On December 1, I wrote about Amway's defense of its conduct in the United Kingdom. John Hutton, Britain's Secretary of State for Business, Enterprise, and Regulatory Reform is attempting to shut down the company's operations there, charging that Amway is essentially an endless chain scheme.
The government has demonstrated that only 10% of Amway's multi-level marketing Independent Business Owners turn a profit, while only 6% ever actually sell a product to someone outside of the organization.
This is compelling evidence that Amway is a pyramid scheme. People buy products to qualify for commissions, and the business operates as a closed system: Money is made by recruiting new distributors, not selling products. This is not different from a chain letter in any meaningful way.
According to the Times, David Chivers, an attorney for Amway, said that Amway's own rules say that promotional material should state that income can only be achieved by the sale of products to end clients and that the company does not pay simply for recruiting further agents.
And yet the data would seem to suggest that the company is doing just that. Meanwhile, Amway continues to recruit "distributors" in the United States, unimpeded by government officials who have essentially been bribed.
To learn more about Amway, check out this Dateline special available on YouTube, or read Amway: The Cult of Free Enterprise.











Reader Comments (Page 1 of 1)
12-08-2007 @ 9:36PM
R. Richard Fusilier said...
Relatively, We have the same thing. We have millions of unassimulative people migrating here, mostly illegal, because our laws are not firrmly enforced. Its all political and there are often not enforced or prosecuted. Our absurd juries in our are a`puzzle; in our courts and look how and where we recruit our judges. That ancient Greek seeking an honest man would have no success here. Our system has been violated by and out of unassimilatives, selfish irresponsible. No one should be afdmitted here with a bias towards another people; Aliens advantangeously doing what they can to "make it" by milking and never feeding the cow. We are governed by Int. Corporations, no longer by the Majority, AND who now make and sell cars here, a basic industry to our economy! Its`almost like spitting on our flag by tghese peoplke living America, but not buying American cars. What politiciands pewrsuaded `the passing of laws`falsely preventing the production of petroleum and Methane here. It benefit `who?
12-08-2007 @ 10:59PM
coleman O Hagan said...
here is the facts that i think you forgot to mention,
1. Amway does not pay for recruiting new ABO,s
2.And the starter pk is 100 percent refundable
3.ABO do sell products to cutomers outside the network
4.Yes i buy my own products from my own Amway business if you had your own supermarket where would you buy your everyday products
5. finally Amway is not a Pyramid scheme
6.Every new Abo has Their own customer base that they build at their own speed with the help and support off their Team
Im fed up with people knocking the Amway business when they dont have the facts and i do because im involved in the Amway business and proud to be assoicated with Amway,
Coleman-Amway business owner
Ireland
12-09-2007 @ 7:24AM
donna osborne said...
well done Coleman for speaking up for us Abo,s. i am a British distributor and also fed up with uninformed know-alls making glib remarks on a wonderful oppertunity to own a business that is both ethical and rewarding. Yes there are some individuals out there that dont carry out their business this way but one bad plummer don't spoil the whole bunch eh!. lets face it there is good and bad in any business today.
If you get with the right organisation, follow the rules and forget inventing you own wheel, then with proper focus and good old fashioned hard work the sky is the limit!
12-09-2007 @ 9:32AM
woodardamily4 said...
My ex-husband and I did Amway too and we got out because we were investing FAR more money in the business than we were making. Actually, we made NO profit! And not for lack of trying. We bought from ourselves and went to all the meetings and were pouring thousands of dollars into a business that was just sucking us dry! I was taking time off from work to put time into the business and losing money from my job, while not making any through this business. It's a scam. Unless you have an upline that will "give" you people to sign up under you, you're pretty much screwed. Plus, I can buy all of those products from Wal Mart at a much cheaper price than I was paying through Amway!!!
2-02-2008 @ 11:32AM
Lorrie said...
Hi
What are you earning from Amway??? Do you have proof of your earning's???? I used to do Amway about 10yrs ago and lost £1,000's I then started with Kleeneze 3 and a half years ago and I am now earning £850-£960 every 4 weeks for approx 10hrs a week, the difference is that i earned money straight away with Kleeneze, we have quite a lot of ex-amway now in Kleeneze, which proves to me that Kleenze definately was a better move. If you would like to check it out go to www.freedom4u.me.uk and www.kleeneze.net as all facts and figures are there and proof of incomes are available for anyone to look at.
12-09-2007 @ 1:24AM
Tex said...
The biggest problem isn't the IBO's or the company, it is the upline lying cowardly "kingpins" who make most of their money via their tool scams.
12-09-2007 @ 5:35AM
ibofightback said...
Zac,
The companies data as outlined in the case in no way suggests "you get paid for recruiting". You seem to have fallen for a common misconception promoted by many anti-Amway zealots - that by registering as an IBO (Distributor) you are suddenly no longer an "end client".
Of course you are. The FTC back in it's investigation in the 70s made it clear they were aware that many people joined Amway simply to get the products at a better price. They had no problem with this. More recently the FTC has clearly spelled out that they are not concerned with whether the "end client" is an IBO or not. What matters is whether they're a legitimate consumer or not.
I addressed this whole area in
AMWAY/QUIXTAR MYTH: It's a pyramid if most products are bought by IBOs on my site.
One point you say in your article is "People buy products to qualify for commissions". If this is *was* the case, then yes, there's a problem. However there is no evidence to suggest this is happening on any significant scale. Recent data from a lawsuit in the US indicate that a significant precentage of IBOs renew their businesses every year, but have never earned a bonus from recruiting others. Why would they do this? Because they like and want the products - legitimate consumers.
This isn't a hypothetical. My mother has been using Amway products since I was a kid. I spent years just buying the products because I liked them. What makes more sense? Pay a small yearly fee to get them cheaper, or pay full RRP?
If you were buying significant amounts of the products only an idiot would pay full RRP if they didn't have to, so folk who want and like the products register as IBOs to get the discount price.
Unfortunately many folk interpret "registering as an IBO" to mean "trying to make money". It's simply not true.
12-09-2007 @ 4:01PM
Tex said...
ibofb,
Buying products has much less to do with liking them and much more to do with buying them to get upline support and additional discounts.
If you wanted to buy at IBO cost, it wouldn't be difficult to find an IBO who was willing to sell them at IBO prices. In the U.S., about 3.4% retail (non-IBO) volume, IBO's are desperate for more retail volume.
The problem is the lying cowardly "kingpin" who are our upline, including N21, make far more via the tool scams, and when the prices of products went down for the general population because of the advent of discount stores, A/Q got lazy and didn't get any meaningful from our "esteemed" upline "leaders", who didn't want to rock the boat, or the tool scam would have more focus placed on it.
Both A/Q and the upline therefore rode the "high quality" horse until they ran it into the ground, which is why many Amway products in the UK have apparently been reduced about 70%.
Yes, 70% LESS than they were. That means a $1 product now costs 30 cents.
12-09-2007 @ 11:24AM
Jeff said...
My wife and I got into Amway a few years back, We folowed our uplines instructions to the T.We almost lost our house because of this! They are a cult , They teach all of thease religous ways in their meetings, by opening with long prayers and lenthy speaches about how god has blessed them, then on break they quickly rush off to the nearest bar and get trashed. I have seen more then one upline go running off and sleeping with some member of their down line! They teach you to lie by telling new prospects that no this isnt amway its my own bussiness!We were faithful for four years, We bought every tape of the week plus one, and spent over $1300.00 in one year.Not to mention how much money we spent on gas driving from mall to mall trying to make contacts. Yes amway IS a RIP OFF! Those of you who are in it should go to your up line and ask about the real numbers and odds of you susceeding. I learened a very valuble lesson, check it out befor you get involved!It WILL save you alot of money and time.And to those that use amway products..... check the price of things compared to your local ?-mart. You paid how much????
12-09-2007 @ 2:13PM
burl said...
Yes,
AMWAY without a doubt operates through its pyramid scheme. I quit the organization sometime ago for several reasons, one being the low profit margin on sales unless you are selling vitamins, pot and pans, vacuum cleanser and the like. Another reason, I found it difficult to look a possible recruit in the eye and give him the spiel about how he is able to make a lot of money. There is a possibilty if he could sign enough people under him. The jamborees were brainwashers and in the end they were like prayer meetings. The people strutting on the platform also were politically biased leaning toward Republican party. I could write a book, but what's the use. Suckers are born everyday.
12-09-2007 @ 5:13PM
ibofightback said...
Tex, in the UK if you want access to the website to order yourself and have them delivered to your home, you have to register as an IBO. There are no direct customer deliveries as there is in the US. Even in the US you are better off being an IBO as you can refer folk to your "upline" and while you won't make any money, the upline should "credit" them to you and it may result it in you getting cheaper discounts again. I have many people in my Amway business that registered as IBOs primarily as a way to buy the products cheaper and get them delivered to the home. Quite frankly I prefer it that way so I don't have to spend time delivering to them.
As for the price reductions, some have been dropped, yes, in the HomeCare range. As you know I've been calling for that for some time. A UK IBO who has discussed this with UK management reported on my website that it some cases Amway UK may be now selling some of these products below cost and the price reduction may or may not remain, depending on whether they are effective as "loss leaders" or not.
12-10-2007 @ 8:07AM
SPARTAN said...
Tex,
My goodness. I am impressed!! Folks, Tex used to be the biggest supporter of Amway / Quixtar / Alticor. Here is a man who realizes that he 'didn't know what he didn't know.' It appears that he has taken a long hard look at Amway and seen the truth about their high prices, and low customer volume. Great job Tex! :) Granted, I don't quite agree with you on the tool business, for all formerly affiliated Quixtar businesses, but I understand how most organizations run their tool business, so I can understand how you may think they are all alike.
12-10-2007 @ 11:09AM
ibofightback said...
Jeff, promotion of particular religious views at meetings held for Amway training is actually against the rules. Amway has indeed been lax in enforcing this rule but recently in the US instigated large financial penalties for those that ignore it.
Please note that your "amway meeting" was probably not held by Amway at all, but some group of distributors. Some large american-based organisations in particular are well known for their religious bent. As an atheist I'm glad that I became involved with Amway through a group of IBOs (distributors) that respect the rules, treat the business professionally, and do not push their religious beliefs down my throat at what are supposed to be business meetings.