Is Amway A Scam?

[icerat]

So: Any business practices can be considered defendable, as long as it results in tremendous net profit for the corporation?! Say, billions in sales!

No, but more than 53 years of history (nearly 80 including Nutrilite) operating (now) in 100+ countries and territories, with products topping sales rankings, and awards around the world is a bit of a hint that it's a legitimate company.

We should take Bernie Madoff out of jail, then.

Took less than a decade for him to be caught, tried, and convicted.

That's interesting. I didn't think it could be done because of rule 2.8 and the IBO registration agreement.

Amway does have some rules around sales of businesses. They've developed over the years as they want people who buy a business to actually know how to operate it.

The LOS area in particular is somewhere I disagree with Amway. I understand why they have the rule but I'm not 100% comfortable with it

Tiny resale value. That's always a warning sign.

Tiny? Do you think it's unusual that someone selling a business gets less than they wanted?

The business in question had enormous potential, but poor structure which means it was an unstable income. It thus did not sell for the price it could have.

Even 30 years ago Amway businesses were selling for hundreds of thousands of dollars.

^^This.

So the Amway corporation itself is hugely successful. How does this help prove it's not a huge scam that's getting away with taking advantage of lots of people?

Nutrilite, which developed the initial MLM model, began in 1934 and is now part of Amway. The business has been running pretty much non-stop since then. That's nearly 80 years. It's been formally investigated a number of times in several countries and cleared every time*.

You have two choices really -

(1) A massive global conspiracy that has allowed it to "get away with it" for so long in so many places, despite thorough and occasionally hostile investigations
or
(2) It's not what you think it is

*though it has been smacked over the wrist a couple of times, rightly in my view, for not properly monitoring and controlling the field.

 

[Wowbagger]

more than 53 years of history (nearly 80 including Nutrilite) operating (now) in 100+ countries and territories, with products topping sales rankings, and awards around the world is a bit of a hint that it's a legitimate company.

That doesn't say anything about its business practices.

(1) A massive global conspiracy that has allowed it to "get away with it" for so long in so many places, despite thorough and occasionally hostile investigations

They don't need a "massive global conspiracy" to "get away with it". All they need to do is skirt the law just enough to not actually be considered completely illegal.

 

[icerat]

That doesn't say anything about its business practices.

Yeah, it does. Countries around the world, including the US, have authorities whose task it is to monitor and stamp out unethical business practices

They don't need a "massive global conspiracy" to "get away with it". All they need to do is skirt the law just enough to not actually be considered completely illegal.

You mean "the hundreds of different laws" they'd have to get around.

Why would so many other companies and organizations, from the UN, to top sports clubs, to hundreds of partner stores, and major companies, not to mention Presidents of the United States be willing to be publicly associated with this "barely legal" company?

Have they not do their due diligence?

 

[Wowbagger]

You mean "the hundreds of different laws" they'd have to get around.

A lot of things can be unethical, but still perfectly legal. Even if there are authorities out to monitor them.

Why would so many other companies and organizations, from the UN, to top sports clubs, to hundreds of partner stores, and major companies, not to mention Presidents of the United States be willing to be publicly associated with this "barely legal" company?

Have they not do their due diligence?

Argument from testimony and authority, again.

 

[icerat]

A lot of things can be unethical, but still perfectly legal. Even if there are authorities out to monitor them.

We're not talking "perfectly legal" where talking "not completely illegal"

Can you point out some other companies operating for 80 years straight around the world, not banned anywhere, that you believe to operate unethically?

Argument from testimony and authority, again.

It wasn't an argument, it was a question. Two actually.

Which you haven't answered.

 

[Wowbagger]

It wasn't an argument, it was a question. Two actually.

Which you haven't answered.

Famous and important people can endorse all sorts of things that turn out to be awful. Welcome to the JREF Forum, where we collectively seem to have a knack for unraveling just those sorts of things!

Can you point out some other companies operating for 80 years straight around the world, not banned anywhere, that you believe to operate unethically?

I don't know how long the timeshare industry has been in existence. But, they've managed to stick around for a while.

Quackwatch has lots of examples of quack doctors, some with international exposure, that manage to stick around for long periods of time.

Let's assume there were no other examples, though. Let's pretend no unethical practices have ever lasted more than, say, 5 years, so far. That doesn't mean one exception can't emerge. 80 years might be a long time. But, that does not mean it would be impossible.




To defend Amway better, you must describe the nature of the system, and sell its virtues, on its own merits. Defend the "warts" by appealing to how it is necessary for the greater success of the system, for all IBOs involved. I tried to jump-start you in that direction. Perhaps you can roll back a bunch of posts, and take off from there.

 

[icerat]

Famous and important people can endorse all sorts of things that turn out to be awful.

I wasn't talking about endorsements. I was talking primarily about partnerships. You know, with contracts and all that stuff.

How long does it take before they "turn out to be awful"?

I don't know how long the timeshare industry has been in existence. But, they've managed to stick around for a while.

Quackwatch has lots of examples of quack doctors, some with international exposure, that manage to stick around for long periods of time.

80+ years? And they got officially investigated by different countries and cleared?

Let's assume there were no other examples, though. Let's pretend no unethical practices have ever lasted more than, say, 5 years, so far. That doesn't mean one exception can't emerge. 80 years might be a long time. But, that does not mean it would be impossible.

It's also possible, I suppose, that the Queen of England is a reptilian alien. David Icke thinks so.

So lets forget Amway. Let me ask you to consider this company -

• It's been in operation for nearly 80 years
• One of the largest private companies in the world
• Wins awards around the world
• Has some of the best selling products in their categories in the world
• Is endorsed by numerous organizations and well known individuals from all arenas of life
• It generates very few complaints for a company of it's size

What is more likely? It is legitimate or it is illegitimate?

 

[Joecool]

• It's been in operation for nearly 80 years
• One of the largest private companies in the world
• Wins awards around the world
• Has some of the best selling products in their categories in the world
• Is endorsed by numerous organizations and well known individuals from all arenas of life
• It generates very few complaints for a company of it's size

You should grown corn. With all the strawmen you put up, your corn would be safe.

This issue is not with the parent company but the miserable results of the sales force or the IBO's. Despite all the awards and things that you claim Amway has, the vast majority of their IBO's do not even earn as much as my newspaper delivery boy.

 

[marplots]

We're not talking "perfectly legal" where talking "not completely illegal"

Can you point out some other companies operating for 80 years straight around the world, not banned anywhere, that you believe to operate unethically?

You mean not currently banned?

There's a problem with your framing. The Amway of today isn't the same as the Amway of even a few years ago. You seem to assume that it's all fixed up now and everything they might have been doing wrong is patched.

But if we were having this conversation a few years ago, there would be this (from Wiki on Amway):

On November 3, 2010, Amway announced that it had agreed to pay $56 million – $34 million in cash and $22 million in products – to settle a class action that had been filed in Federal District Court in California in 2007.[96] The class action, which had been brought against Quixtar and several of its top-level distributors, alleged fraud, racketeering, and that the defendants operated as an illegal pyramid scheme.

While noting that the settlement is not an admission of wrongdoing or liability, Amway acknowledged that it had made changes to its business operations as a result of the lawsuit. The settlement is subject to approval by the court, which is expected in early 2011.[97] The economic value of the settlement, including the changes Amway made to its business model, totals $100 million.

Amway has a history of such things, has been banned in parts of India as recently as 2006 and is still said to be an illegal practice by authorities there. There have been arrests as recently as May, 2013 (http://www.deccanchronicle.com/1305...le/andhra-pradesh-police-caution-public-amway).

MLMs have been banned in the past, with Singapore changing their law in 2000.

As far as companies or industries that have been operating legally a long time and which I would call scams, homeopathy and chiropractic come to mind.

 

[Joecool]

I wasn't talking about endorsements. I was talking primarily about partnerships. You know, with contracts and all that stuff.

How long does it take before they "turn out to be awful"?

How did Amway's partnership with Enron and Worldcom work out?

 

[Joecool]

We're not talking "perfectly legal" where talking "not completely illegal"

Can you point out some other companies operating for 80 years straight around the world, not banned anywhere, that you believe to operate unethically?

Gambling has been around a long time. It's legal in some places and not legal in others.

It's a certainty that nearly all who gamble will lose money. The difference between gambling and Amway is that people who gamble usually know they are likely to lose.

Amway recruits often think they are going to make money but they don't. And the fact that Amway is not a game of chance means their system sucks since they have about the same dismal results as gaming prospects.

 

[Wowbagger]

Icerat, please, before you write another response, I want you to put some time into thinking about Amway's business practices: Both in theory and how they've worked out in practice.

I would encourage you to rebuild your defense of Amway on making those practices as appealing as possible - on their own merits - for potential IBOs who might join, and perhaps customers looking to buy products.

There might be limitations and complications in the structure, but that's fine. As long as they can be communicated in the context of preserving the intended structure, that ultimately benefits everyone, they can be considered defendable.

You don't have to sell us Amway. But, you should try to convince us that Amway can be good for everyone in their ecosystem. At least in theory.

If you have time, try to reconcile that theory with reality. Do some research on other sites hostile to Amway, and see if you can make sense of their issues, in light of the model you've developed.

That last part will probably require a lot more work, so if you want to postpone it, that's fine.

But, without a solid foundation of a defendable description to start with, you will only continue to flounder and fail on this forum.

So lets forget Amway. Let me ask you to consider this company -

• It's been in operation for nearly 80 years
• One of the largest private companies in the world
• Wins awards around the world
• Has some of the best selling products in their categories in the world
• Is endorsed by numerous organizations and well known individuals from all arenas of life
• It generates very few complaints for a company of it's size

What is more likely? It is legitimate or it is illegitimate?

I think it is more likely that an uncritical thinker will widen their eyes with admiration at such distinctions, and might be swayed to assume the company must be legitimate!

However:
I don't know if you noticed this, or not, but JREF is primarily a critical thinker's forum. Such bullet points won't sway most of us. See through them, we can!

It's time to start over, as I suggested above.

 

[icerat]

You mean not currently banned?

Never has been, apart from a brief period when all direct selling companies (not just multilevel) were banned while a licencing scheme was put in place. Amway was the second to receive a licence.

Amway has a history of such things, has been banned in parts of India as recently as 2006

false

and is still said to be an illegal practice by authorities there.

Some local police

There have been arrests as recently as May, 2013 (http://www.deccanchronicle.com/1305...le/andhra-pradesh-police-caution-public-amway).

QED. The federal government, which is responsible for the law (which is ambiguous and led to some confusion) has apologised and said they're changing it.

As far as companies or industries that have been operating legally a long time and which I would call scams, homeopathy and chiropractic come to mind.

What, you don't think placebo effect is real?

Could you point out some examples of homeopathic or chiropractic companies that have been specifically and officially investigated and cleared?

 

[icerat]

Icerat, please, before you write another response, I want you to put some time into thinking about Amway's business practices: Both in theory and how they've worked out in practice.

You first.

I would encourage you to rebuild your defense of Amway on making those practices as appealing as possible - on their own merits - for potential IBOs who might join, and perhaps customers looking to buy products.

Contrary to some claims, I'm not on here trying to prospect for IBOs or customers. I would use an entirely different approach - the first part of which would be not using a web forum!

You don't have to sell us Amway. But, you should try to convince us that Amway can be good for everyone in their ecosystem. At least in theory.

It is impossible to discuss that when you refuse to accept even basic facts about how the company operates.

If you have time, try to reconcile that theory with reality. Do some research on other sites hostile to Amway, and see if you can make sense of their issues, in light of the model you've developed.[/quote]

I have arguably done more research in to Amway than anybody. I have absolutely done more research into anti-Amway websites than anybody.

In summary, they are full of misunderstandings and over-generalizations and often outright lies

The general pattern in "skeptics" sites is - MLM=Pyramid therefore MLM has the weaknesses of pyramids. QED.

Brian Dunning, for example, even actively took quotes off the FTC website, removed the term "pyramid scheme" and replaced it with "network marketing" when he did a post about it.

Robert Carroll says things like "There will always be some distributors who will make money in an MLM scheme. The majority, however, must fail due to the intrinsic nature of all pyramid schemes"

I tried engaging Dunning in discussion, he asked for links to evidence, I provided them, he deleted my comment. Carroll has a note on his website saying don't bother emailing him if it's about MLM.

Neither of them primarily conducted their research through a handful of critical websites and completely ignored a wide range of academic and other published works. Dunning of course is now heading for jail for criminal fraud, ironically from affiliate marketing, which is often considered a form of network marketing!

Here on this thread we have people talking about "legal pyramid schemes", which makes no sense since pyramid schemes are illegal.

We've seen ridiculous claims like there's no complaints because people are embarrassed, or it's only legal because of lobbying or it's "not completely illegal"

I don't know if you noticed this, or not, but JREF is primarily a critical thinker's forum. Such bullet points won't sway most of us. See through them, we can!

And clearly critical thinking goes out the window when it comes to MLM! As a critical thinker myself, it's really quite sad to see. I can present as much fact or logic as you like. Peer reviewed sources, official data, court decisions, expertly reviewed books - you name it. It doesn't matter - when people are misinformed, giving them facts to correct those errors only makes them cling to their beliefs more tenaciously.

Seriously, you step back for a minute.

Think about all the known facts about Amway. Just the data. What's more likely? That all the experts and governments around the world and millions participating in Amway are wrong, and have been for nearly 80 years?

Or it's a legitimate business that some people misunderstand.

Occam's razor. What's the simplest explanation?

 

[Joecool]

Amway is a pyramid scheme. They've been able to skirt the law because of unclear definitions laid down by the FTC. The main point of contention that Icerat uses in his defense of Amway is that the IBO's themselves can be considered end users or retail consumers.

But in reality, Amway defines consumer as one who is not an IBO and the FTC says that a red flag of a pyramid scheme is when the products are primarily consumed by the participants and not actual customers.

Amway also legally separates themselves legally by having the distributors be "independent". Therefore they can claim innocence when the IBO's do unethical or illegal behaviors. Smart move by Amway actually. But then again they had their reputation tarnished by those same behaviors.

Icerat also claims that there are few complaints against Amway. Probably true but what does Amway or the BBB do with complaints against IBO's or the motivational groups that sell seminars and such? Technically they are complaints but would not be filed against Amway.

Then there's the reality of the internet which is filled with horror stories and tales of scam by IBO's. The reality is a different picture than the one Icerat paints.

 

[MinnesotaBrant]

Please let this boring thread die. Its about as much fun as talking about the shear strength of the T beams holding up the WTC during 9/11 Amway is has not been declared a scam because they are big enough to buy a few congressman here or there to say its legit.

 

[Wowbagger]

It is impossible to discuss that when you refuse to accept even basic facts about how the company operates.

So, that's it, then. A complete and utter non-answer to the most important questions that would have gotten you out of this mess.

Perhaps we should let the thread die, then....




.... But, I am a little curious to know what "basic facts" you think I am refusing to accept, if you don't mind letting me know.

I've tried to construct the model as best as I could. You even liked most of it, at one point. So, I must be accepting something about how it works.

 

[marplots]

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.

That's how the OP starts. Not about Amway the corporation, but about Amway as experienced by the masses. For some reason, the conversation keeps missing that point - I'm as guilty as anyone else.

 

[icerat]

Please let this boring thread die. Its about as much fun as talking about the shear strength of the T beams holding up the WTC during 9/11 Amway is has not been declared a scam because they are big enough to buy a few congressman here or there to say its legit.

As I was saying about massive global conspiracies.

QED

 

[Joecool]

Bottom line. Amway is operated as a scam. Nearly everyone knows it.

This thread is clear evidence of that.

Either we are all wrong or Icerat is wrong. I believe it to be the latter.