Amway admits that the FTC is soft on multi-level marketing ethics

Zac Bissonnette — Sat, 01 Dec 2007 15:40:00 EST

Filed under: Blogs, Marketing and Advertising, Politics

Back in July, I wrote about network marketing giant Amway/Quixtar's self-imposed 120-day moratorium on recruiting in the United Kingdom, a response to a Department of Trade and Industry complaint against the company. Many critics charge that Amway is operating a thinly-veiled pyramid scheme, based on the same principles as the chain letter.

Well earlier in November, Amway blogged about its plans to return to the region, posting a memo that had been sent to directors and employees, and also forwarded to many of the company's United Kingdom distributors.

Here's where it gets interesting. Many people, myself included, have charged that the FTC is not doing enough to crack down on multi-level marketing companies using false and misleading recruiting tactics. based on the text of the memo, Amway seems to agree:

"The fact is, in the wake of this sobering experience, every one of us -- employees, IBOs, and others -- should renew our commitment to hold ourselves to the highest standards of behavior. The marketplace -- and in the UK, the government -- has made it clear that they expect no less. And when falling short of those standards exposes our company to such grave risk, there can no longer be any such thing as 'business as usual.'" (emphasis added)

In other words, the government of United Kingdom has made it clear that it will hold Amway to the highest standards of behavior -- but the United States has not followed the lead.

Perhaps Amway's massive political contributions have had something to do with that. it's a shame that our elected officials are putting the interests of special interest groups ahead of those of consumers. That's just business as usual in the land of the free, home of the brave.

Amway admits that the FTC is soft on multi-level marketing ethics originally appeared on BloggingStocks on Sat, 01 Dec 2007 15:40:00 EST. Please see our terms for use of feeds.

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Amway/Quixtar sues online foes

Zac Bissonnette — Mon, 15 Oct 2007 17:21:00 EST

Filed under: Law, Blogs, Scandals

According to a recent report from CBS News, "Direct-marketing firm Quixtar Inc., a sister company of Amway Corp., has sued 30 people who anonymously posted what it considers disparaging remarks about Quixtar in blogs and online forums and in YouTube.com videos."

The company is seeking subpoenas to compel internet sites, including Google (NASDAQ: GOOG)'s YouTube, to give the company information it needs to find out who is making the videos that it believes are defamatory. Amway/Quixtar believes some of the videos were made by former distributors who unsuccessfully sued the company and are under court order not to disparage the company.

For years, Amway has been battling allegations that the company is a pyramid scheme. In 1979, the FTC ruled that Amway was not a pyramid scheme, but ordered the company to change many of its sales and marketing practices.

Unfortunately, the media as a whole lacks a strong understanding of how Amway and other multi-level marketing companies work. For instance, take this line from the CBS piece:

Quixtar develops and manufactures nutrition, beauty and cleaning products that are marketed in the United States and Canada through a tiered selling system, hiring entrepreneurs to sell its products.

This is not even close to how Quixtar really works. Quixtar does not "hire entrepreneurs." "Independent business owners," as Amway euphemistically calls them, must buy products in order to qualify for commissions, and can earn by recruiting others to buy products as well. Sites like Pyramid Scheme Alert have documented how little "selling of products" actually happens.

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Amway/Quixtar sues online foes originally appeared on BloggingStocks on Mon, 15 Oct 2007 17:21:00 EST. Please see our terms for use of feeds.

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