On Friday, Avon released this press release notifying its customers and investors that it is quitting the Direct Selling Association. The initial press release is simple:
Avon has made the decision to withdraw from the U.S. DSA based on our belief that in the U.S. the DSA is not advocating effectively for Avon and our Representatives. We are committed to direct selling in the U.S. and markets around the world. Avon’s number one priority is supporting our 6 million Representatives worldwide. We succeed when they succeed.
And, maybe we now know the mystery as to why their conference call was cancelled a couple weeks ago. The call was supposed to opine on how great and legal the industry is. D’oh!
But, it’s the .pdf at the bottom of the press release that is worth reading. You can find it at the bottom of this link.
The letter is entitled “An Open Letter to Direct Selling Companies”, and it reads (my emphasis added):
If the suggestions put forth by Avon take place (namely limiting downlines), it would result in a collapse of models like Herbalife’s that rely on the “bonus to infinity” fallacy. Limited downlines would stunt Herbalife severely and would make for some great news to guys like John Tartol, who have been sucking off of the “infinity downline” teat for years.
This also comes right around the same time we’re seeing Herbalife’s e-commerce model hitting the skids. More and more of these are popping up day after day (h/t Matt Stewart):
Kudos to Avon for leading the charge here and (likely) saving their own ass when the FTC finally rules on Herbalife.