Moderated MLM Crap :(

[Joecool]

Amway is a total scam.

Absolutely. Does that make Icerat a scammer?

 

[Mycroft]

Remember folks, the secret to Amway is they recruit you telling you you're going to be their sales force, but the reality is you're their market for motivational materials sold by your upline. It's not very likely you're going to recover your investment by selling off brand soaps and shampoos to your friends and family even if they do manage to recruit people on their own, but the first time you spend $1700 to attend some seminar, you're making money for somebody.

 

[icerat]

Remember folks, the secret to Amway is they recruit you telling you you're going to be their sales force, but the reality is you're their market for motivational materials sold by your upline.

(1) Where's the secret? The fact people make money when they sell you stuff is (a) obvious and (b) with regards to "motivational materials", the fact is published in various bits of literature numerous times, as well as in the registration contract

(2) You're also "their market" for Amway products sold by your upline

welcome to capitalism, your buy stuff, someone makes money

It's not very likely you're going to recover your investment by selling off brand soaps and shampoos to your friends and family

(1) Partially true, since most people don't even try to sell anything. Indeed, as the FTC reported in their analysis of a proposed new business opportunities rule a few years ago, most people join legitimate MLMs primarily to purchase at distributor pricing. Incidentally the FTC decided to exclude MLMs from the new regulations as their investigations showed there were few complaints and few problems with the legitimate operators (namely those who were DSA members)

(2) These days Amway is primarily a health & beauty company, not soaps and shampoos, and has been for a long time. Indeed it owns the #1 brand in nutrition globally, and one of the top 10 in skincare and cosmetics (it's top 4 in the "prestige" category)

(3) It's really not hard to sell $300 worth of stuff, which is about all you'd need to "recover your investment"

even if they do manage to recruit people on their own, but the first time you spend $1700 to attend some seminar, you're making money for somebody.

The first time you buy anything for anyone you're making money for somebody. Welcome to capitalism.

$1700 for a seminar? What was it, Tony Robbins?

 

[Mycroft]

(1) Where's the secret? The fact people make money when they sell you stuff is (a) obvious and (b) with regards to "motivational materials", the fact is published in various bits of literature numerous times, as well as in the registration contract

It may be published, but it's certainly not emphasized. Recruits are told told their path to success is in recruiting more people to sell more product. They're not told that the only people making real money are the ones selling motivational materials, nor are they told how to get on that side of the business.

(2) You're also "their market" for Amway products sold by your upline

Sure, but really that doesn't amount to much. The majority of the money is in selling motivational materials.

welcome to capitalism, your buy stuff, someone makes money

I'm all for capitalism. What I'm against is products being sold on unrealistic expectations, and Amway fits that bill.

(1) Partially true, since most people don't even try to sell anything. Indeed, as the FTC reported in their analysis of a proposed new business opportunities rule a few years ago, most people join legitimate MLMs primarily to purchase at distributor pricing. Incidentally the FTC decided to exclude MLMs from the new regulations as their investigations showed there were few complaints and few problems with the legitimate operators (namely those who were DSA members)

I suspect a large reason for the low number of complaints is that people who fail at MLM's blame themselves for their failure rather than looking at the system as a whole and understanding that it only allows for a tiny number of successes.

(2) These days Amway is primarily a health & beauty company, not soaps and shampoos, and has been for a long time. Indeed it owns the #1 brand in nutrition globally, and one of the top 10 in skincare and cosmetics (it's top 4 in the "prestige" category)

The product itself is unimportant.

(3) It's really not hard to sell $300 worth of stuff, which is about all you'd need to "recover your investment"

And most people do it by just buying $300 in merchandise, because selling $300 worth if stuff to your friends, family, and coworkers is a lot harder than one would think.

The first time you buy anything for anyone you're making money for somebody. Welcome to capitalism.

As I said I'm all for capitalism, but when loved ones are hyped up on a promise of six figure incomes without being told that only a tiny fraction of one percent make it that far, and the ones that do are doing it by a different route (selling motivational materials) than the recruits are instructed to follow...then I'm against it. I call it a scam.

$1700 for a seminar? What was it, Tony Robbins?

If you have evidence that Amway seminars are free, I'd love to see it. But the saying is "tools are 100% optional but 100% necessary" right? What are tools? Books, tapes, seminars, videos...anything that can part a recruit from a few bucks.

 

[icerat]

Recruits are told told their path to success is in recruiting more people to sell more product.

Yup, that it's easier to get larger sales volumes with more people marketing your products, just like any other business.

They're not told that the only people making real money are the ones selling motivational materials

No, because that wouldn't be true. Now, the people making "real money" from their Amway businesses also tend to be making "real money" from motivational side businesses, but that correlation is as obvious as the golfers who win the most prize money tend also to be the one's with the most advertising endorsement money.

nor are they told how to get on that side of the business.

(a) I was
(b) having said that, providing too much information about this "side business" would be considered an illegal enticement - ie it is illegal to encourage someone to sign a contract with one company by promoting the potential to earn income through another company

Sure, but really that doesn't amount to much. The majority of the money is in selling motivational materials.

Simply not true. This is a myth that has been perpetuated over and over again. Even Dexter Yager, who perhaps has made the most from that area, explictly told 60 minutes that he makes more from his Amway business than from Internet Services, his motivational business.

Have some people made more from this area than from their Amway businesses? Sure, particularly in the past, and in particularly in groups where the commission structure for motivational materials was not performance (ie volume) based. For some years now, Amway rules include withholding various of their own major bonuses and commissions if any IBO promotes motivational materials with a compensation plan that has not been independently reviewed and audited as fair. Part of that requirement is performance based rebates and contractual agreements.

I'm all for capitalism. What I'm against is products being sold on unrealistic expectations, and Amway fits that bill.

When you say "Amway" are you referring to "Amway Corporation", or are you referring to some or all of the millions of independent reps?

I suspect a large reason for the low number of complaints is that people who fail at MLM's blame themselves for their failure rather than looking at the system as a whole and understanding that it only allows for a tiny number of successes.

Why would you suspect that? Do you have any research? Industry statistics show that the vast majority of people that register with MLM companies (a) put no or nearly no time or effort in to it and (b) don't expect to make much money.

There is nothing inherent in a legitimate MLM scheme that "only allows for a tiny number of successes" that does not exist in all retailing operations

The product itself is unimportant.

Au contraire, the fact you're referring to "soap" indicates you know very little about the Amway of the past few decades.

And most people do it by just buying $300 in merchandise, because selling $300 worth if stuff to your friends, family, and coworkers is a lot harder than one would think.

Sorry but that's nonsensical. If you just buy $300 in merchandise and resell it then you won't be making any profit will you?

It's not that hard to sell $300 worth of stuff. Having said that, is it harder than many think? Sure. No such thing as a product that sells itself. Indeed a recent survey found that even among MLMers, most people would prefer buying advice from an expert rather than a friend. Too many people join these companies and make little or no effort to learn about the products they're supposed to be marketing.

As I said I'm all for capitalism, but when loved ones are hyped up on a promise of six figure incomes without being told that only a tiny fraction of one percent make it that far

if anyone is "promising" that, then they should be smacked in the head reported to Amway. Again, industry statistics from multiple sources indicate that few people who join MLMs do so with earning "six figure incomes" as their primary motivation. MLMs are required by law, and industry ethics guidelines, to provide statistics and income disclosures. Amway has done so for decades. It's not hidden. Indeed in Amway's case they promote some statistics that are actually misleading and highly discouraging.

and the ones that do are doing it by a different route (selling motivational materials) than the recruits are instructed to follow...then I'm against it. I call it a scam.

I'd call that a scam too. That alas you're referring more to a myth of how Amway and other legitimate MLMs operate than the reality.

If you have evidence that Amway seminars are free, I'd love to see it.

I never said that. Depending on the country, but in some Amway operated seminars are free. Seminars offered to Amway IBOs by independent 3rd party companies are generally not, as you would expect. Never seen one for $1700 though. If you have any evidence of one, I'd love to see it.

But the saying is "tools are 100% optional but 100% necessary" right?

Saying so is clearly a violation of Amway rules, but the truth of it depends what you mean by "tools". Amway's definition of Business Support Materials (BSM) in Europe for example covers *anything* that is used to support your business, such as a computer, or telephone, whatever. In which case, yes, 100% necessary. If you're talking "tapes"/"books"/"seminars" etc, then they certainly make logical sense to use if you want to build a large business, but certainly not necessary for a small business. Indeed, the vast majority of people who register with Amway do not purchase BSM from upline.

right? What are tools? Books, tapes, seminars, videos...anything that can part a recruit from a few bucks.

Umm, no. If downline buys the aforementioned soap, it makes money for upline, and they're not considered "tools". If I buy, say, a bunch of books from amazon and use them within my group, they're "tools" but no member of my upline would make money off it (well, unless they're amazon shareholders)

You appear to have fallen for the myth that the majority of successful Amway business owners make the majority of their money from the sale of motivational materials. It's simply not true.

 

[marplots]

Here is the problem I have with Amway.

They tell you that you can make money, and maybe even huge money. But the stats don't back that up. If you question the stats as reflecting the real opportunity, the answer is that some don't make money because they don't do X or Y or whatever.

How is it that I am more exceptional than all the others who have tried it and failed? In truth, I'm not. Telling me so is just a flagrant appeal to my ego.

There are plenty of ways to make money that are all but guaranteed. And non-MLM employees sometimes do work their way up the ladder to become rich -- true, in a working situation these are the exception, but they are also the exception in Amway.

So my choice is some reliable paycheck with the chance to excel, or no paycheck with a chance to excel. It is better to bet with the statistics isn't it? Otherwise, I might as well spend all my money on the Lotto. Surely, someone wins that as well.

Amway is just like any other corporation -- those at the top are very protective of their wealth. Look at all the examples of "successful" Amway distributors who went on to other MLMs. They realized that the top spots in Amway were filled.

And just to make that part plain, if the top spots aren't already filled, what happened to those people who would be "set for life?" Either Amway is full up at the top or it isn't. Either way, there's a turd in the pool.

Does figuring this out make me too smart for Amway?

 

[Mycroft]

You appear to have fallen for the myth that the majority of successful Amway business owners make the majority of their money from the sale of motivational materials. It's simply not true.

It's no myth, but if you have stats that say otherwise, now is the time to pull them out.

 

[NewtonTrino]

I just want to confirm everything Mycroft is saying. If you care about the details you can look at the previous threads where Icerat and I argued for literally hundreds of posts over the amway scam. In the long ago past I wrote software that many of the high end amway distributors used to run their business. This allowed me to see inside the scam at a fairly high level of detail. These distributors made the vast majority of their profit from selling motivational tapes, seminars etc. according to the information I was exposed to.

Basically stay as far away as possible from these scammers.

Also Icerat is well known on the internet as an amway apologist. This isn't to be underestimated as he is by far the most prolific of these on the entire net. Of course he has yet to see any real level of success making money at amway by his own admission.

Bottom line, it's one of the biggest scams in history. The FTC has shown no interest in cracking down on them but they have some pretty good lobbyists

 

[Skeptic]

Yup, that it's easier to get larger sales volumes with more people marketing your products, just like any other business.

In real businesses there is a *limit* to how many people you recruit to sell your stuff and a *defined territory* for each person. In Amway, you recruit anybody and everybody you can to sell to the same people *you* are supposed to sell to. It's like someone who owns a McDonald's opening another McDonald's across the street and a third next door. It's recruiting your own competitors.

Now, the people making "real money" from their Amway businesses also tend to be making "real money" from motivational side businesses, but that correlation is as obvious as the golfers who win the most prize money tend also to be the one's with the most advertising endorsement money.

Yes, but in Amway the golf is merely the way to get an endorsement deal. The minute people make it in Amway to "Diamond" level they usually stop selling and concentrate on the motivational BS. That's where the real money is.

Saying so is clearly a violation of Amway rules,

Yes, but of course nobody takes those rules seriously, least of all the top earners. It's just a legal fiction they use to cover themselves. Remember the "70% retail customers" rule? Practically NOBODY in Amway has 70% of their customers being "Retail customers" that are cajoled into being part of the "downline" -- apart, perhaps, from their long-suffering family members.

In any case this whole discussion is moot. What matters is not if what Amway is doing is legal. What matters is if it's a good business deal. It's not. Nobody apart from the 1% or so at the top make more than pocket change; in fact most (90% or so) lose money. Taking a part-time minimum-wage job is a much better investment of one's time.

 

[icerat]

They tell you that you can make money, and maybe even huge money. But the stats don't back that up.

Not sure how you define "huge money", but the stats have people making millions a year. (Note that (a) people at the higher levels have normally expanded internationally, this is only their north american income (b) it doesn't include any incomes from "side businesses", ie motivational materials, speaking fees etc etc

If you question the stats as reflecting the real opportunity, the answer is that some don't make money because they don't do X or Y or whatever.

How is it that I am more exceptional than all the others who have tried it and failed? In truth, I'm not. Telling me so is just a flagrant appeal to my ego.

Same applies to almost any endeavour. Weight loss, sport, becoming a doctor, you name it. A lot of people have goals in those areas and don't obtain them. Does that mean they can't? No. Does that meant they should be told not to bother trying? I say no, you may disagree.

There are plenty of ways to make money that are all but guaranteed.

Such as? I'm always skeptical when someone says "all but guarnteed"

And non-MLM employees sometimes do work their way up the ladder to become rich -- true, in a working situation these are the exception, but they are also the exception in Amway.

So where's the problem?

So my choice is some reliable paycheck with the chance to excel, or no paycheck with a chance to excel. It is better to bet with the statistics isn't it?

Is it? I've several times seen impromptu surveys done where every single person who was actually doing what is recommended to do to make money was actually making money. Here's another way of looking at the "odds of success"

Otherwise, I might as well spend all my money on the Lotto. Surely, someone wins that as well.

Except there, success is out of your hands.

Amway is just like any other corporation -- those at the top are very protective of their wealth. Look at all the examples of "successful" Amway distributors who went on to other MLMs. They realized that the top spots in Amway were filled.

Amway doesn't work that way, there are no "top spots to be filled". It's performance based. Like being a 4 minute miler vs Olympic champion. Anyone who makes the grade can be the first, the second has limited places. The majority of "successful" Amway distributors who went on to other MLMs did so because Amway kicked them out.

And just to make that part plain, if the top spots aren't already filled, what happened to those people who would be "set for life?" Either Amway is full up at the top or it isn't. Either way, there's a turd in the pool.

Again, there are no "top spots" waiting to be filled. There's no quota or limit. Indeed, there's not even a "top spots" - Amway has continually had to create new recognitions and awards as people create bigger businesses.

Does figuring this out make me too smart for Amway?

Doesn't matter how smart someone is if they don't have correct information.

 

[icerat]

It's no myth, but if you have stats that say otherwise, now is the time to pull them out.

I've "pulled them out" often. They get dismissed. You got the average Amway incomes in North America in the link in my last post. "payouts" for sales of motivational materials vary from company to company. The one I associate with is globally the largest. Their North American statistics -

2007 Average Diamond income from system (Tools, Events and Speaker Fees)
$23,200/yr

2007 Average Emerald income from system (Tools, Events and Speaker Fees)
$7,000/yr

Like any average some make more and some make less.

Note that Newton Trino had no connection at all with this organisation, all of his connections were with one organisation and it's off-shoots. I can't speak for their averages, but I do know they had a pretty screwed up way of calculating rebates and commissions, including cutting some people out of it entirely, which obviously affects averages for the others! Even within that organisation I'm pretty sure he had little connection with the folk who had so little tool profit they didn't need his software. He's suffering from sample bias.

 

[icerat]

In real businesses there is a *limit* to how many people you recruit to sell your stuff and a *defined territory* for each person.

In some businesses there are, but in most businesses there are not. There's nothing stopping me opening a clothing store in every location I want and employing as many sales people as I want.

In Amway, you recruit anybody and everybody you can to sell to the same people *you* are supposed to sell to. It's like someone who owns a McDonald's opening another McDonald's across the street and a third next door. It's recruiting your own competitors.

So if I own a clothes store, and I work there selling clothes, and then I recruit another sales person, I'm "recruiting a competitor "? If I'm a master franchisor, and I own a few franchises myself, if I sign up other franchisees, I'm "recruiting competitors"?

Technically in all of these situations I am indeed "recruiting competitors". That doesn't mean it's not a smart thing to do.

Yes, but in Amway the golf is merely the way to get an endorsement deal. The minute people make it in Amway to "Diamond" level they usually stop selling and concentrate on the motivational BS.

Rubbish. What people tend to do, along the continuum from first starting a direct sales business, through to building a very large team, is progressively move from greater focus on retail sales to wholesale sales. That doesn't mean they "stop". Focusing on motivating your downline teams is concentrating on wholesale sales.

Yes, but of course nobody takes those rules seriously, least of all the top earners. It's just a legal fiction they use to cover themselves. Remember the "70% retail customers" rule?

I remember it. It's a fictional rule made up and promoted by the likes of anti-mlm zealots Jon Taylor and Robert FitzPatrick. And yourself apparently.

 

[Aepervius]

In some businesses there are, but in most businesses there are not. There's nothing stopping me opening a clothing store in every location I want and employing as many sales people as I want.



So if I own a clothes store, and I work there selling clothes, and then I recruit another sales person, I'm "recruiting a competitor "? If I'm a master franchisor, and I own a few franchises myself, if I sign up other franchisees, I'm "recruiting competitors"?

Technically in all of these situations I am indeed "recruiting competitors". That doesn't mean it's not a smart thing to do.



Rubbish. What people tend to do, along the continuum from first starting a direct sales business, through to building a very large team, is progressively move from greater focus on retail sales to wholesale sales. That doesn't mean they "stop". Focusing on motivating your downline teams is concentrating on wholesale sales.



I remember it. It's a fictional rule made up and promoted by the likes of anti-mlm zealots Jon Taylor and Robert FitzPatrick. And yourself apparently.

I am sorry, but most retail chain have at most 1 level maybe 2. Not the many level MLM have. It is way way different to recruit your own team, and to have 1 recruit 6 which then recruit 6 and those again 6 etc...

 

[The Don]

Is it? I've several times seen impromptu surveys done where every single person who was actually doing what is recommended to do to make money was actually making money. Here's another way of looking at the "odds of success"

That's another interesting article. It tries to refute one group's claims by restating the problem, creating a set of conditions which mitigate towards a favourable outcome (a bit like refuting someone's claim that the odds of becoming king of the UK are millions to one by saying they're much better if you're the child of the reigning monarch).

Despite all of this, the thing that brings home the futility of it all to me is:

Let’s put this in perspective. If all you do is join Amway and do enough to earn a bonus on downline volume, then already your “odds” of being close to developing a business earning $50,000K/yr+ (Q-12 Platinum) is approaching 1 in 35

So, if you bust a nut and do everything right you have a 1 in 35 chance of earning the United States median household income - big whoop !

And this comes from the most favourable source.

 

[icerat]

I am sorry, but most retail chain have at most 1 level maybe 2.

Ummm. No. It can be as little as one, but it can be a lot more. For example -

Manufacturer - distributor - exporter - importer - distributor - retailer - customer

Thats seven levels.

It's only when buying direct from a manufacturer are you getting one level.

When the FTC investigated Amway in the 70s they found that the more than 70% of transactions within Amway were within 4 levels or less of manufacturer, with 99% within seven.

The difference today is that Amway "links" are volume based and virtual (virtually everyone buys direct from Amway) rather than actual links in a distribution chain.

Still, changes in retailing like big box stores and the internet have meant companies using MLM have had to adapt and change, like for example as Amway has done moving focus into the higher margin health & beauty categories.

 

[icerat]

That's another interesting article. It tries to refute one group's claims by restating the problem, creating a set of conditions which mitigate towards a favourable outcome (a bit like refuting someone's claim that the odds of becoming king of the UK are millions to one by saying they're much better if you're the child of the reigning monarch).

No, that's not at all analagous. That's based entirely on luck. A better analogy would be that you improve your odds of getting fit by not only buying a gym membership, but actually going to the gym and training.

So, if you bust a nut and do everything right you have a 1 in 35 chance of earning the United States median household income - big whoop !

AHhh ... no ... qualifying for a bonus on downline volume doesn't require anything remotely like "busting a nut" (nor is it based a chance, which is not the same thing as "odds"). You're talking about sponsoring one person, who does any volume at all, and combining that volume with your own personal volume to have total sales of around $300 in a month. Just once. That's what the statistics indicate is needed to make your odds 1 in 35.

That really isn't hard at all. More than 1 in 8 who join Amway do that, and that's including the 1 in 2 who join and then do nothing, not even order products, after registering.

 

[The Don]

That really isn't hard at all. More than 1 in 8 who join Amway do that, and that's including the 1 in 2 who join and then do nothing, not even order products, after registering.

So 1 in 8 people have a 1 in 35 chance of getting the median income. Wooo-hooo !

And it's interesting that what you need to do to get in this 1 in 8 is to maximise the income for those people sitting right at the top of the tree.

 

[icerat]

So 1 in 8 people have a 1 in 35 chance of getting the median income. Wooo-hooo !

No. Chance has very little to do with it.

And you're comparing a part-time business with a full-time income.

And it's interesting that what you need to do to get in this 1 in 8 is to maximise the income for those people sitting right at the top of the tree.

huh? You're not actually familiar with the compensation plan are you?

In general, people in the downline of a platinum ("top of the tree") make a significantly greater margin on their sales volume than the platinum. The platinum would make A LOT more by generating the sales personally rather than through developing a team. The person who usually makes the most money on any given sale is the one who sells it to the end consumer.

The reason why you build a team is the same reason any business takes on employees/commission staff etc - it's hoped that by doing so sales volume will be increased to the extent they make up for loss of margin.

 

[Almo]

When some law firm works out how to make international lawsuits for internet defamation cost effective they're going to be extremely busy.

 

[Joecool]

Here is the problem I have with Amway.

They tell you that you can make money, and maybe even huge money. But the stats don't back that up. If you question the stats as reflecting the real opportunity, the answer is that some don't make money because they don't do X or Y or whatever.

How is it that I am more exceptional than all the others who have tried it and failed? In truth, I'm not. Telling me so is just a flagrant appeal to my ego.

There are plenty of ways to make money that are all but guaranteed. And non-MLM employees sometimes do work their way up the ladder to become rich -- true, in a working situation these are the exception, but they are also the exception in Amway.

So my choice is some reliable paycheck with the chance to excel, or no paycheck with a chance to excel. It is better to bet with the statistics isn't it? Otherwise, I might as well spend all my money on the Lotto. Surely, someone wins that as well.

Amway is just like any other corporation -- those at the top are very protective of their wealth. Look at all the examples of "successful" Amway distributors who went on to other MLMs. They realized that the top spots in Amway were filled.

And just to make that part plain, if the top spots aren't already filled, what happened to those people who would be "set for life?" Either Amway is full up at the top or it isn't. Either way, there's a turd in the pool.

Does figuring this out make me too smart for Amway?

Bingo. This is spot on!

2007 Average Diamond income from system (Tools, Events and Speaker Fees)
$23,200/yr

2007 Average Emerald income from system (Tools, Events and Speaker Fees)
$7,000/yr

I call BS on these tool income quotes from Icerat. If a diamond took his family to several events first class, stay at a 5 star hotel, etc, they'd end up with a loss from the tools and we know that there are at least 4 major functions and a bunch of other smaller ones going on each month. On one of Icerat's own forums, one of his droogies admitted that his upline diamond in BWW made about $20,000 a month on voicemail alone. Basic math clearly displays the income potential of the tools.

A cd costs 50 cents to a buck to produce. They sell for $7.00 or so. They sell 6 or more cds each month to the "serious" IBOs. They earn about $75 to $100 per head at the major funtions. They earn $5-$10 per head on local functions. These diamonds who speak at and run these functions don't work for love. They make tons of money on it or they wouldn't do it at all.

Furthermore, the tools have no value outside of the cult of Amway. It is why you can buy these cds for pennies on the dollar on ebay or craigslist. Do non Amway people attend the functions? I doubt it. Bottom line, these diamonds are cutthroat businessmen posing as mentors and business associates. If you are an IBO, you are just an unpaid commissioned salesperson under the guise of being an independent business owner.

How else could a diamond earning $150,000 a year from Amway purchase mansions, jets and sports cars? Icerat is insulting people's intelligence with his pedantry.

For example - Manufacturer - distributor - exporter - importer - distributor - retailer - customer

In Amway, it's manufacturer, distributor, distrubutor, distributor, distributor, distributor, distributor, distributor, distributor, distributor. Many IBOs have no customers. It's why the model fails. The money is made from the pockets of the sales force.