined process; conflict management to address conflicts of interest with transparent mechanisms for resolution; effective and transparent processes and procedures for oversight and regulating members of the industry; appropriately resourced, technically and advanced surveillance programs; adequately funded enforcement program that polices misconduct; regulatory database of information about outcomes that is accessible to stakeholders; market disruption procedures in case of capacity, continuity or computer failures that impact operations; innovation to stay ahead of the curve; and a dispute resolution process that employee find offers fair and transparent policies and procedures (Evens, 2014).

Each self-regulatory group was evaluated based upon: ethical leadership, independent oversight, clear standards and guidelines, scope and focus of accountability, transparency, education and training and continuous improvement (ongoing risk management). Appendix A provides an overview of each program using this template. The programs evaluated include: Financial Industry Regulatory Authority (FINRA), Distilled Spirits Council of the U.S. (DISCUS), Direct Selling Self-Regulatory Council (DSSRC), Children’s Food and Beverage Advertising Initiative (CFBAI), Children’s Advertising Review Unit (CARU), National Advertising Division (NAD), Online Behavioral Advertising (OBA) and Online Lenders Alliance (OLA). All of these programs focus on advertising, promotion and communication with key stakeholders.

A review of the DSSRC compared to other self-regulatory programs indicates that all of the components of the DSSRC program reflect BBB National Programs’ best practices and the characteristics of effective regulatory programs. With DSSRC managed by BBB National programs, it provides independent, non-profit oversight of the program. The key features of BBB National Programs are accountability, trust, impartial monitoring, enforcement and dispute resolution (Marinello, 2024).

By working with the DSSRC guidelines, direct selling companies demonstrate their commitment to ethical marketing practices, transparent disclosure of material information and the correct positioning of the direct selling opportunity (Marinello, 2024). The DSSRC is strengthening consumer trust and addressing potential misconduct issues before legal and/or regulatory intervention. This proactive approach not only prevents misconduct in the marketplace, often by non-DSA member firms, but also educates these firms about appropriate conduct in the marketplace. While the FTC and state legislation may develop unpredictable rules and regulations, the DSSRC can provide stability in developing and challenging regulations that can best be addressed by self-regulation.

References

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Appendix A
Self-Regulatory Program: Core Elements