To filter out pyramid schemes, DTI to give direct sellers ‘legitimacy’ seals

Ruth Castelo —INQUIRER PHOTO

The Department of Trade and Industry (DTI) said it would issue “seals” to legitimate direct sellers to distinguish them from those who engage in pyramid scams.

In a statement on Friday, the DTI said it has released guidelines on the grant of the seals to those who are in direct selling and multilevel marketing (MLM). The lack of which should give the customer an idea if they are dealing with “those with questionable practices.”

The statement did not say when it would start accepting applications for the seal. The order was signed last Dec. 15, according to a copy of Department Administrative Order No. 21-09 seen by the Inquirer. The official seal has yet to be issued.

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

Pyramid schemes are not allowed under the Consumer Act of the Philippines. The order defined the scheme as an activity wherein “the profits of the person employing such a plan are derived primarily from the recruitment of other persons into the plan rather than from the sale of consumer products.”

On the other hand, a direct selling company is one that distributes its products “through [an] independent salesperson who sells to consumers person-to-person on a commission basis, typically demonstrating the effectiveness of the products in the homes or places of business of the customers.”

The DTI said interested companies may submit their application to the Consumer Policy and Advocacy Bureau. A committee will review all applications before approval by the office of the undersecretary for Consumer Protection Group.

—Roy Stephen C. Canivel