The Direct Selling Association is a joke and here's why

YTB International, an online multi-level marketer masquerading as a legitimate travel agency, was sued by California's Attorney General back in August 2008, accused of being nothing more than a "gigantic pyramid scheme."

YTB settled the charges and agreed to pay a $1 million fine on top of huge changes in its business. In its latest SEC filings, YTB notes that there is "substantial doubt about the company's ability to continue as a going conern."

In September 2007, a year before the California Attorney General sued, YTB's application for membership into the Direct Selling Association was approved. The DSA describes its mission as "To protect, serve and promote the effectiveness of member companies and the independent business people they represent. To ensure that the marketing by member companies of products and/or the direct sales opportunity is conducted with the highest level of business ethics and service to consumers."

So the DSA would appear to have a pretty serious problem on its hands: A member that settled allegations that it was a massive pyramid scheme, surely a problem that doesn't mesh well with a commitment to "business ethics and service to consumers."

So how did DSA respond? Was YTB kicked out of the organization? Nope! Instead, the DSA issued a 497-word statement last month that says almost nothing.

"DSA prides itself in serving as a steward of consumer and distributor protection through its efforts to create and enforce acceptable business standards that often go beyond the requirements of the law," said Neil Offen, president and CEO of the Direct Selling Association, in the statement. "This situation is a clear indication that we must redouble our efforts to make sure our processes are sound and that our members not only understand the requirements of the Code of Ethics but that they are incorporating them into every aspect of their business operations."

But isn't the first step to redoubling your efforts kicking out the company that the California Attorney General said is "immensely profitable to a few individuals on top and a complete rip-off for most everyone else."

The message for consumers here is clear: The Direct Selling Association is a lobbying organization that pretends to be some kind of industry watchdog, and multi-level marketing operations of questionable merit use its imputed credibility to recruit new would-be entrepreneurs.

But if a company like YTB can be a member in good standing of the DSA, consumers would do well to be highly skeptical of any sales pitch that invokes this trade group.