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.

Amway denies operating as a closed system in the UK originally appeared on BloggingStocks on Sat, 08 Dec 2007 17:40:00 EST. Please see our terms for use of feeds.