Amway TV ad

[Bob Klase]

It's my understanding that the con commonly refered to as a pyramid scheme was established well before MLM's. MLM's evolved to circumvent the law.

Which might make MLM's stupid, dishonest, unethical and many other things, but not illegal. Pyramid Schemes are "illegal" by definition. MLM's can resemble pyramid schemes, they can have many similarities to pyramid schemes, but until they meet the other requirements of pyramid schemes they are not pyramid schemes.

I think it's foolish and deliberately misleading to represent them as anything but legal pyramid schemes.

I think it's foolish to represent them as something that 'by definition' is illegal unless they are violating the law that makes it illegal. If your goal is to warn people about the bad things about MLM then I think deliberately miscalling them by a name with a specific definition which they do not meet is only giving them (the Amway supporters) ammunition to counter all the bad things you can say about them that aren't incorrect.

Is Amway really sustainable or is it just that it hasn't collapsed yet? It seems to teeter on the edge, waiting for the next generation of "entreprenuers".

And what's the average and maximum lifespan of every other pyramid scheme (which actually meets the definition) that you know of? Can you find me a pyramid scheme (which actually meets the definition) that has last 50 years? How about a time frame until something that's "on the edge" collapses. Make it longer than Chrysler has lasted since they're also teetering on the edge and they've been around longer than Amway.

If it makes you happy I'll refer to Amway as a not illegal pyramid scheme

You can refer to roses as not flower pine trees- that won't make roses grow 80 feet tall and drop pine cones all over the place. Or you could refer to everyone death row for a single murder as not-multiple-person-killer-serial-killer.

You insist on calling it by a term with specific definition because you're desperate to make it look as bad as possible. In reality calling it by that term makes it look no worse than using actual, correct facts will show it to be, but makes you look as desperate to blacken Amway's face as icerat is to convince people that it's a great money making opportunity which is no different than selling cell phones at Walmart.

 

[Furcifer]

Neither Mary Kay nor Amway bases pricing on the "number of minions you enlist"

You sure about that? I'm not going to look into this and discover sales entered into the system by a Director get "kicked back" to them, they essentially pay less than their minions because they know they will get a percentage credited back to them on anything they order?

I'm curious as to how you know Amway's Detroit sales numbers?
US sales are around a billion, it's one of the countries largest private companies, and has #1 in internet sales for health & beauty. And sorry, the rest of the world does matter.

Meh, if you can't make here you can't make it anywhere I don't know, I just remember what it was back in the early 80's when a number of people used Amway products. These days I know very few. It's pretty much a joke in these neck of the woods. But I could be wrong, there could be a smathering of underground Amway users I'm not aware of.

You've made a lot of claims that Amway isn't a pyramid scheme, but I don't think you've really proved much other than Amway has found a market outside of the US where they can peddle their wares to a new unsuspecting public. I mean seriously, don't you find it weird Amway is big in South Korea but doesn't really do much business in the US? Michigan is a really pro-union pro-American kind of state. If Amway weren't such a sketchy company they would be held in much higher regard here. You could make the arguement that they have been incorrectly labelled in the past and still carry that stigma, but I'm not hearing that. What I'm seeing is a lot of hand waving. I chimed in to give you some relief from the onslaught but you've done nothing but make claims that make me suspect you really are brainwashed and Amway is a cult.

 

[Bob Klase]

I'm not an expert, nor do I play one on TV. I'm a guy who can put 2 and 2 together. I didn't know Amway was a pyramid scheme, I figured it out. So have other people, hence the inclusion in the Wiki article.

You mean this wiki article:

http://en.wikipedia.org/wiki/Amway#Pyramid_Scheme_Accusations

Amway has several times been accused of being a pyramid scheme. A 1979 FTC investigation in the United States and a 2008 court judgement in the United Kingdom dismissed these claims.

I suppose we could look at the shape of the distribution structure and see that it's bigger at the bottom than it is at the top giving it a pyramid shape. Then we have to find other businesses that have a distribution structure that don't have a similar structure. Then it's going to be very difficult to find a business in the country which isn't a 'pyramid scheme'.

 

[Furcifer]

Which might make MLM's stupid, dishonest, unethical and many other things, but not illegal. Pyramid Schemes are "illegal" by definition.

Yes, that's why I included the qualifier "legal". There are illegal pyramid schemes and there are legal ones that operate as "MLM's".

This comes down to my understanding of the pyramid scheme and what people are calling MLM's. In not an expert, but I recall hearing on NPR a while back (I believe it was in conjunction with a review of the book "The Art of The Con" by Gary Cornelius, or maybe it was in the book?) that these MLM's grew out of the pyramid con. The con itself had been around since the turn of the century in various forms. It was in the late 40's or the early 50's this con evolved into what we are now calling MLM's.

That' what I remember, or at least that's how I remember it. If I'm wrong and MLM's were around before the pyramid scheme, then I would certainly agree with you, they aren't related. But if I am correct, then MLM's like Amway are just legal versions of the pyramid scheme.

I would agree with you however that misrepresenting Amway as having an illegal business model would benefit no one and only slightly less harmful than calling it a cult.

 

[Foolmewunz]

Oh right, I thought forums were for discussion. I didn't realise that when people said things that were blatantly wrong I shouldn't "deny" them in case I get accused of "defensive manuevering".

Well, we're going to have to agree to disagree, then. What I see is constant defence of the gospel according to Amway. You claim you're no longer that involved, yet you seem to devote a whole lot of time to answering this thread... in fact, just about exclusive to any other activity on the forums.

Maybe you're just a latter day Gary Cooper, forced by your moral strength to defend the wronged, going out there at high noon on Main Street, regardless of the odds? I doubt it, though. You've apparently drunk the korporate Kool-Aid (yes, pedants, I know it was Flavor Aid, but then where'd we get our alliteration?), as you accept nothing that anyone says that is critical of Amway.

 

[Furcifer]

You mean this wiki article:
http://en.wikipedia.org/wiki/Amway#Pyramid_Scheme_Accusations

No, the Wiki on pyramid schemes. But notice in that one:

In a 1979 ruling,[16][64] the Federal Trade Commission found that Amway does not qualify as an illegal pyramid scheme since the Amway system is based on retail sales to consumers.

If all pyramid schemes are illegal why put in the qualifier?

Anyways, it's an interesting game of semantics. I don't put a negative spin on the term "pyramid scheme". I think the problem is the word "scheme" can and does take on a negative connotation at times. In this case its a business "scheme" which isn't inheirently negative.

I still think calling it an MLM is misleading. It certainly can be described at a business model sharing such close similarties to a pyramid scheme that the FTC even laid charges against them in 1979.

 

[Derwoods]

Does anyone have any price comparisons in cases where the Amway product outperforms competing product available at retail stores?

 

[Ferguson]

Does anyone have any price comparisons in cases where the Amway product outperforms competing product available at retail stores?

It would depend on an individual's definition of "competing." To me, I would never buy an Amway drink since I can buy a brand I'm familiar with for cheaper at a store, however an Amway rep would be quick to point out that their drinks have their "special blend of nutrients" that I can't get anywhere else.

 

[Skeptic]

The 3 million is people who have renewed in the previous year. The average is a global number and doesn't discriminate between those working for a full-time income or those who renew just to buy the products cheaper.

Buying Amway's products "cheaper" is a sucker's bet, since their products are usually three to five times more expensive than comparable store brands. Gotta pay that upline...

$2000/yr is also a decent income in many countries Amway operates.

Yeah, but not in the USA, where the vast majority of their members are. That comes out to less than minimum wage, even if you do it part-time. Taking a second job at McDonald's will make you a lot more money.

People on average don't make much money. On the other hand, people on average don't do much to make any money.

Actually, people in other jobs, indeed even in part-time minimum wage jobs, make more money on average than you make in Amway. You have to be REALLY GOOD in Amway to make about what an AVERAGE regular worker makes.

But if you're good enough of a salesmen to make money in Amway -- which means you need to be in, about, the tope 1% or 0.5% or so of the population -- you could surely make a lot more as a salesmen for just about any other product.

Amway is a sucker's bet.

Very very few of that 3million would even put 5 hours a week into their Amway business.

5 hrs. a week * 52 weeks = 250 hours. $2000/250 = about 7 bucks an hour.

If you work more than that, or make less than the average, your hourly wages in Amway are even worse, say, $4 an hour. Since Amway reps are "independent businessmen", in theory, they don't get any medical insurance, social security, severance pay, or anything.

The average Amway rep works to make his "upline" (in practice, his boss) money for $4 an hour with no benefits. In other words, the average Amway rep is, due to his stupidity in choosing this "opportunity", working in worse conditions than the illegal immigrant who doesn't speak a word of English and jumped the fence last night.

What a deal!

Amway is like any other business

Not really. It's a pyramid scheme. The "business" is just an excuse to funnel money from the lower-ranked in the pyramid to the higher-ups, by making them buy tons of ridiculously overpriced products nobody who isn't in Amway would touch with a ten-foot pole.

There is also the scam within the scam: the "motivational meetings" and so on organized by the higher-ups, where there isn't even any Amway product to buy -- the suckers actually pay the upline directly to hear him tell them how they're really good boys and girls, and how they should keep doing that "until they succeed".

 

[Skeptic]

The whole "is it legal?" argument is besides the point. Whether Amway is legal or not, it is simply a pathetic pyramid scheme where only the top 0.1% or so make money which is funneled to them by the 99.9% of the suckers below them.

So what if it's legal? It's perfectly legal to take all the money in your wallet and throw it out the window. It's perfectly legal to lose all your money in slots at the Las Vegas casino. It's still not a good idea.

Still, it's a better idea than joining Amway: the end result is the same -- you go broke -- but at least you don't work your @$$ off for your "upline" doing it. In the casino case you at least have some fun.

Heck, when you take into account the dubious character of those "big wheels" in Amway, the ones who fleece the suckers, throwing your money out the window begins to look positively reasonable: chances are, whomever finds your money is more worthy of it than the your local Amway group's leader.

 

[Jeff Corey]

I wonder how this is proceeding? http://www.pyramidschemealert.org/psamain/news/AmwaySuedasPyramidScheme.html

 

[Nogbad]

I sat through an Amway presentation a long time ago (early 80s). It was fascinating from a social phenomenon perspective. The couple selling were nice young people and had that evangelical glow. They were determined to climb the pyramid and talked of being wanting to be "pearls" and I think there was a prize of getting to spend time on a boat and meet senior Amway people.

Anyhoo, they did have stuff to sell, washing powder and other household products but they seemed much more interested in getting us to join as sellers of said household products than sell said household products.

It is a pyramid scheme. It may abide by the law and pay its taxes but it is a pyramid scheme. Like any such scheme, get in early and you will make money but simple maths dictates that the lower levels quickly run out of population to recruit 8 new sellers or whatever it was at the time.

Contrast and compare something like Kirby which also sells by house to house selling. OK a Kirby is one expensive Hoover but it is the product they are selling not the right to sell Kirbys. It is a quality bit of kit and the only decision the customer has to make is whether they could justify spending that much on a Hoover.

I take it Amway have gone into the HerbalLife (sp?) territory with all this talk of vitamins?

 

[icerat]

Which might make MLM's stupid, dishonest, unethical and many other things, but not illegal.

Stupid products or marketing claims can make an MLM stupid, just like any other business
Dishonest reps or management can make an MLM dishonest, just like any other business
Unethical reps or management can make an MLM unethical, just like any other business

All of those things happen in MLM, as they happen in other businesses.

 

[icerat]

I wonder how this is proceeding? http://www.pyramidschemealert.org/psamain/news/AmwaySuedasPyramidScheme.html

It was kicked out and the judge ruled any disputes go to arbitration, as outlined in the contract. If the business was an illegal pyramid then the contract would have been invalidated. Of course, you won't find that on PSA. Fitzpatrick does the classic mistake of assuming MLMs are pyramids and then ranting about the failings of pyramids when those failings don't apply to legitimate MLMs.

 

[Jeff Corey]

It was kicked out and the judge ruled any disputes go to arbitration, as outlined in the contract....

When did that occur? Do you have a link to that?

 

[icerat]

Buying Amway's products "cheaper" is a sucker's bet, since their products are usually three to five times more expensive than comparable store brands. Gotta pay that upline...

You are incorrect. The majority of volume comes from the two major brands of Nutrilite and Artistry, both of which are generally cheaper than the competitors.

Yeah, but not in the USA, where the vast majority of their members are. That comes out to less than minimum wage, even if you do it part-time. Taking a second job at McDonald's will make you a lot more money.

The majority of Amway's members are not in the US. Amway is a business, not a job. Like any startup you will generally work for little or nothing for months or years to reach decent profitability. If all you're after is a few extra bucks and you have the time, then a second job is a better alternative.

The rest of your "analysis" is based on this false assumption it's a job. Please compare to starting an running a business, with all the attendent strengths and weaknesses.

Not really. It's a pyramid scheme. The "business" is just an excuse to funnel money from the lower-ranked in the pyramid to the higher-ups, by making them buy tons of ridiculously overpriced products nobody who isn't in Amway would touch with a ten-foot pole.

A ridiculous and unfounded assertion. Amway products have won numerous awards and recognitions around the world.

 

[icerat]

When did that occur? Do you have a link to that?

Apologies, I was incorrect, I was thinking of a very similar case launched in California by some distributors who had been kicked out (TEAM). I'm not sure of the current status of this case. Docs are here -

http://www.amwaywiki.com/Pokorny_%26_Blenn_vs_Quixtar%2C_Inc_et_al

As the claims are virtually identical to the TEAM case it's extremely unlikely to have much success. I'd note the court refused FitzPatrick (pyramid scheme alert) as a supposed "expert witness". I'll see what else I can found out.

 

[icerat]

for the numerous posters who ignored the earlier links that explained what a pyramid scheme actually was, I'd be interested in your explanations of *why* you think Amway is a pyramid scheme?

It seems to be based on the idea that people earn come kind of compensation or reward based at least partly on the efforts of folk "lower" in the distribution heirarchy. Given this same setup exists in virtually any heirarchy, whether it be a company or other organisation, or traditional distribution, do you folk consider all heirarchical organisations to be "pyramid schemes"?

 

[Skeptic]

You are incorrect. The majority of volume comes from the two major brands of Nutrilite and Artistry, both of which are generally cheaper than the competitors.

Not true. They are, in fact, far more expensive. Let's take Nutrilite: Their vitamin C tablets (300 tablets) cost -- are you sitting down? -- $52.49. Compare this to, say, Shoprite's vitamins which cost (for 100 tablets) $3.95, or about one fifth the price of Amway's stuff. This 5:1 price difference is typical of Amway products. Amway lies and says it's due to the products "superior quality" -- their Vitamin C is "natural" or "organic" or whatever (yeah, like the molecules give a flying duck!) But the truth is that it is more expensive because ca. 70% or so of Amway's sticker price is payments and commissions to the "uplines" in the pyramid. Except for, perhaps, other, even more expensive pyramid schemes (I presume that's who you mean by "competitors"), Amway's products are ludicrously overpriced.

The majority of Amway's members are not in the US. Amway is a business, not a job.

Actually, It is a job. Amway reps are salesmen whose sales pay for their upline, their upline's upline's, and so on, comissions -- just like a saleslman in a store pays for his boss, his bosses' boss, etc., salary. It is only a "business" in one sense -- you don't get paid. Unlike salesmen in stores or other places, Amway folks work on full commission, get no salary, health benefits, or anything else. Heck, they don't even need to be fired if they stop selling -- they fire themselves by not renewing. It's no wonder their bosses, the "upline", love them so much. They work for them for free!

Like any startup you will generally work for little or nothing for months or years to reach decent profitability.

Not really. Startups finally become profitable IF THEY SELL ENOUGH PRODUCTS OR SERVICES TO THE PUBLIC. Amway folks only become profitable if they GET ENOUGH PEOPLE BELOW THEM IN THE PYRAMID. Nobody cares about the product -- it's just an excuse that officially makes the pyramid legal. It's not as if anybody except for Amway drones, brainwashed by their "upline" to be "team players", actually buys a $52.49 bottle of vitamin pills -- of which $40 or so is pure commission to the upline, the upline's upline, the upline's upline's upline...

The rest of your "analysis" is based on this false assumption it's a job. Please compare to starting an running a business, with all the attendent strengths and weaknesses.

WHAT strengths?

It is a business selling incredibly overpriced products, where nobody has any contractual guarantee of any territory, and in which you are very strongly encouraged to RECRUIT YOUR OWN COMPETITION. If Amway were a business where the goal was to make money selling products, it is a suicidal business plan -- it's as if McDonald's priced their hamburgers at $100 a piece, and encouraged every franchise owner, not to sell hamburgers, but to recruit every customer to open another McDonald's next door in order to "join the great opportunity".

Amway's pricing and strategy of recruiting make it crystal clear that it isn't a business, but merely a pyramid scheme where the real, indeed the only, money is found by getting people "under" you to buy tons of overpriced stuff so you'll get a comission... just like YOU paid tons of money to YOUR upline buying tons of overpirced stuff so HE'LL get a comission.

 

[icerat]

Not true. They are, in fact, far more expensive.
Let's take Nutrilite: Their vitamin C tablets (300 tablets) cost

They are not "vitamin C tablets". You're not comparing like with like. Having said that, I happen to think that product IS over-priced.

But the truth is that it is more expensive because ca. 70% or so of Amway's sticker price is payments and commissions to the "uplines" in the pyramid.

"uplines" generally share in less than 30% of the price, similar to traditional distribution. You have no idea what you're talking about at all do you?

Except for, perhaps, other, even more expensive pyramid schemes (I presume that's who you mean by "competitors"), Amway's products are ludicrously overpriced.

Try comparing with other organic plant concentrates. Try comparing Artistry products with others in the "prestige" category. Pick any manufacturer, you'll always be able to find some product somewhere that has something vaguely similar cheaper elsewhere.

Why didn't you pick say the Daily Multivitamin? Didn't like the price comparison? Why didn't you pick Artistry and compare with it's competitors? Didn't like the comparison?

Nutrilite Daily (90 tablets), 180 tablets, list price $22.95 - 12.75c per tablet
* includes naturally sourced alfalfa, watercress, parsley, and acerola cherries and provides 100% or more of the RDA for 24 essential vitamins and minerals
Centrum Advanced Formula 325 tablets, list price $35.95 - 11.06c per tablet
* no organic concentrates, significantly less of many essential vitamins and minerals.

I'm willing to pay 1.69 cents more per tablet for a better product and so are many others. If you're not, that's your prerogative.

Actually, It is a job. Amway reps are salesmen whose sales pay for their upline, their upline's upline's, and so on, comissions -- just like a saleslman in a store pays for his boss, his bosses' boss, etc., salary.

Just like a corner stores' sales of "pick any product" pays for the local distributor which pays for the wholesaler which pays for the importer, which pays for the exporter which pays for the manufacturer

Welcome to business.

Not really. Startups finally become profitable IF THEY SELL ENOUGH PRODUCTS OR SERVICES TO THE PUBLIC. Amway folks only become profitable if they GET ENOUGH PEOPLE BELOW THEM IN THE PYRAMID.

I know there's little point in mentioning it again, since you've clearly ignored it every other time .... WE DON'T GET PAID BASED ON THE NUMBER OF PEOPLE RECRUITED.

If we did, then it would be a pyramid as you suggest.

It's not as if anybody except for Amway drones, brainwashed by their "upline" to be "team players", actually buys a $52.49 bottle of vitamin pills -- of which $40 or so is pure commission to the upline, the upline's upline, the upline's upline's upline...

Do you just pluck this figures out of your a**?? Your commission percentages are wrong, your claims on purchasing are wrong. As outlined in an earlier post above, the great majority of Amway sales are to people who have no "profit motive" for purchase.

It is a business selling incredibly overpriced products, where nobody has any contractual guarantee of any territory, and in which you are very strongly encouraged to RECRUIT YOUR OWN COMPETITION.

And they call "us" brainwashed ... do you actually think for yourself or do you just regurgitate the anti-amway talking points?

So ... Coca-Cola sells coke out their factory canteen. They also actively "recruit" wholesalers .... MY GOD! THEY'RE RECRUITING THEIR OWN COMPETITION!!!! People I recruit are not my competition, they're my customers.

The rest of your rant is predicated on the idea that there is no legitimate demand for Amway's products, and people only purchase them because of the profit motive. If this was true then you would be correct in your accusations of it being a pyramid scheme. However -

1. 25% of folk who do not renew their Amway businesses continue to purchase products as customers - they have no profit motive
2. 77% of folk registered with Amway do not do even the minimum required to earn bonuses, yet many of them continue to purchase products and renew their memberships. They have no profit motive.
3. Amway and Amway IBOs do hundreds millions of dollars in sales to people who are explicitly registered as customers, with no profit motive
4. Amway's products have won numerous independent consumer awards and accolades

Your assumptions are false, your conclusions are thus understandably also flawed.