Is Amway A Scam?

[Joecool]

Amway the corporation by itself is not a scam. But the Amway opportunity, tied in with Amway Motivational Organizations (AMOs) are run like a scam.

People are often recruited by being told if they work hard for a short period of time (usually 2-5 years), they can become wealthy beyond their dreams, own mansions, yachts, sports cars - all paid ofr in cash! The diamonds will even show you their trappings to get your juices flowing.

Then when people's interest gets piqued, they tell you that it's 100% guranteed if you will only follow their foolproof system of cds, seminars and some other optional but necessary tools. The tools teach you to never quit, to blame yourself if you fail, and of course to buy more tools. It is well documented that some diamonds make most of their income from these tools.

It's basically a bait and switch scam. They lure you into Amway when the real money is actually made by selling tools, in many cases. Even the compensation for selling Amway products is unfair with most IBOs doing the work, but with upline(s) getting most of the bonus money that Amway pays out.

Factor in the well known deception, and at times, outright lies that are told to recruits, and you have all kinds of red flags indicating scam.

 

[AdMan]

Amway the corporation by itself is not a scam. But the Amway opportunity, tied in with Amway Motivational Organizations (AMOs) are run like a scam.

People are often recruited by being told if they work hard for a short period of time (usually 2-5 years), they can become wealthy beyond their dreams, own mansions, yachts, sports cars - all paid ofr in cash! The diamonds will even show you their trappings to get your juices flowing.

Then when people's interest gets piqued, they tell you that it's 100% guranteed if you will only follow their foolproof system of cds, seminars and some other optional but necessary tools. The tools teach you to never quit, to blame yourself if you fail, and of course to buy more tools. It is well documented that some diamonds make most of their income from these tools.

It's basically a bait and switch scam. They lure you into Amway when the real money is actually made by selling tools, in many cases. Even the compensation for selling Amway products is unfair with most IBOs doing the work, but with upline(s) getting most of the bonus money that Amway pays out.

Factor in the well known deception, and at times, outright lies that are told to recruits, and you have all kinds of red flags indicating scam.

Not arguing that it's not a scam because I don't know enough about it, but what's your evidence for the claims?

 

[Joecool]

Not arguing that it's not a scam because I don't know enough about it, but what's your evidence for the claims?

Personal experience, years of research, and seen lots of testimony describing exactly what I posted above.

 

[Sideroxylon]

Personal experience, years of research, and seen lots of testimony describing exactly what I posted above.

I have never been impressed by the spiels and tactics, but you do need to do better than that around here. Evidence for your claims?

 

[Joecool]

I have never been impressed by the spiels and tactics, but you do need to do better than that around here. Evidence for your claims?

www.amquix.info

www.amwayscheme.blogspot.com

http://network21amway.blogspot.com/

http://rocketsrants.blogspot.com/

http://thefactsabouttheamwayopportunity.blogspot.com/

http://bwwsot.blogspot.com/

 

[JoeTheJuggler]

I suppose it depends on how you define the word "scam". As a legal pyramid scheme, it's not breaking the law, but it depends on the fact that many people will lose money so that a few people will make money.

 

[Sideroxylon]

So what happens now? Your mate Icerat drops a few pro-Amway links in the thread?

 

[Joecool]

So what happens now? Your mate Icerat drops a few pro-Amway links in the thread?

What kind of evidence do you want to see?

 

[Sideroxylon]

What kind of evidence do you want to see?

A sampling of the evidence that led you to your stated conclusion.

ETA: To be honest, I sympathise with what you are saying but rightly or wrongly I have come to believe that you just enjoy trolling him.

 

[Almo]

A sampling of the evidence that led you to your stated conclusion.

ETA: To be honest, I sympathise with what you are saying but rightly or wrongly I have come to believe that you just enjoy trolling him.

I have to agree with this. I hate Amway as much as the next guy, but JoeCool's posts on the subject of Amway, like Icerat's, are all the same.

Which is weird because I've seen Icerat post outside Amway threads, and he seems a really reasonable guy. Just seems to have this blind spot.

 

[Joecool]

A sampling of the evidence that led you to your stated conclusion.

I personally witnessed people lose their homes and go bankrupt following the sage advice of their trusted mentors. Icerat claims this doesn't happen, thus we do not see eye to eye in issues surrounding Amway. Icerat made some of the issues more personal by threatening to "out" some of the anti Amway forum members (reveal their true identity) He also posted some false articles on his own forum about me that led to a corporate Amway blogger to label Icerat as a cyberbully. I feel as if someone has to present information to information seekers. What does more good? Preventing people from joining where they are nearly assured of losing money to encouraging them to join because somewhere out there is a "good" Amway? I'm not interested in trolling him but he has a habit of showing up whereever I post experiences and opinions,

Source: http://www.amquix.info/Amway_zerosum.html

A negative sum game is one in which the participants (risk takers, game players) take home less than what they brought with them. Lotteries, casinos, racetracks are all negative sum games. The administrators of these games be it the state, the casinos, or race track all take money out of the pot which leaves less for the game players to take back home.

Most companies, be it Wal-Mart or McDonalds balance their quest to grow with the need to be profitable. If they open too many stores, saturating their markets, there will not be enough sales volume to support the average store's overhead costs. Stores on average could lose money when too many stores are in one market.

Edited by Locknar: 

Edited, breach of rule 4.

In general, IBOs will not break even on average until personal sales (BV) exceed expense levels by three to four times, or two times PV. Personal sales is defined as personal consumption plus sales of inactive, non-building personally sponsored IBOs and member/client purchases. It is likely that the average PV/IBO does not even exceed 65 PV/month.

 

[Maurice Ledifficile]

Amway, like all MLM businesses, is operating on a model where the representatives are the consumer. Sales of the products to non-representatives account for almost none of the profits the company is generating.
There is virtually no evidence of "Diamonds" having made their fortune through hard work selling Amway products. The money is made by the people who fund the rallyes and seminars, selling motivational woo.
It may not be a scam in the proper sense, but it is dishonest in my opnion. As Robert Fitzpatrick (auth: False Prophets) says: "it's an enless recruitment chain"; "You're supposed to fail. That's the business".

 

[icerat]

Joecool is on my ignore list and I'm trying to not get sucked in to his trolling, but I'll make a few comments on Maurice's comments.

Amway, like all MLM businesses, is operating on a model where the representatives are the consumer.

That's partially true. The business opportunity is used as a "hook" partially to get people to try MLM products. Charles King, a Professor of Marketing at the University Chicago (and who is pro-MLM) talks about this in his book "The New Professionals".

So many people try the products because they got intrigued by the business opportunity, decide the bizopp isn't for them but remain as customers. Why I say "partially true" is because since they never market the products, they're not really "representatives".

Sales of the products to non-representatives account for almost none of the profits the company is generating.

This is a myth, especially when you exclude people who have registered but never act as "representatives".

There is virtually no evidence of "Diamonds" having made their fortune through hard work selling Amway products. The money is made by the people who fund the rallyes and seminars, selling motivational woo.

This is false. Amway provides average income statistics from Amway income alone and it is significant. In the most recent US figures, for Founders Diamonds and above the average income from Amway income alone is over $600,000/yr. There are many examples on the internet of photographs of very large Amway cheques (some over a million). In 1982 Dexter Yager, who is probably the best known for having made a lot of money selling BSM (business support materials aka "tools") told 60 minutes the majority of his income was from Amway.

It may not be a scam in the proper sense, but it is dishonest in my opnion. As Robert Fitzpatrick (auth: False Prophets) says: "it's an enless recruitment chain"; "You're supposed to fail. That's the business".

Robert Fitzpatrick was involved in the airplane game, a real (and obvious) pyramid chain letter scam. He's taken that experience and falsely extrapolated it to legitimate MLMs. I'd note by the way that his book, False Profits, was self-published, it had no editorial control at all, it's merely his opinions.

 

[icerat]

Which is weird because I've seen Icerat post outside Amway threads, and he seems a really reasonable guy. Just seems to have this blind spot.

And I'd say that I've seen Almo (and others!) post outside Amway threads, and they seem really reasonable guys. Just seem to have this blind spot!

Seriously, I've done a lot of research in this area. Academic studies, books, lawsuits, 5 decades of media reports, critics websites, documentaries, you name it. How many of the "critics" can even remotely say the same?

 

[EvilSmurf]

This is false. Amway provides average income statistics from Amway income alone and it is significant. In the most recent US figures, for Founders Diamonds and above the average income from Amway income alone is over $600,000/yr. There are many examples on the internet of photographs of very large Amway cheques (some over a million). In 1982 Dexter Yager, who is probably the best known for having made a lot of money selling BSM (business support materials aka "tools") told 60 minutes the majority of his income was from Amway.

Yes, but how much of their $600,000 income is sales to their downlines rather than actual sales to consumers?

 

[icerat]

Yes, but how much of their $600,000 income is sales to their downlines rather than actual sales to consumers?

Your question makes no sense on a variety of fronts. First and foremost, being a downline and being a consumer are not mutually exclusive.

Secondly, a major part of the MLM model is the idea that as your business grows you progressively transition from your business primarily being one of retail (sales direct to consumer) to one of wholesale (sales to resellers). Ultimately of course, all the revenue comes from actual sales to consumers.

How much of Proctor & Gambles revenue is sales to consumers and how much is sales to resellers? It's virtually all to resellers. How much of Coca Cola's revenue is sales to consumers and how much is sales to resellers? It's virtually all to resellers.

Do you have an issue with that?

 

[marplots]

Yes, but how much of their $600,000 income is sales to their downlines rather than actual sales to consumers?

I don't think there is any way for Amway to measure this other than by what their distributors tell them. The temptation is for a distributor to claim a retail sale (outside the Amway network) when they consume the product themselves.

If you are told that to stay legal, 70% of your sales must be to the end consumer (and that can't be you) -- what would you say? When we are told that Amway is a "buyers club," this flies in the face of the 70% rule.

 

[marplots]

Seriously, I've done a lot of research in this area. Academic studies, books, lawsuits, 5 decades of media reports, critics websites, documentaries, you name it. How many of the "critics" can even remotely say the same?

I can't say it. That's a lot of research. I just read some junk on the net.
How many years of study will it take for me to unearth all the stuff that contradicts the little I know now? Cause that little is pretty discouraging.

 

[icerat]

I don't think there is any way for Amway to measure this other than by what their distributors tell them. The temptation is for a distributor to claim a retail sale (outside the Amway network) when they consume the product themselves.

Sure, but don't forget that a retail sale is a sale made to a consumer. There's no reason that can't include the distributor themselves.

If you are told that to stay legal, 70% of your sales must be to the end consumer (and that can't be you) -- what would you say? When we are told that Amway is a "buyers club," this flies in the face of the 70% rule.

That rule doesn't exist. It was made up and promoted by mlm critics like Jon Taylor and Robert Fitzpatrick. The actual rule is that 70% of products must be sold at wholesale (ie to other distributors) or retail (ie direct to a customer) or consumed before a bonus gets paid out. It's to prevent inventory loading, ie filling up your garage with soap to get a bonus. To quote the findings of fact in FTC vs Amway -

The '70 percent rule' provides that '[every] distributor must sell at wholesale and/or retail at least 70% of the total amount of products he bought during a given month in order to receive the Performance Bonus due on all products bought

Note again that a retail sale is a sale to an end user. There's nothing that says the end user cannot be a distributor. Indeed the FTC has explicitly clarified that legitimate "internal consumption" (ie buyers club type of model) is perfectly acceptable.

I can't say it. That's a lot of research. I just read some junk on the net.

And we all know how accurate the 'net is

How many years of study will it take for me to unearth all the stuff that contradicts the little I know now? Cause that little is pretty discouraging.

You're right, I gotta right a book

 

[Maurice Ledifficile]

The "business opportunity" is NOT a hook to introduce the products. That's the biggest lie yet. It's the other way around. The business opportunity IS the real product. Again, I know it, and you know it.

Coke makes profit by selling to distributors, true. But those distributors make money by selling to consumers. Amway makes money by selling to a distributor, who sells to a distributor, who sells to a distributor...

The numbers you posted about how much profit Diamonds make don't address my main issue. Diamonds are the ones who saw the real business opportunity: Investing a lot more than the average sucker does. They fund rallyes and seminars and make a real profit selling "start-up kits" and self-help nonsense. No one goes from a few hundred dollars' investment, works hard, then goes on to become a big shot diamond. They just don't.

If I had a lot of money to risk in an investment, and no conscience, I would invest in the Amway business opportunity. The real one. The one where I run large seminars and rake in the real dough off the small investor (the poor guy who believes the lies about the business model).

But I won't. I don't do cults.