The Canadian Diamond Traders Program (Plan) According To The Competition Bureau of Canada Laws
1 - Do you have a real product or service? The product must be the reason for the plan. The plan must exist to sell the product.
Diamonds are a real product. CDT is a diamond wholesaler and has been successfully selling diamonds to brokers and jewelers two years before implementing the plan. The plan was designed to sell more diamonds , because 98% of CDT's income comes from the sale of diamonds. The only other profits CDT makes are from a US$5.00 administration fee, which is used to cover overhead such as a toll free number, merchant services etc.
2 - Are you making earnings claims that are not typical of participants in your plan?
We are letting people know the average cycle time of a typical member: 2-3 months in the US$500 Diamond Program and 1 month in the US$100 Feeder Program. Other top distributors are simply stating when they are cycling out. We also notify them that the fastest cycle time is in less than 1 hour and the longest has been 10 months where some slow members have not yet cycled out. We let the members know that the cycle time will be determined based on sales efforts of the entire team.
3 - Are your participants expecting to make money by recruiting others to the plan?
Members are not paid for recruiting other members, and CDT does not pay recruitment bonuses. We only ask that the members find 2 other members to join the program. The program has members who have brought in 2 other members, but who have made the exact same commission as members who have recruited zero members.
4 - Does your plan force people to buy a product in order to join?
CDT charges a diamond purchase deposit of US$100 to join the Feeder System and US$500 to join the Diamond Program. This deposit allows every member: 1) to enter the program and 2) to buy diamonds (at any time) at below the current wholesale price (as stipulated by the Rapaport Diamond Report). We do not force people to buy diamonds to become a member. We only ask that successful members use part of their commission to purchase diamonds from us making it a win-win situation, because CDT makes its money from selling diamonds.
5 - Are you asking or allowing people to buy unreasonable amounts of inventory you know they can't sell?
There is no monthly purchase requirement of our members. CDT will provide the inventory on request for any member who wishes to re-sell diamonds. The main purpose for this law is to ensure that companies are not putting their members in financial jeopardy. Again, the only time a member is required to purchase a diamond is after they have received their commission. From the US$4000 that CDT collects on their behalf they use US$869 + tax (or shipping for foreign residents) to purchase a diamond valued at over US$2700.
6 - Do you have a fair product buy-back policy or a right to return the product on reasonable terms?
We have a 2-year money back guarantee for all members. CDT will refund the entry fee in full, if the member gets their 2 other people to join the program within the first year, and yet is not successful by the end of the second year. This is better than the Industry standard. The diamonds are appraised by Gem Scan International Inc., one of the most conservative and reputable appraisers in the world. Furthermore, if a member decides they no longer want to be part of the program they can trade-in their deposit for a diamond at that retail value (including taxes).
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The Canadian Diamond Traders Program in Regards to the Direct Selling Association Code of Ethics
Preamble
The Direct Selling Association, recognizing that companies engaged in direct selling assume certain responsibilities toward customers arising out of the personal-contact method of distribution of their products and services, hereby sets forth the basic fair and ethical principles and practices to which member companies of the association will continue to adhere in the conduct of their business.
A. Code of Conduct
1. Deceptive or Unlawful Consumer or Recruiting Practices
No member company of the Association shall engage in any deceptive, unlawful or unethical consumer or recruiting practice. Member companies shall ensure that no statements, promises or testimonials are made which are likely to mislead consumers or prospective salespeople.
CDT takes pride in giving potential customers the facts Fair Franc and Full Disclosure of information to potential members, even if some of the information may deter the client from joining. All promises and testimonials are based on facts of actual events during the course of business CDT does not tele-market or spam customers. We strictly work on referral and advertising (such as that on 680 News, Toronto, Canada).
Note:
1. Prior to 1993, the Code protected only the ultimate users or consumers of our products and services. The 1993 amendments extended protection to our independent sales representatives. The amendments were not intended to include "proselytizing" or salesforce raiding disputes within the jurisdiction of the Code, except to the extent that such disputes involve allegations of deceptive, unlawful or unethical recruiting practices or behaviors aimed at potential salespeople. As used in this section, "unethical" means violative of the U.S. DSA Code of Ethics.
2. Products or Services
The offer of products or services for sale by member companies of the Association shall be accurate and truthful as to price, grade, quality, make, value, performance, quantity, currency of model and availability. A consumer's order for products and services shall be fulfilled in a timely manner.
CDT's diamonds are appraised by the Industry's leading gemologist companies, such as Gem Scan International, GIA, and EGL. CDT endeavors to have the diamonds ready for pickup within 2 weeks of the order. There are rare situations where the diamonds are delayed because of customs clearance, theft, and late appraisal reports from the gemologist.
3. Terms of Sale
A written order or receipt shall be delivered to the customer at the time of sale, which sets forth in language that is clear and free of ambiguity:
CDT provides all clients with receipts which outline all applicable details regarding that respective receipt.
a. All the terms and conditions of sale, with specification of the total amount the customer will be required to pay, including all interest, service charges and fees, and other costs and expenses as required by federal and state law;
CDT Clients know exactly how much they have to pay for their products and services and if they require more information we have our contact information posted on our website. We are available Mon - Fri 11 a.m. - 7 p.m. EST.
b. The name and address of the salesperson or the member firm represented.
CDT's name and address are clearly indicated on all receipts and invoices.
4. Warranties and Guarantees
The terms of any warranty or guarantee offered by the seller in connection with the sale shall be furnished to the buyer in a manner that fully conforms to federal and state warranty and guarantee laws and regulations. The manufacturer, distributor and/or seller shall fully and promptly perform in accordance with the terms of all warranties and guarantees offered to consumers.
CDT stands by all warranties and guarantees it sets forth in its terms and conditions, which are available on our website at all times
5. Identification and Privacy
Sellers shall truthfully identify themselves, their company, their products and the purposes of their solicitation to the prospective customer. Contact with the consumer shall be made in a reasonable manner and during reasonable hours to avoid intrusiveness. A demonstration or sales presentation shall discontinue upon the request of the consumer.
CDT does not enforce or encourage deceiving anyone into listen to its unique opportunity. We practice a no pressure environment. We simply provide customers with the information and allow them to make their own decision. We have a saying at CDT. They will JOIN NOW or JOIN LATER!
6. Pyramid Schemes
For the purpose of this Code, pyramid or endless chain schemes shall be considered consumer transactions actionable under this Code. The Code Administrator shall determine whether such pyramid or endless chain schemes constitute a violation of this Code in accordance with applicable federal, state and/or local law or regulation.
CDT is not a pyramid as outlined in the CDT Plan According to the Competition Bureau of Canada.
Note:
6. The definition of an "illegal pyramid" is based upon existing standards of law as reflected in In the matter of Amway, 93 FTC 618 (1979) and the anti-pyramid laws of Kentucky, Louisiana, Montana, Oklahoma, and Texas. In accordance with these laws, member companies shall remunerate direct sellers primarily on the basis of sales of products, including services, purchased by any person for actual use or consumption. Such remuneration may include compensation based on sales to individual direct sellers for their own actual use or consumption.
7. Inventory Purchases
a. Any member company with a marketing plan that involves selling products directly or indirectly to independent salespeople shall clearly state, in its recruiting literature, sales manual, or contract with the independent salespeople, that the company will repurchase on reasonable commercial terms currently marketable inventory, in the possession of that salesperson and purchased by that salesperson for resale prior to the date of termination of the salesperson's business relationship with the company or its independent salespeople. For purposes of this Code, "reasonable commercial terms" shall include the repurchase of marketable inventory within twelve (12) months from the salesperson's date of purchase at not less than 90 percent of the salesperson's original net cost less appropriate set offs and legal claims, if any. For purposes of this Code, products shall not be considered "currently marketable" if returned for repurchase after the products' commercially reasonable usable or shelf life period has passed; nor shall products be considered "currently marketable" if the company clearly discloses to salespeople prior to purchase that the products are seasonal, discontinued, or special promotion products and are not subject to the repurchase obligation.
CDT has a no refund policy. However, we have a money back Guarantee. Also, since the deposit of $100(Feeder Program) or $500(Diamond Program) is a deposit toward the purchase of a diamond, if any member wishes to leave the program they may retrieve equal value diamonds at any time (including tax).
Note:
7a. The purpose of the buyback is to eliminate the potential harm of "inventory loading;" i.e., the practice of loading up salespeople with inventory they are unable or unlikely to be able to sell or use within a reasonable time period. Inventory loading has historically been accomplished by giving sellers financial incentives for sales without regard to ultimate sales to or use by actual consumers. The repurchase provisions of the Code are meant to deter inventory loading and to protect distributors from financial harm which might result from inventory loading.
"Inventory" is considered to include both tangible and intangible product; ie., both goods and services. "Current marketability" of inventory shall be determined on the basis of the specific condition of the product. Factors to be considered by the Code Administrator when determining "current marketability" are condition of the goods and whether or not the products have been used or opened.
Changes in marketplace demand, product formulation, or labeling are not sufficient grounds for a claim by the company that a product is no longer "marketable." Nor does the ingestible nature of certain products limit per se the current marketability of those products. Government regulation which may arguably restrict or limit the ultimate resalability of a product does not limit its "current marketability" for purposes of the Code.
State statutes mandate that certain buyback provisions required by law must be described in a direct seller's contract. While acknowledging that the contract is probably the most effective place for such information, the DSA Code allows for placement of the provision in either "recruiting literature or contract." The DSA Code is meant to emphasize that the disclosure must be in writing and be clearly stated. Wherever disclosed, the buyback requirement shall be construed as a contractual obligation of the company.
A company shall not place any unreasonable (e.g., procedural) impediments in the way of salespeople seeking to sell back products to the company.
The buyback process should be as efficient as possible and designed to facilitate buyback of products. The buyback provisions apply to all terminating distributors who otherwise qualify for such repurchase, including distributors who are not new to a particular company, or those who have left a company to sell for another company.
b. Any member company with a marketing plan which requires independent salespeople to purchase company-produced promotional materials, sales aids or kits shall clearly state, in its recruiting literature, sales manual or contract with the independent salespeople, that the company will repurchase these items on reasonable commercial terms.
No one is required to purchase a kit or promotional items. In fact, we promote that our members be creative (not deceptive) in acquiring new sales and tailor it to their personality. We realize at CDT that different people need different paths to succeed.
Any member company with a marketing plan which provides its independent salespeople with any financial benefit related to the sales of company-produced promotional materials, sales aids or kits shall clearly state, in its recruiting literature, sales manual or contract with the independent salespeople, that the company will repurchase, on reasonable commercial terms, currently marketable company-produced promotional materials, sales aids or kits.
We do not sell kits and there are no commissions from promotional materials paid to members. Flyers are provided by CDT at no cost. We merely ask that that members use what they take. We charge $5.00 to members who require a Microsoft PowerPoint Presentation CD.
A member company shall clearly state in its recruiting literature, sales manual or contract with the independent salespeople if any items not otherwise covered by this Section are ineligible for repurchase by the company.
Note:
7b. 1998 amendments made it clear that sales aids, kits and promotional materials, while not inventory or necessarily intended for resale, are subject to the repurchase requirement if a company requires their purchase or if there is a financial incentive associated with their sale. It was recognized that "loading" of these items can cause the same harm to plan participants as loading of "inventory."
With respect to the final paragraph of Section 7b., disclosure of an item's eligibility or ineligibility for the buyback is key. Provided that repurchase is not required by this Code provision, for those items a company chooses not to repurchase, the company should clearly and conspicuously disclose to the buyer that the items are not subject to the repurchase requirement. Under such disclosure, a refusal to take an item back will not constitute a violation providing the member is acting in good faith and not attempting to evade the repurchase requirement.
As it states in the above paragraph, as long as disclosure is provided CDT has no obligation to buy back products and services. We clearly have a NO REFUND policy on our website. In spite of that, we are willing to do exchanges at CDT's discretion.
8. Earnings Representations
No member company shall misrepresent the actual or potential sales or earnings of its independent salespeople. Any earnings or sales representations that are made by member companies shall be based on documented facts.
Any potential sales earnings divulged by CDT are based on actual events and statistics.
Note:
8. There is ample legal precedent in the form of FTC decisions to afford guidance on the subject of earnings representations. While not controlling, these precedents should be used by the Code Administrator in making determinations as to the substantiation of company earnings claims.
The Code's simple prohibition of misrepresentations was intended, in part, to avoid unduly encumbering start-up companies that have little or no actual earnings history with their compensation plan or established companies that are testing or launching new compensation plans. The prohibition approach is meant to require that companies in these circumstances need only ensure that their promotional literature and public statements clearly indicate that the compensation plan is new and that any charts, illustrations and stated examples of income under the plan are potential in nature and not based upon the actual performance of any individual(s).
9. Inventory Loading
A member company shall not require or encourage an independent salesperson to purchase inventory in an amount which unreasonably exceeds that which can be expected to be resold and/or consumed within a reasonable period of time.
We do not load customers with inventory. We only require them to purchase their diamonds after they have successfully completed (cycled out of) our program. This ensures that we do not put our members into financial difficulties.
Note:
9. See, Code Explanatory §7a. regarding inventory loading.
10. Payment of Fees
Neither member companies nor their representatives shall ask individuals to assume unreasonably high entrance fees, training fees, franchise fees, fees for promotional materials or other fees related solely to the right to participate in the direct selling business.
$100 is the minimum diamond purchase deposit to enter our system, which is not expensive or unreasonable. We even go as far as financing our clients regardless of Credit or Job status. All we require is a commitment for them to help us sell more diamonds. This is both reasonable and fair. No payments are required by the borrower until they have successfully completed the cycle.
10. High entrance fees can be an element of pyramid schemes, in which individuals are encouraged to expend large upfront costs, without receiving product of like value. These fees then become the mechanism driving the pyramid and placing participants at risk of financial harm. Some state laws have requirements that fees be returned similar to the repurchase provisions delineated in Code §7a. The Code eliminates the harm of large fees by prohibiting unreasonably high fees. The Code Administrator is empowered to determine when a fee is "unreasonably high." For example, if a refund is offered for only a portion of an entrance fee, to cover what could be described as inventory, and there is nothing else given or received for the balance of the entrance fee, such as a training program, that portion of the entrance fee may be deemed to be unreasonably high by the Code Administrator. This Code section reinforces the provision in Code Part B.
Responsibilities and Duties requiring companies to address the Code violations of their independent contractor salesforce.
Our diamond purchase deposit is not high. Again, it's a minimum of $100, and if for any reason the member decides they no longer want to be involved, we will give them the same value in diamonds. However, if they wait until they cycle out, they will of course get a better price on the diamonds.