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Home Research & AcademiaPublicationsStudy ReportsReports under FTC Study Grants2006The Project of Study on Research & Setup of "Professional Assessment Systems" and "Professional Assessment Indices" for "Multi-level Sales Industry"
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The Project of Study on Research & Setup of "Professional Assessment Systems" and "Professional Assessment Indices" for "Multi-level Sales Industry"


Multi-level sales companies landed in Chinese Taipei from the United States and Japan, one after another, in the late 1980s when domestic environment was well-suited to multi-level sales industry for development.
The “Tai Chia Company Incident” broke out in 1981, as a notorious fraudulent scandal known as the “rat trick”, leaving victims numbering up to nearly eleven thousand, defrauded of over NT$400 million. That incident critically defamed the domestic multi-level sales industry, leading domestic multi-level sales into a dark age.
In the midst of the dozen-year long, persistently awkward position of lacking the necessary laws to the regulate multi-level sales industry, the Fair Trade Commission of the Executive Yuan (the Cabinet) officially put the Supervisory Regulations Governing Multi-Level Sales into effect. Since then, domestic multi-level sales industry has been well regulated by law to prevent the rat-trick club scandal from recurring.
The official statistics revealed by the World Federation of Direct Selling Association indicate that as of 1999,domestic multi-level sales industry reaped NT$35.7 billion total turnover, ranking 10th the world over. The multi-level sellers numbered 2.81 million, next only to the United States, surpassing even Japan.
To date, the officially accredited multi-level sales firms number 739, and those in substantial business operation number 276, yielding a total of NT$68.304 billion. With a total of 3.877 million multi-level sellers making a living on multi-level sales, it has virtually become one of the key “marketing channels”.
The multi-level sales cases compiled in 2004 indicate 37 cases receiving penalty, 12 cases in administrative appeals, 11 cases in administrative lawsuits, 7 cases receiving criminal judgments, 67 cases in gross total.
Can the multi-level sales management system focusing on Article 23 of Fair Trade Law and “Supervisory Regulations Governing Multi-Level Sales” as the framework appropriately accomplish the goal of assuring sound multi-level sales practice The answer depends.
For instance, the policy of “reporting” used to be intended to encourage the multi-level sellers to take the initiative to disclose their information and data. In actuality, nevertheless, the system has been distorted. Some unscrupulous sellers have taken advantage of their registration with the Fair Trade Commission as a means of publicity, misleading the general public so as to believe that they have been endorsed by the Fair Trade Commission. While it is true that Article 23 of Fair Trade Law can take Criminal Law to penalize the offenders, there have not been any relevant criteria available to prevent the wrongdoing.
The competent authorities of the government are, therefore, urgently required to build a set of “professional assessment systems” and “professional assessment indices”. Through detached, independently third parties, they will provide professional, fair and just mechanism/regime for assessment services. Through such sound practices, the government, sellers, participants and consumers will all become the beneficiary winners.
The present study is intended to set up a set of “professional assessment systems” and “professional assessment indices” to accomplish the following objectives:

  1. To assure sound market order through to build a set of professional, lawful, fair and just assessment systems for multi-level sales industry.
  2. To set up just, objective and useful assessment indices and to provide landmark significance.
  3. To best utilize the professional assessment systems to provide accurate information and data regarding multi-level sales to as to safeguard participants and consumers.
  4. To prevent through the professional assessment systems fraudulent practices by means of multi-level sales.
  5. To boost support to multi-level sales and create markets beneficial to economy by means of professional assessment systems.

Through probe into literatures, it will develop the concept diagrams for multi-level sales assessment indices.

Preliminarily, the multi-level sales assessment indices will be classified into four major aspects: Organizational structure, system, personnel and commodity.

  1. Organizational structure aspect: Report by the multi-level sales businesses for application, change, and grievance.
  2. System aspect: The contractual systems, reward bonus and commission systems, purchase and refund systems.
  3. Personnel aspect: The human resources quality, educational & training programs.
  4. Commodity aspect: Sources, quality, safety and security, after-sales service.
    In the days and years ahead, more sub-categories will be further developed on the grounds of the four major aspects. The assessment criteria will be both qualitative and quantitative so as to set up fair, just and professional indices of assessment.
Updated at:2010-01-13 15:20:28