An Introduction to Amway
Founded by Nutrilite, Amway is one of the largest direct selling companies based out of Ada, Michigan that has been around for over 50 years. By the end of December 2013, Amway’s parent company Alticore reported $11.3 billion in revenue annually. They offer one of the largest bonuses to their Independent Business Owners (IBO’s) of all multilevel marketing companies.
Top-selling brands for Amway include Nutrilite vitamin mineral and dietary supplements, Artistry skincare and color cosmetics, and eSpring water treatment systems.
As an IBO, they claim you can make passive income either selling their high quality health and wellness and a variety of other products or by recruiting others and getting them to make their standing order so they meet their certain number of points to qualify for certain levels. To achieve this, it is recommended that you transfer most of the products you are already buying elsewhere and buy it through your store, Amway.
The company has been prosecuted numerous times and in various regions for running a pyramid scheme. For years, they have been in violation of the law, but it’s just too difficult to track them effectively and they have excellent lawyers. The FTC can’t shut the company down because it has political connections and people who were associated with Amway working and benefiting from Amway. Also, the majority of people fail to file a complaint with the FTC.
The Corrupted History of Amway
VanAndel and DeVos had their first bit of success when they developed a granola bar around 1959 and made false exaggerated benefits, but the FDA stopped them. They then decided to recruit new independent contractors into their business to do this for them so they will not be held liable. It didn’t take long for this to heavily fill their wallets, so they expanded their operation to other health and beauty products and now, you can buy almost anything through Amway.
According to this 1981 story, on October 4, 1976, Amway was held liable for one of its distributors raping a 12 year old girl and was told to pay $180,000.
In a 1979 case, the US Federal Trade Commission found that Amway’s sales plan was not a pyramid scheme according to a 1998 statement posted on the FTC website, but they didn’t investigate the scam around its tools. Less than 70% of sales were made to the general public which is still the standard, but they get around this ruling by removing “front end loading”. The vast majority of their sales were made to their IBO’s.
The company reported record sales of $1.2 billion in 1982, but experienced a $70 million drop in sales after Devos was fired as chairman of the national party.
In 1984, Amway and Amway of Canada Limited paid a $25 million fine for criminal charges of defrauding Canada of $23 million.
According to a 2004 Dateline investigation, the majority of distributors who are making money are not doing it from product sales, but from selling expensive motivational materials which is evident in the following videos:
Amway Quixtar Scam Part1
Dateline – Scam=Quixtar=Amyay=Alticor-(Part2).flv
In 2006, Amway was ranked No. 114 by Deloitte and No. 25 among the major private companies in the United States by Forbes in 2012.
Amway agreed to pay $56 million to former IBO’s for fraud to settle a 2007 class-action suit in that alleged unfair and illegal business practices on November 3, 2010.
Three days later, the ICE reported that 36 out of the 42 passengers in an Amway group on a bus were illegal immigrants.
Beijing’s Air Quality Index climbed an all-time high of 755 on January 12, 2013 resulting in Amway distributor Bi Xiuyan selling 50 air purifiers for two months’ pay of what the Chinese make. (Source Chinese Struggle Through Airpocalypse Smog).
On February 23, 2013, Amway became a Mets sponsor and opened its first North American storefront at Citi Field (might as well call it Ponzi Field now) and hope to recruit Mets fans this season. (Source Amway At Citi Field).
The police seized $23 million dollars’ worth of Amway counterfeit products on May 9, 2013. (Source Police seize counterfeit Amway products).
On November 24, 2013, a fire mysteriously demolished a maintenance building on Doug Devos property.
Doug Devos reported that Amway’s sales are slowing down in the United States, has grown in Japan and have seen varied results in Europe on January 31, 2014
Amway reported sales of $11.8 billion on February 3, 2014, in which 500 million were due to the sales of eSpring water purifiers to countries where pollution is a problem.
Could it be a sign of desperation that on March 19, 2014 Amway expanded into its first Islamic country, Kazakhstan?
Amway may be feeling the pressure from the Herbalife and FTC Formal Inquiry and announced a change to their compensation plan at a North American Diamond Club on April 7, 2014 with the most obvious change being the replacement of the 3% and 6% bonus brackets with discount coupons and halving the group volume requirements 9% down to 300PV. (Source Amway North America proposes biggest changes to compensation plan in 25 years).
On April 29, 2014 Amway and husband-and-wife distributors Barry Chi and Holly Chen were being sued in superior court by nine Los Angeles distributors for alleged breach of contract, fraud, false advertising, unfair competition, unjust enrichment, conversion and negligent misrepresentation. (Source Amway’s Claims Are Malarkey, Distributors Say).
Amway’s CEO William Pinkney got arrested for the second time in two years on May 27, 2014. (Source Andhra Pradesh court rejects bail plea of Amway India CEO William Pinckney).
It was reported on June 6, 2014 that Amway wants Amway wiki shut down possibly because it’s a gold mine of information for regulators proving it is a pyramid. (Source Amway wants me to shut down Amway Wiki).
On June 21, 2014 it was reported that Amway criminally removed $1.3 billion dollars from India in a period of 10 years. (Source Amway sent Rs 8,000 crore to US, says Enforcement Directorate).
Police officials of Andhra Pradesh and Telangana arrested Amway Diamonds who have received quick and easy commissions from selling tools on July 2, 2014. (Source Cops tracking ‘Diamonds’ of Amway).
On August 4, 2014 in South Korea, the FTC gave Amway corrective orders to stop the price fixing activities and remove the clause from their sales guidelines. (Source Amway Korea Flaunts Regulations-Receives Slap Wrist).
Signs of a Pyramid Scheme
- Again, sales are from the 99.95% of people that fall into this business and their CEO is currently in jail in a south Indian state.
- Distributors make the majority of their money through the sale of motivation materials including CD’s, books, guides, manuals, seminars, and tickets to conventions to their downline more than anything else.
- Once you become an Amway distributor, you have to buy their overpriced products, tripling your expenses. You will have to accumulate at least 150 PV every month for Amway to pay you on the amount of points that you accumulate in your network. $2.50 is 1 point for Nutrilite and Artistry while L.O.C. and S8 are a lot less points per dollar and you will have to spend $11 to earn a mere 0.7 points. The costs can easily add up to over $500 because of the high shipping charges and taxes.
- According to the Amway Business Reference guide, out of the three million IBO’s, only 138,000 are active and make only $2,424 per year. Typical expenses are over $300 per month including other business related expenses. Some earn less than $100 per month. Ambitious people who have genuinely worked the business for years are now drowning in debt even if they did everything they were told to do. It was until they stopped doing the business and it was when they went back to their job that they began to get their life back.
- Within a year, about half of IBOs will quit.
- Uplines are secretive about their business financials.
Even if you reach the Platinum level, you will not make a profit.
- Home foreclosures, bankruptcies and financial struggles are common for people involved in Amway despite being at the “Diamond” level.
- Amway has greatly financially affected the lives of millions for over 50 years and it all starts with their lies that you will become wealthy by selling their overpriced products. It is evident that only a small number of people have become wealthy.
- As with another direct selling company, you will need to pitch to your family members and friends through home events and meetings. After you have exhausted your warm market, you will be told to approach strangers wearing a nice business suit. Most of the people will not join or buy a product. The overpriced products makes it hard to get customers to buy $80 per month vitamins. To reach 300 points a month, you need customers 5 to 10 % of your total sales is yours. It is more of a “recruiting” game more than anything and the majority of IBO’s will never even sponsor a downline.
Submitted: Mon, August 31, 2009 Updated: Wed, April 23, 2014
Reported By: Bart — Bartlett Illinois USA
The point behind my story is, whether or not Amway is legit, it’s still a waste of time, money and it’s a good way to alienate your friends and family. How bullsh*t is it to receive 7 dollars for slaving at the bottom of the pyramid while pushing 250-300 dollars’ worth of products. The only people who make any actual money or get rich off of it are the ones who do it by lying, stealing and selling all those motivational bullcrap to people… their money is just blood money sucked dry from the people at the bottom who do the work and see little to none of the results. I’m too moral to get rich doing something that evil to good, honest people.
… My sponsor Sam rarely talks to me, occasionally he’ll text me and try to get me to go to a meeting or an expo which I would gladly go just to have a good laugh. I also gave him my old laptop a while back because it had problems…He’s probably going to try and keep it as collateral for me owing him money for CD’s, books, the function I went to and other Amway bullsh*t … Another thing too is he asks me or anyone if I have a job which he only asks because then we would have money to spend on Amway products…He’s also stocking people…I know he doesn’t make any money doing the business, he’s been in it for years and he’s so blind and in denial.
Other things to keep in mind:
The regular weekly meetings held at hotels by Amway are the same exact thing every week…
Diamonds don’t actually make 250,000 a year, I know this because I’ve been in my upline Diamonds home many times and he doesn’t have anything in his house someone making a quarter of a million would have… The only thing he has is a Lexus….
You can see the frustration, anguish and sleepiness in downlines and crosslines eyes and you know that they work hard but see no results…
Yea. Sure, Amway is partners with many legit companies and stores but that doesn’t give you legitimate credit. What do they care if you’re exposed for your fraud, it still won’t hurt their sales no matter what happens to you Amway.
… Amway is just a waste of time and money and it only leads to heartache, an empty pocket and lost friends. Even if you do get rich off this scam, you’re no better than Bernie Madoff and that’s just not worth it.”
1 month ago
“I went to an Amway business presentation the other day and they tried to convince me to leave my high paying job to buy their products without actually explaining anything about the system and how to make money. At the end of the 3 hour presentation they asked me if I would like to join and that all I would need to do is pay them $150 and a couple thousand dollars on their products a month to learn more… What was really insulting is that they wasted 3 hours of my time and were promising me I’d be able to make 10,000 a month after the first year. (I already make that much) Sure you could make some money with them, or you could get a real job and make a lot more money.”
My Final Opinion of Amway
In conclusion, the ultimate goal of every Amway representative is to achieve Diamond status so they can retire from their downline. There are people who have sincerely tried for years to make it work and none of them made a profit.
I personally don’t believe in taking protein bars and vitamins as I rather get my nutrients from real food, so I wouldn’t sell anything to others that I personally wouldn’t buy. How much better can their inflated products be than any other leading brand? You can find the same quality and more economical products at your local vitamin store. In a struggling economy, the majority of people are looking for better deals.
The Amway business has a high turnover rate along with a small number of sales the general public, making residual and substantial income nearly impossible. There will never be time to rest, you will have to constantly keep working your business and keep bringing people in to maintain your earnings. In Ruth Carter’s book, Amway Motivational Organizations: Behind The Smoke and Mirrors, even though a diamond had a net income of over $300,000, he still lived in debt, barely paid his mortgage, and was constantly spending money traveling from events.
Starting your own business shouldn’t cost you an arm and a leg and that’s why I chose internet marketing as a way to build passive income. That means you do the work once and you get paid for it for as long as your website is live on the internet.
If you have been an Amway business owner, please share your experience below.
To your Success,