Is Amway A Scam?

[paiute]

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?

I see the Amway TV ads about how this or that of their products is the best selling whatever, but I have never seen any of these products in any house I have ever been in. P&G and Coke products I see everywhere.

 

[Maurice Ledifficile]

If there are Amway products in a house, you will probably not find out by seeing them in the house. You will be in that house because you're being pitched to in the first place. Only distributors have the products. They're the consumer.

 

[icerat]

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.

*Professor Charles King disagrees with you. A book of his is the one that opened my eyes to this particular strategy,
*I disagree with you
*I'm a living example that you're wrong. While I was familiar with the quality of Amway's cleaning products (my mother bought them - yet another of these customers that aren't supposed to exist), I doubt I would have made the time to sit down and learn about Nutrilite, or for that matter Satinique or Tolsom if I hadn't been building an Amway business. Ten years later I continue to buys those products, without working as a "distributor"

Coke makes profit by selling to distributors, true. But those distributors make money by selling to consumers.

No, distributors usually distribute. Either to regional distributors or wholesalers or maybe retailers. The retailers sell to consumers.

Amway makes money by selling to a distributor, who sells to a distributor, who sells to a distributor...

And just like for Coke, at some stage the product ends up the hands of a consumer. Unlike coke, if it doesn't, then it can be returned to Amway for a full refund.

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.

You guys don't give a damn about reality and evidence do you? $600,000/yr isn't "a real opportunity"? I've provided statistics from a major BSM company, representing hundreds of Diamonds, showing them averaging about $20K/yr from their BSM side business, including speaking fees. There's been a bankruptcy document from a guy who is actually a part-owner in a BSM manufacturer (not just reselling like most Diamonds) and his BSM income was at most (we don't know all the breakdowns) equal to his Amway income, not more. Dexter Yager, who owns one of the best known BSM companies, is on record (60 minutes) stating he makes more from Amway than from his BSM company (Internet).

Do some make more from this "side business" than from Amway? Sure, and there's particular reasons and circumstances behind that (not always positive either!)

But to claim a business bringing in income over $600,000/yr isn't a "real business" is just plain silly.

No one goes from a few hundred dollars' investment, works hard, then goes on to become a big shot diamond. They just don't.

No, they have to learn stuff too.

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.

You apparently don't do facts much either.

I see the Amway TV ads about how this or that of their products is the best selling whatever, but I have never seen any of these products in any house I have ever been in. P&G and Coke products I see everywhere.

You spy in people's bathroom and medicine cabinets? You check through women's purses? Really?

If there are Amway products in a house, you will probably not find out by seeing them in the house. You will be in that house because you're being pitched to in the first place. Only distributors have the products. They're the consumer.

(1) I'm not a distributor of Amway products(*). I'm a consumer of Amway products.
(2) What's wrong with distributors being consumers, if it's because of legitimate demand?

*unless someone asks. Put it this way, I claim zero Amway business expenses. I have the right to resell/distribute the products, but I don't. I'm a consumer

 

[marplots]

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.

From the link you provided: http://www.scribd.com/doc/26856636/FTC-Staff-Advisory-Opinion-Pyramid-Scheme-Analysis

It is important to distinguish an illegal pyramid scheme from a legitimate buyers club. A buyers club confers the right to purchase goods and services at a discount. If a buyers club is organized as a multi-level reward system, the purchase of goods and services by one’s downline
could defray the cost of one’s own purchases (i.e., the greater the downline purchases, the greater the volume discounts that the club receives from its suppliers, the greater the discount that can be apportioned to participants through the multi-level system). (highlighting mine).

Is this your claim? That being an IBO in Amway allows purchases at a higher volume and a discount from suppliers? Isn't Amway itself the only supplier here?

And later, at the same link:

The purchase of goods and services within such a system can, therefore, be distinguished from a pyramid scheme on two grounds.
First, purchases by the club's members can actually reduce costs for everyone (the goal of the club in the first place).

Is this the purpose of Amway, to reduce costs for everyone? I have been misled. I thought it was a business opportunity. (Again, pardon me for quoting material you provide.)

 

[icerat]

Is this your claim? That being an IBO in Amway allows purchases at a higher volume and a discount from suppliers? Isn't Amway itself the only supplier here?

No it isn't. Amway manufactures around 450 products, and from them is where the profit potential primarily arises, but Amway members have access to thousands of other products and brands as well.

Is this the purpose of Amway, to reduce costs for everyone? I have been misled. I thought it was a business opportunity. (Again, pardon me for quoting material you provide.)

Why do so many people on these threads have such a problem comprehending that something can offer more than one thing? Is there some objection to giving people the choice to decide what they want?

 

[marplots]

Why do so many people on these threads have such a problem comprehending that something can offer more than one thing? Is there some objection to giving people the choice to decide what they want?

I think my problem with the "more than one thing" is that when I think it's a scammy business opportunity I am told it's a buyer's club. But then, when I point out it's a scammy buyer's club, I am told it's a business opportunity.

Somehow, I feel as if I'm dealing with a used car salesman who points out the new tires when I ask about mileage and then the great deal I am getting because it's a high mileage car when I point out the tires aren't the proper size.

Is this the bottom line here? A flaw in one area isn't additive to a flaw in another? I will have to stick to business models I can understand. Too much can be concealed with complexity.

 

[icerat]

I think my problem with the "more than one thing" is that when I think it's a scammy business opportunity I am told it's a buyer's club. But then, when I point out it's a scammy buyer's club, I am told it's a business opportunity.

Well then both you and whoever you've been talking to are both wrong and both right. It can be utilised as both a buyer's club and a business opportunity, and it can be run professionally or scammy.

Is this the bottom line here? A flaw in one area isn't additive to a flaw in another?

I don't really see your issue here. The model, at least for Amway, is simple - buy more stuff, get stuff cheaper.

That's it.

I will have to stick to business models I can understand. Too much can be concealed with complexity.

What's so complicated? You can get a costco membership to use the stuff yourself, or you can get it to resell the stuff at a profit. Buy a carton of stuff rather than eaches, you can generally get it cheaper.

It ain't that complicated!

 

[paiute]

You spy in people's bathroom and medicine cabinets? You check through women's purses? Really?

Yes. Yes, I do. And yours really needs some cleaning.

 

[Muldur]

Your question makes no sense on a variety of fronts.

No, you just can't answer it honestly without admitting the scam.

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).

In other words: recruit your own rubes and make your money off of them instead of spending 70 hours a week schlepping door to door hawking the goods direct.

Ultimately of course, all the revenue comes from actual sales to consumers.

Only because you've defined the "downstreamers" as "consumers".

Not one ounce of product may be going out the door to a non-member in sales, but because the "retailers" (individual salesmen) pay for the product up front, the manager/middleman gets to count it as income, and as long as he's good at convincing the next rube to sign on, he has steady income even with no product actually being sold to non-members.

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.

The all important difference being that the reseller chain in the case of P&G and Coke (supermarkets, etc) are actual stores selling product to end users that are NOT attempting to entice rubes into setting up their own supermarkets.

The corner grocery is set up to be exactly that: the corner grocery. NOT a corner grocery looking to become a wholesale hub for a gaggle of "groceries" lined up and down the street in all directions.

Do you have an issue with that?

I've got a problem with ANY business based on tricking rubes into buying bulk quantities of over-priced, poor quality cleaning supplies and trying to pawn them off on friends and neighbors. Every experience I've ever had with MLM products and/or their "infomercial" counterparts has left me dissapointed with both price and results.

 

[bigred]

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.

I was going to take a friendly jab at you saying something like "congrats you're the last person on the planet to find this out," but amazingly, you're not. lol @ people giving you a hard time about the granddaddy of all pyramid schemes which has been well-known for decades.

 

[icerat]

No, you just can't answer it honestly without admitting the scam.

No, it's because you apparently have decided that someone eating pasta is not a consumer because they registered to get it as a discount

In other words: recruit your own rubes and make your money off of them instead of spending 70 hours a week schlepping door to door hawking the goods direct.

Yeah, just like those scammers P&G and Coke & Unilever and you name it.

Only because you've defined the "downstreamers" as "consumers".

No, I haven't had to define that. If they consume they're consumers, not my decision.

Not one ounce of product may be going out the door to a non-member in sales, but because the "retailers" (individual salesmen) pay for the product up front, the manager/middleman gets to count it as income, and as long as he's good at convincing the next rube to sign on, he has steady income even with no product actually being sold to non-members.

1. a huge amount of product is sold to non-members.
2. a huge amount of product is sold to non-retailing members
3. if at least 70% of what has been bought in any given month hasn't been on-sold or used, then no income is earned

The all important difference being that the reseller chain in the case of P&G and Coke (supermarkets, etc) are actual stores selling product to end users that are NOT attempting to entice rubes into setting up their own supermarkets.

Rubbish. P&G sells for example to importers who actively look for further distributors and wholesalers, who actively look for smaller distributors, wholesalers and retailers.

Your ignorance of the retail industry is mind-boggling.

The corner grocery is set up to be exactly that: the corner grocery. NOT a corner grocery looking to become a wholesale hub for a gaggle of "groceries" lined up and down the street in all directions.

Woolworths started as a single "five and dime" store
Wal-mart started as a Walton's 5 & 10 store
etc etc etc

Your ignorance of the retail industry continues to be confirmed.

I've got a problem with ANY business based on tricking rubes into buying bulk quantities of over-priced, poor quality cleaning supplies and trying to pawn them off on friends and neighbors.

I've got a problem with that any business like that too.

Every experience I've ever had with MLM products and/or their "infomercial" counterparts has left me dissapointed with both price and results.

How many of the top 100 direct selling companies products have you tried?

 

[Joecool]

It sounds like Icerat is saying that Amway downline are customers. Thus it doesn't matter if very little or nothing is sold to non IBOs - because downline are customers. However, in real life, having no actual customers is a red flag sign of a pyramid scam. Icerat's definition makes Amway look like an illegal pyramid scam.

Then Icerat's next defense is that there are customers who register only to get price discounts. That is odd because I have heard (and personally witnessed) people selling Amway goods at cost or below (See ebay and Craigslist). Thus, it's like someone buying a McDonald's so he can get cheaper burgers. It doesn't add up.

 

[gnome]

I looked into the "Pyramid" nature of Amway once upon a time--it's been about ten years so I don't know what's changed--except the introduction of the Quixtar branding (spelled right?)

What I found out--there was a defining 1979 ruling. It is often touted by Amway hawks as "declaration that Amway is not a pyramid"... but it also proscribes certain behavior that an MLM must do in order to avoid being a pyramid scam.

http://en.wikipedia.org/wiki/In_re_Amway_Corp.

One big problem that I've observed is Amway distributors focusing more on recruiting other distributors than actually selling products. The family member that pitched to me (and I have no doubt he was trained to make his pitch this way) responded to my disinterest in performing sales by proposing a strategy of only purchasing Amway products for myself, and otherwise directing my effort to recruiting.

This would seem to be an explicit violation of rules that distributors must sell a certain portion of their inventory to enough distinct non-distributors. This was ostensibly enforced by a signed form for distributors attesting that they will follow this requirement, but seems to be ignored after signing. Certainly the person pitching to me made no mention of the requirement, and it is at odds with the entire strategy he proposed. He was not suggesting I'd make money pushing products--only building downlines. The idea of drawing money with no work at all, just by establishing a good downline, was a feature of his pitch.

For my own personal family situation, I simply declined and deflected discussion. I think once I sent some info (similar to what I have posted above) that was ignored.

10 years later, I just don't hear about it from him anymore. I don't know how much he's still active.

 

[icerat]

The family member that pitched to me (and I have no doubt he was trained to make his pitch this way) responded to my disinterest in performing sales by proposing a strategy of only purchasing Amway products for myself

Which would contradict what you said about him having no interesting in selling products, wouldn't it?

This would seem to be an explicit violation of rules that distributors must sell a certain portion of their inventory to enough distinct non-distributors.

There is no such rule. It's a myth promoted by a number of anti-mlm zealots.

The idea of drawing money with no work at all, just by establishing a good downline, was a feature of his pitch.

An unfortunately not uncommon pitch, at least in the past, and one which clearly is against amway's rules -

8.3.7. Must not say that a successful IB can be built in the form of a “wholesale buying club,” where the only products bought and sold are those transferred to other IBOs for their personal use.
8.3.8. Must not say that there is no requirement for the retail sale or marketing of products by IBOs.

 

[Joecool]

Originally Posted by gnome
The family member that pitched to me (and I have no doubt he was trained to make his pitch this way) responded to my disinterest in performing sales by proposing a strategy of only purchasing Amway products for myself

Which would contradict what you said about him having no interesting in selling products, wouldn't it?
[/I]

Selling to who? Selling products to a downline who consumes them does nothing but send money from the bottom of the pyramid to the top. Factor in functions and other materials and everyone has a chance to go bankrupt.

 

[Brattus]

What I find very odd about Amway is the fact that they have not changed one thing about the business opportunity they sell in the past 30 years.

In that time vast changes have come about in the way people communicate with one another.
World Wide Web to name just one.
If Amway was really about selling Amway products and not selling Amway itself then there would be a few major Amway web stores and Ebay stores and that would be the end of it.
Anyone wanting to buy Amway products would simply order what they wanted online.
That full on negates needing any more "distributors" to sell the product to their friends and family or door to door.

Also if it was a door to door selling business like they claim then Amway would be known for door to door sales in the same way Avon is.
Instead Amway is synonymous with pyramid schemes.

 

[gnome]

Which would contradict what you said about him having no interesting in selling products, wouldn't it?

Not really. He only suggested buying products as part of trying to convince me to become a part of his downline.

There is no such rule. It's a myth promoted by a number of anti-mlm zealots.

That article nicely debunks a misconception that there is a 70% sales rule. However I refer to a 10-customer rule mentioned in the FTC decision. There seemed to be little interest in fulfilling that.

An unfortunately not uncommon pitch, at least in the past, and one which clearly is against amway's rules -

8.3.7. Must not say that a successful IB can be built in the form of a “wholesale buying club,” where the only products bought and sold are those transferred to other IBOs for their personal use.
8.3.8. Must not say that there is no requirement for the retail sale or marketing of products by IBOs.

How many have been sanctioned in any way for violating these rules?

Bear in mind, I'd be happy to hear that there's been action on this front. I'm not trying to argue that it's the same as it was when I was observing the situation.

 

[icerat]

What I find very odd about Amway is the fact that they have not changed one thing about the business opportunity they sell in the past 30 years.

What I find very odd about Amway is how there's so many otherwise intelligent and educated people who are so ignorant about the company yet also so certain of the (incorrect) facts. Amway has made enormous numbers of changes over the past 30 years, too many to go in to here.

In that time vast changes have come about in the way people communicate with one another.
World Wide Web to name just one.

And the fact Amway is the #1 internet retailer in health & beauty doesn't make you pause and think?

If Amway was really about selling Amway products and not selling Amway itself then there would be a few major Amway web stores and Ebay stores and that would be the end of it.

So, the strategy they've been following has more than doubled their sales in the last decade and made their health & beauty brands (Nutrilite and Artistry) #1 and #3 in their category in the world, and you think they should setup ebay stores instead? Really?

Anyone wanting to buy Amway products would simply order what they wanted online.

Which you've been able to do since the late 90s from distributor's websites and from amway.com themselves for some years now.

That full on negates needing any more "distributors" to sell the product to their friends and family or door to door.

Amway has never been a door to door sales company. Even with website ordering, you still need marketing. Have you noticed how many internet retailers went out of business?

Also if it was a door to door selling business like they claim then Amway would be known for door to door sales in the same way Avon is.

Where has Amway claimed to be a door to door selling business? For that matter, where has Avon?

Instead Amway is synonymous with pyramid schemes.

Only amongst the ignorant, which alas seems most common amongst Americans, which is ironic given the US is one of a handful of countries where this has been claimed in court and the courts have explictly declared it's not a pyramid scheme. And that was nearly 40 years ago and yet the "myth" persists.

 

[Mike!]

"Scam" is such a harsh word, but yes. Yes it's a scam.

 

[Joecool]

The issue here is reality versus the rule that Amway hides behind.

Amway has a retail sales requirement. Is it enforced? How so? Not saying they don't exist, but I have never heard of anyone being denied a bonus for not following the retail sales rule. Indeed, my own upline, when I was an IBO, said to ignore the ten customer rule. Many groups were taught to "buy from themselves" without regards to selling, because many people do not like selling.

Without sales to actual customers, all the bonuses are being generated by IBO's purchases, thus little or no money is coming into the organization. Thus without sales, the only way to make more money is for IBO to recruit people into the organization so they can get a piece of the action from downline purchases. This is where the red flags go up regarding pyramid scheme.

Add in the tools and the organization is being seperated from their money slowly, but systematically. One cd and one function at a time.

The FTC may have found Amway legal in 1979 but I wonder how they would rule today? How would they rule on the symbiotic tool companies?