Help in getting out of Amway/Quixtar

[Whydoe]

I've been in Quixtar for about 5 years now. Unfortunately, it took that long to figure out it was mostly lies. However, I've been helped a lot in areas of my life through the business by people in the business. But, this had nothing to do with actually building a business.
I want out, my upline Platinum (head of the group) wants me to stay in - of course. Quixtar aside, he's a great guy. So, what would be a good way of telling him to stuff it? Doesn't seem to matter what you tell someone whos been in the business so long, they have a quick answer for you. Any help?

[phildonnia]

Just to clarify: this isn't the mob, right? I mean, you are allowed to get out?

If your upline is really a "great guy", then he shouldn't have any problem with you making your own decisions about what to do with your life.

[l0rca]

Just to clarify: this isn't the mob, right? I mean, you are allowed to get out?


http://www.everything2.com/index.pl?node_id=54209&lastnode_id=91692

Read the writeup by Eldritch, who's sister was involved with Amway.

This guy could face harassment by his up-liners if he quits.

Amway is owned by Quixtar. They are pyramid schemes. Rather nasty ones.


I want out, my upline Platinum (head of the group) wants me to stay in - of course. Quixtar aside, he's a great guy. So, what would be a good way of telling him to stuff it? Doesn't seem to matter what you tell someone whos been in the business so long, they have a quick answer for you. Any help?

I suggest you prepare yourself for some trouble. Recon angles they could use to attack you, and quit with those angles in mind. Just tell The Man you want out, but you still really like him.

Try not to take up religon as an alternate. ;)

[Psiload]

I've been in Quixtar for about 5 years now. Unfortunately, it took that long to figure out it was mostly lies. However, I've been helped a lot in areas of my life through the business by people in the business. But, this had nothing to do with actually building a business.
I want out, my upline Platinum (head of the group) wants me to stay in - of course. Quixtar aside, he's a great guy. So, what would be a good way of telling him to stuff it? Doesn't seem to matter what you tell someone whos been in the business so long, they have a quick answer for you. Any help?

Try this...

"I'm getting tired of this. I've been hawking this Amway crap like a carnival barker for five years now. Nights, weekends, any spare time I might've otherwise have had over the last five years has been spent selling "the dream" and my pride along with it. I've alienated my friends, family and cow-orkers(tm), and for all this I've netted less actual money than my neighbor's kids earn at their lemonade stand over a hot weekend in July. I'm starting to lose faith in Amway. Could you please reassure me that all of my hard work will eventually pay off? Would you kindly forward me copies of your Amway financial records showing all the net income your Amway sales business, that's sales, not the revenue you're scamming out of your downlines(me) in "tools" and "seminars", just your sales records will do quite nicely. I'm sure they'll reflect a substantial monetary sum, which will serve to reaffirm my faith in the righteousness of my "Diamond quest". I'll be expecting them by c.o.b this Friday. If they aren't forthcoming, then I'll cordially invite you to pound salt in your a$$."

Sincerely,

Whydoe

[Lynx2174]

Just to clarify: this isn't the mob, right? I mean, you are allowed to get out?

If your upline is really a "great guy", then he shouldn't have any problem with you making your own decisions about what to do with your life.

from what I've heard, it's about as bad. in just about every way. except the brutal killings and all. :)

[logical muse]

from what I've heard, it's about as bad. in just about every way. except the brutal killings and all. :)
Yeah, at least in the mob, they kiss you first...

[Chupacabras]

And why not just stop doing anything? Not trying to sell a thing, not attending invitations, not answering calls, no nothing. Why ask/give explanations?

[Antiquehunter]

Whydoe - I'll give you my advice based on personal experience. I researched network marketing schemes extensively as part of a course I was taking, and I even became involved in one as part of the learning. (I dropped it pretty quick once the course was over.) My results after 18 months - I spent about $6000 and 500 hours of time to get my business (no - it wasn't Amway)to the point where it was cash-flow neutral - however the TIME expense was so vast with my other activities, and the PRODUCTS were so wooish and crappy, I dropped it quickly. (Talk about suspending beliefs... not a proud time in my life...)

Amway/Quixtar itself is not illegal, nor is it a 'pyramid scheme'. It is DEFINITELY network marketing at its worst, and parts of the business are exploitative, manipulative and in some judgments unethical. Certain distributors or subgroups get themselves in trouble for violating laws particularly when it comes to misrepresenting 'food supplements' - but Amway itself has been around a long time and has withstood legal challenges on its business model.

I have no idea how successful/unsuccessful you've been. Of course your upline wants you to stay in - because they're making residual income off your consumption of personally purchased products. I'll break this down into a few recommended steps.

1) You need to fortify your decision. You need to understand that this will be a difficult process where people are going to pressure you. You need to be comfortable with accepting financial losses - all that product you have in the cupboard is a sunk cost - I hope you like their toothpaste etc... All the literature you've bought is junk unless you intend on trying another network marketing scheme, or are moving into professional sales. I would not proceed until you are completely, 100% sure you are done with this and fully understand the implications.

2) Manage the relationships you want to keep. You have a personal connection to this Diamond-direct guy - he's probably a multi-millionaire if he's Diamond-direct, and may be a valuable person to keep in your network of friends and acquaintances. He may just be a slimy soap salesman. If you are just one person in his network, his personal gain from you is negligible. If you are a 'SUCCESSFUL' distributor with your own personally-recruited downline, then this is more tricky. No means no - when you tell him you're through with the business, don't allow yourself to be talked into staying. Thanks for the memories and the useful household cleaners, no hard feelings, but my Amway dream is over. Thank you. If he pressures you, one of the arguments you can throw at him is that its likely he will move his downline out of Amway/Quixtar at some point and into another program - and you'll want to hear all about it (wink wink - DON'T get involved, but sell yourself on being a valuable 'prospect' in the future.) That's a strategy often used by these guys when their markets become saturated. They jump from Amway to Usana, or to some new startup - and become 'Diamond Direct' or whatever right out of the gate because they are able to move HUGE volumes of product by virtue of their pre-built downline.

3) More delicate is managing the relationship with the person who actually 'sponsored' you, and if you actually 'sponsored' anyone into your business. Its likely these are very close, personal friends - because most network marketing schemes suggest you start recruiting from your personal friends and family. These are the ones that you need to be very clear with - you've made a decision to leave Amway, and they are free to continue or to leave as well. Depending on how bad this is - you may need to make personal apologies or at least be prepared to say 'I was wrong' - and these are difficult things to do for many people. Be ready for the emotional impact. Personally, I would suggest that it took you some time to realize this was simply not for you. Amway and similar network schemes CAN work if you work them (I personally know two multi-millionaires made from network marketing - and some very hot stocks on the Nasdaq/DJ are network marketing stocks USNA for example) - but where they fail is that they don't come anywhere near telling the little guy HOW MUCH work is involved, the KIND of work that is involved, and the slimier sides of the business (the constant recruitment, the sales and profits derived from selling tapes/books/seminars etc...)

4) Finally - the practical side. You've probably been influenced into going on pre-approved purchase plans for products, learning materials etc... You need to research ALL of these - get your credit card / bank statements out and figure out when ALL these payments come out. Then, attack them all at the same time. Go through the Amway / Quixtar network and get them to cut off all these pre-approved payments. Do it in writing, and state they are no longer authorized to debit your accounts for any chrages. Notify the credit card/banking institution at the same time. Monitor the situation VERY closely for the first couple of months. If any further charges appear, act IMMEDIATELY to get them reversed, and do it all in WRITING.

In summary - pick the relationships you want to maintain out of this experience carefully, and do what you need to do to achieve this goal. Then, be precise and swift in dealing with the practical aspects - you've probably spent / lost a lot of money in this learning experience, you need to manage this situation to minimize your losses.

Good luck.

[Whydoe]

Thanks a bunch. This is really going to help me out. I don't have much of a downline - nothing financially gaining or will be as far as I can see. So, that's not a factor. I guess it really is just a sinking ship. The last 2 functions I've gone to (both the same type) I've seen a substantial drop in attendance. Not only that, but at their latest "training" session, they allowed you to bring 2 non-members for free. My guess - to fill seats and make it look better.
It took a while to get off the hype. I had to do it on my own almost because you get programed not to believe ANYTHING on the net.
And the tools - some are actually good. I've read some good books. How To Win Friends and Influence People. Great book. However, I see that the business has used it to sucker people into the business.
If it was all about just meeting someone and asking them if they would want to sell some really expensive products on the side (which most are good - especially those lovely magnets) and make some extra cash from the profit of those sales, that wouldn't be that bad. But they fill your head with "dreams" that aren't yours and then tell you that you can make millions and if you quit you are a loser. And the scare tactics.... yeesh....

[FFed]

Cheez, just tell them to &#@$ off. What's the big deal?

[The Central Scrutinizer]

Cheez, just tell them to &#@$ off. What's the big deal?

That's what I'm thinking.

[SphereGuy]

As stated by Chupa above, just stop performing. Once you stop performing their interest in you will fade very, very quickly. I speak from experience. If I recall, there were dues back in the day, to keep your Amway distributorship, just stop paying those as well. I've never experienced harrassement of any kind when I quit and I was doing better than average.

[Paul C. Anagnostopoulos]

Antique's warning about your credit cards is important, though. If you've set up any recurring charges, you need to stop those and watch your credit cards for awhile. Do it all in writing.

Otherwise, screw 'em.

~~ Paul

[vcrepair]

There is a website that tells more stories of Amway/Quixtar
merchantsofdeception.com
has book you can download that describes Amway "cult" and how they expect total commitment to the "Amway way".

[Psiload]

Here's one of my favorite Amway "upline" zingers:

http://search.ebay.com/search/search.dll?sofocus=bs&sbrftog=1&from=R10&fstype=1&catref=C6&satitle=amway+tapes&sacat=-1%26catref%3DC6&bs=Search&fsop=1%26fsoo%3D1&coaction=compare&copagenum=1&coentrypage=search&sargn=-1%26saslc%3D2&sadis=200&fpos=ZIP%2FPostal&ftrt=1&ftrv=1&saprclo=&saprchi=

The same Amway "tools" that your upline shoved down your throat at five bucks a pop being sold by the bushel for mere pennies per tape.

I saw one auction for a lot of 150(many unopened!) tapes that sold for $18. Some poor schlub probably shelled out over five hundred bucks for these things. The average Amway distrubutor will spend around $1000 per year on "tools" (books and tapes), and seminars.

But remember... the internet is full of LIES! LIES! LIES! about poor lil' ol' Amway.

[Luke T.]

Cheez, just tell them to &#@$ off. What's the big deal?

Amway/Quixtar is not just a job. It's a way of life. A cult. Yes. That's what's the big deal.

My parents were Amway zombies for several years. It was very painful for me to watch. They even thought I would be some magical multimillion dollar inroad into military sales and kept pressuring me to mind meld with them. It got pretty ugly.

Whydoe, Antiquehunter gave some outstanding advice. Heed it well.

[CurtC]

I didn't realize that the motivational tapes were something that made money for the upline people. Does anyone have any idea of how a distributor's income is split between various sources? How much is from motivational tapes vs. soap?

And how much Amway product gets sold to the "outside" world, people who are not themselves distributors? It's always seemed to me that the only people who buy Amway soaps, vitamins, etc., are the distributors themselves.

[Psiload]

I didn't realize that the motivational tapes were something that made money for the upline people. Does anyone have any idea of how a distributor's income is split between various sources? How much is from motivational tapes vs. soap?

And how much Amway product gets sold to the "outside" world, people who are not themselves distributors? It's always seemed to me that the only people who buy Amway soaps, vitamins, etc., are the distributors themselves.

"The soap" accounts for about 10% of any given "upline's" income. The big money comes from the "tools", the dues, and the seminars. Only the big fish get a slice of that pie. There is money to be made in Amway, but not from selling "the soap", the big bucks are made selling "the dream". Amway's number one cash cow product is Amway.

By the time you you reach high enough in the ranks to learn this dirty little secret, you'll be so heavily invested and indoctrinated that you'll probably lack the integrity to realize the moral bankruptcy inherent in the Amway system. Not always though. Occassionaly, some Pearl or Diamond levels will crack. I've seen it happen, and it was, in a word, ugly.

[Almo]

I had a friend who got sucked into that whole Amway thing. They convinced him Denver was a new area, so he packed up and left Laramie. Once down there, he couldn't afford rent, and things went really badly for him for a couple years till he got out.

From my limited contact with the attitude, I'd say that Antique gave some really good advice.

[Bone_Vulture]

By the time you you reach high enough in the ranks to learn this dirty little secret, you'll be so heavily invested and indoctrinated that you'll probably lack the integrity to realize the moral bankruptcy inherent in the Amway system. Not always though. Occassionaly, some Pearl or Diamond levels will crack. I've seen it happen, and it was, in a word, ugly.

That's a classic example of cult mentality in action. :)

[Whydoe]

Cheez, just tell them to &#@$ off. What's the big deal?

Well, for one I'm not someone who would just tell another to &#@$ off. I'm done in the business. I'm just trying to find a nicer way of telling my upline. If that doesn't work, then I'll tell him to &#@$ off.

[Dr Adequate]

These are the guys who accused Proctor & Gamble of being Satanists.

The Amway email (http://urbanlegends.about.com/library/weekly/aa061098.htm):

The President of Procter & gamble appeared on the Phil Donahue Show on March 1, 1994. He announced that due to the openness of our society, he was coming out of the closet about his association with the church of Satan. He stated that a large portion of his profits from Procter & Gamble Products goes to support this satanic church. When asked by Donahue if stating this on t.v. would hurt his business, he replied, "THERE ARE NOT ENOUGH CHRISTIANS IN THE UNITED STATES TO MAKE A DIFFERENCE."
P & G sued. They lost, because you can only defame a company's products and services. Saying that they give their profits to Satan is not libelous.

[Psiload]

Well, for one I'm not someone who would just tell another to &#@$ off. I'm done in the business. I'm just trying to find a nicer way of telling my upline. If that doesn't work, then I'll tell him to &#@$ off. I guess now you'll get to see how much of a "great guy" he really is.

[Jon.]

What about help getting someone else out of this mess without alienating them? My youngest brother and his wife are into it and it looks like they're getting in pretty deep. I've given him all the info I could find on the Internet but he just says he knows what he's doing and will make sure he doesn't lose money. Any hints? Preferably legal?

[Psiload]

What about help getting someone else out of this mess without alienating them? My youngest brother and his wife are into it and it looks like they're getting in pretty deep. I've given him all the info I could find on the Internet but he just says he knows what he's doing and will make sure he doesn't lose money. Any hints? Preferably legal? Show him how much "the tools" are really worth:

http://search.ebay.com/amway-tapes_W0QQbsZSearchQQcatrefZC6QQcoactionZcompareQQ coentrypageZsearchQQcopagenumZ1QQfposZQ5AIPQ2fPost alQQfromZR10QQfsooZ1QQfsopZ1QQfstypeZ1QQftrtZ1QQft rvZ1QQsacatZQ2d1QQsadisZ200QQsargnZQ2d1QQsaslcZ2QQ sbrftogZ1QQsofocusZbs

These tapes are a major part of the Amway scam. Nearly every distributor forces their "downlines" to buy these tapes, hundreds of them, for about $5 per tape.

I once showed a co-worker, a highly indoctrinated, 7+ year Amway victim, these auctions on ebay. The look on his face was heartbreaking. The same tapes he'd spent thousands of dollars on, going for as little as 10 cents per tape. The "uplines" hype these tapes as if they're worth their weight in gold... like they contain the secrets of the universe. To see them going begging on the internet, at a price barely higher than the cost of shipping them, deals a crushing blow to that fantasy. I suggested to my co-worker that he should bring up the ebay sale of discount tapes at his next Amway meeting. I suggested he tell everyone how much money they could save buying the "the tools" this way. I asked him to fill me in on how his "upline" reacted to that suggestion after the meeting. The look on his face told me that he already knew.

My co-worker did finally extricate himself from the Amway web, and I like to think I planted the first seeds of doubt in his mind.

[gnome]

These are the guys who accused Proctor & Gamble of being Satanists.

The Amway email (http://urbanlegends.about.com/library/weekly/aa061098.htm):


P & G sued. They lost, because you can only defame a company's products and services. Saying that they give their profits to Satan is not libelous.
I'm surprised the president couldn't file a personal lawsuit against them. In fact, I'm skeptical that this is the reason the lawsuit failed... do you by any chance have a source? I don't think of you as unreliable, I just am amazed that's how it happened.

[Jon.]

I'm surprised the president couldn't file a personal lawsuit against them. In fact, I'm skeptical that this is the reason the lawsuit failed... do you by any chance have a source? I don't think of you as unreliable, I just am amazed that's how it happened.

The suit against Amway per se failed a while back, presumably because there was no evidence linking Amway to the allegations, which were made by a high-level distributor called Randy Haugen. The case against Haugen was thrown out but was been resurrected by an appeals court in November.

Source (http://news.findlaw.com/andrews/m/ese/20051111/20051111proctorgamble.html)

[Blackwell]

I'm surprised the president couldn't file a personal lawsuit against them. In fact, I'm skeptical that this is the reason the lawsuit failed... do you by any chance have a source? I don't think of you as unreliable, I just am amazed that's how it happened.

Looks like they HAVE successfully sued individuals over the rumor - they just haven't been successful in proving that Amway itself had anything to do with it:

http://www.snopes.com/business/alliance/procter.asp

ETA: Yeah. What Jon said.

[Dr Adequate]

I'm surprised the president couldn't file a personal lawsuit against them. In principle he could, I guess. Would you?

In fact, I'm skeptical that this is the reason the lawsuit failed... do you by any chance have a source? I don't think of you as unreliable, I just am amazed that's how it happened. Sorry, I came across the actual court ruling a couple of months ago, and just remembered it when someone said "Amway". I can't find it now. But I think that was the gist of the ruling: the law only protects companies from certain types of defamation.

This quote from ex-cult.org confirms that that aspect of the case was thown out:

Amway is trying to create the impression that a prior suit by Procter and Gamble filed in Ohio has been dismissed. This is not the case. A judge disallowed Procter and Gamble's contention that Amway spread rumors about the head of P and G being a satanist and donor of P and G revenues to a satanic church. All other allegations against Amway still stand in this suit.
Note "disallowed", i.e. there was no basis in law for their complaint.

[apocalypse]

They are pyramid schemes. Rather nasty ones.

You couldn't be further from the truth. Learn what a pyramid scheme is, and you'll know this isn't one. Unfortunately, multilevel marketing has become synonymous with pyramid schemes. Just like atheists have the connotation of being moralless, evil-doers.

The state-run lotteries are closer to pyramid schemes than Amway/Quixtar, or any of the other MLM's.

I was involved with Amway (which later was renamed Quixtar) for 10+ years. My brother got me involved, and I had no problem, and neither did he, when I told him I was not going to renew the next year. Some people can be jerks no matter what the situation.

If your sponsor is the great person you say he is, he'll understand.

If anyone wants to talk more about it at TAM4, I'll be there. :-)

[schplurg]

From an above link:
People on her "up-line" called her and harassed her at home, trying to keep her from leaving. When she finally left, none of her so-called friends would talk to her anymore, she had spent all her savings and she was stuck with a room full of laundry detergent that plain doesn't work.Now what again is the big problem leaving Amway? People will try and talk you out of it? You'll lose "friends"? I've read this thread, my parents were in Amway years ago. I guess I just don't see the big problem. Are people's lives being threatened? Just say goodbye and leave. I still don't get it.

[Antiquehunter]

Lemme draw an analogy. Assume we're good friends, known each other for years. I show up at your house and announce that I've started to sell cars on the side. A new line of cars, from a company you're unfamiliar with. These are the BEST cars in the world. They have features you can't get anywhere else. I liked them so much that the first thing I did when I started selling them was to buy one myself. You say 'well, I don't want a car' I say 'Sure you do - these cars are great' we have some annoying sales talk etc... etc... Finally by the end of our conversation more to get rid of me than not, you say 'Fine, I'll buy a car'.

Then I say 'Hey - you can pay for your car if you find two people to buy a car, and they find two people each to buy a car, and we'll all end up with free cars and even make extra money on the side for the rest of our lives because of this complicated payout structure. All you gotta do is get 2 people to buy cars and you're in like Flynn.' You say 'How do I get people to buy a car' I say 'Well, you talk to your friends (like I'm doing with you) and you buy these tapes from the car company every week to motivate you to sell cars and its easy! See how easy - I sold YOU a car, and you're really intelligent'

So away we go and try and sell cars. Five years later, you've decided the car you bought from me sucks. You never made any significant money from selling more cars, and you've spent a lot of valuable time and looked kinda silly trying to sell cars to your friends and family. You spent a lot of money buying those tapes every week because one day they were going to help you sell those cars and get you that free car that you KNOW is attainable. I knock on your door and say 'You know what - I'm stopping selling cars. I made a mistake, and I'm sorry I got you involved.' Guess what - now that I'm not involved, your motivation plummets. You're annoyed at me because of the time and money you wasted. And me - I have 10 more of these visits / conversations to look forward to with other friends that are going to go pretty much the same way - because I WAS able to sell a few cars, but never really got any value out of my efforts.

Eew. Yucky for me, and unpleasant for you. Can really test the mettle of our friendship.

That is how Amway (MLM) works in simplest terms, and that's what leaving is all about.

(edited to improve the analogy.)

[CurtC]

You couldn't be further from the truth. Learn what a pyramid scheme is, and you'll know this isn't one.Here's what makes Amway/Quixtar seem like a pyramid scheme to me:

* The products are, for the most part, not sold outside the distributors themselves (at least in my impression).

* Almost 100% of the distributors actually lose money, considering the supplies they have to buy, expenses, seminars, motivational "tools," and excess product.

* The only people who make money are the people who are far upline.

Since the stuff they sell, including both the primary products and the tools, are used predominantly inside the network, and it always takes a fresh supply of new distributors losing money to keep it going, that's what makes it seem pyramidish. If the assumptions above are wrong, please set me straight, but that seems to be the consensus here and other placed I've read about it.

[Psiload]

You couldn't be further from the truth. Learn what a pyramid scheme is, and you'll know this isn't one. Unfortunately, multilevel marketing has become synonymous with pyramid schemes. Just like atheists have the connotation of being moralless, evil-doers.

The state-run lotteries are closer to pyramid schemes than Amway/Quixtar, or any of the other MLM's.

I was involved with Amway (which later was renamed Quixtar) for 10+ years. My brother got me involved, and I had no problem, and neither did he, when I told him I was not going to renew the next year. Some people can be jerks no matter what the situation.

If your sponsor is the great person you say he is, he'll understand.

If anyone wants to talk more about it at TAM4, I'll be there. :-)


Lotteries are nothing like pyramid schemes. They are games of chance pure and simple. You buys your ticket, and you takes your chances. The rules and odds are clearly spelled out on every ticket sold. I'm not defending lotteries. I think they're a blight on society, but they're not pyramid schemes.

Questions...

Why did you leave Amway after investing a decade of your life into "the dream"?

Do you think Amway is a sound business model that "works"?

[ChristineR]

There is a legal definition of "Pyramid Scheme." Amway does not qualify for the legal definition because all money transfers involve actual product sales. The fact that the products cost four times as much as they should doesn't matter. But in the informal sense, they are obviously a scheme with a pyramidal structure.

As a former member, Antiquehunter has probably heard the Amway propaganda which stresses that it is not an illegal pyramid scheme. They never refer to themselves as a "legal pyramid scheme," which is pretty much what it is.

[gnome]

There is a legal definition of "Pyramid Scheme." Amway does not qualify for the legal definition because all money transfers involve actual product sales. The fact that the products cost four times as much as they should doesn't matter. But in the informal sense, they are obviously a scheme with a pyramidal structure.

As a former member, Antiquehunter has probably heard the Amway propaganda which stresses that it is not an illegal pyramid scheme. They never refer to themselves as a "legal pyramid scheme," which is pretty much what it is.
Actually, these days some or many distributors may be acting illegally. In 1979, when they were in legal trouble for actually BEING an illegal pyramid scheme, they were ordered by the court to cease and desist certain practices. (Amway's PR likes to spin this as they were "Vindicated" by the courts... whereas it was more like... cut it out or we'll shut you down.)

I bet I can find a link if someone wants me to, but to be distinguished from a pyramid scam, they had to fulfill two conditions:

1. Each distributor must sell a certain amount of actual products to non-distributors over a specified time period.

2. Avoid something called "Inventory Loading"... which I always have to read up on to understand...

Condition 1, in my experience, is violated routinely. When someone I know tried to get me into Amway, I told them I didn't want to be a salesman. That was OK, he said, I didn't have to sell any products... just buy them myself and convince others to join. If their whole "upline" operates this way, they are acting as a pyramid scam, illegally. In fact, at one time to become a distributor you have to sign a document specifically stating you won't operate this way. I don't know if this is still so, or if the document is ignored.

[Almo]

Read this, if you doubt MLM pyramidness:

http://www.vandruff.com/mlm.html

I find that this article explains the problems inherent in MLM very well.

[Psiload]

Actually, these days some or many distributors may be acting illegally. In 1979, when they were in legal trouble for actually BEING an illegal pyramid scheme, they were ordered by the court to cease and desist certain practices. (Amway's PR likes to spin this as they were "Vindicated" by the courts... whereas it was more like... cut it out or we'll shut you down.)

I bet I can find a link if someone wants me to, but to be distinguished from a pyramid scam, they had to fulfill two conditions:

1. Each distributor must sell a certain amount of actual products to non-distributors over a specified time period.

2. Avoid something called "Inventory Loading"... which I always have to read up on to understand...

Condition 1, in my experience, is violated routinely. When someone I know tried to get me into Amway, I told them I didn't want to be a salesman. That was OK, he said, I didn't have to sell any products... just buy them myself and convince others to join. If their whole "upline" operates this way, they are acting as a pyramid scam, illegally. In fact, at one time to become a distributor you have to sign a document specifically stating you won't operate this way. I don't know if this is still so, or if the document is ignored.


"Inventory loading" defined. For the purposes of §§ 37-33-1 to 37-33-11, inclusive, the term, inventory loading, means that the plan or operation requires or encourages its independent salespersons to purchase inventory in an amount, which exceeds that which the salesperson can expect to resell for ultimate consumption or to consume in a reasonable time period, or both.

Anyone who has ever visited the homes of the Amway afflicted and seen the stockpiles of "the soap" jammed into every nook and cranny and piled in stacks will tell you that "inventory loadiing" is the rule rather than the exception.

My Amway afflicted ex-landlord used to occassionaly discount my rent because he used my garage spot as a "soap" storage facility during those months when he was trying to "make his numbers".

[Antiquehunter]

For the record - I researched the Amway model prior to them turning into Quixtar, but have never been an Amway rep. When I was choosing which MLM to test for a learning experience, I felt the Amway market was saturated - and this was the early 90's. The MLM I tried out, and experienced modest success - but dumped after 18 months - was 'Enrich'. It had several ex-Amwayers involved, and I was recruited fairly high up by a successful Amway person who had a 'premade' downline by transferring from Amway to Enrich. I haven't looked at the Amway plan since this whole Quixtar thing - no time, and no interest. (Although I've been invited to attend info sessions by people who are 'in'.)

I can't quote the legal references for illegal pyramid scheme, but I believe the 'loophole' used by most MLMs is that a product or service changes hands. The theory being I suppose, that someone COULD resell the products they buy at 'wholesale' (generally at or above full retail) and make a profit through simply being a retailer. Of course, the real money is not in reselling, and the time and effort required to make $20 on a purchase of soap or what have you is crazy.

In none of the Amway literature that I have seen do they suggest inventory loading is a best practice, indeed they caution against it. They officially suggest if you need to 'make numbers', you recruit or try for some resale customers. That said, people who do not understand the compensation model may be inclined to load up in order to attain the next tier or to maintain a tier - generally a foolish move unless what you load up on is something you know you can resell or something you consume personally. I can't remember, but in the old system that I recall (vaguely) if you ran $1000 worth of product through your business, you'd make about $20 in bonus commission in addition to whatever markup you made on retail sales. So if you were at $980 for a commission period, buying a $20 item would be cost-neutral, particularly if it was something you'd use anyways. But buying $300 worth of product personally just to get the $20 bonus is well... stupid.

As you climbed the levels, the importance was more on having directly sponsored people attain a high level of volume - as I recall the ultimate was to have 6 people you personally sponsored each running $7500 worth of product. At that level, you were actually making a sustainable living. As a skeptic looking back, ANY business grossing $45k a month or over $500k a year is probably able to support a family. And its WAY easier to accomplish those numbers in my opinion in a traditional business over any MLM I've seen.

I guess the other popular MLM model - the 'binary' model - discourages the inventory loading concept to a degree; however the 'pyramiding' aspect is much heavier in a 'binary' MLM structure. If you're interested, look at the Usana model. Its pretty obvious there that if three people who had a wide network of MLM junkies under them teamed up, those three could make out like banditos - and indeed, those schlebs who were high enough up would probably be relatively successful themselves. But for the folks getting in at the bottom tiers - unless they are EXTREMELY motivated, EXTREMELY good salespeople, and willing to go to EXTREME lengths to recruit and keep on recruiting - likely doomed to fail.

[apocalypse]

Here's what makes Amway/Quixtar seem like a pyramid scheme to me:

* The products are, for the most part, not sold outside the distributors themselves (at least in my impression).

* Almost 100% of the distributors actually lose money, considering the supplies they have to buy, expenses, seminars, motivational "tools," and excess product.

* The only people who make money are the people who are far upline.


1. For me, all of my profit was from normal customers as I didn't care to sponsor people. That is not how I wanted to work my business. I treated my business more like a buying club, Sam's, Costco, etc. The only difference was the goods were delivered to my house and I didn't have to travel to a store. My customers either picked it up from me or I went to them to deliver it.

2. There weren't any "tools" you had to buy. If you felt you needed some support, enthusiasm, etc. a person could buy books, tapes, and the rest, but none of it is required for the business.

3. Two of the people in my upline passed up their sponsors and were only a little above me in terms of sponsorship (I was seven down from the top, the 3 and 5 passed up their sponsors).

Perhaps my "line" wasn't the typical one, must like the weight loss ads on t.v. which state "results not typical".


The fact of the matter is that actual products move hands and people can earn more than their sponsors are two reasons on how this is not a pyramid scheme. Pyramid schemes are illegal, just ask Ponzi...

[apocalypse]

Questions...

Why did you leave Amway after investing a decade of your life into "the dream"?

Do you think Amway is a sound business model that "works"?

1. I made more investing than with the Amway business. For me, to not have to leave my house to earn a buck was easier than dealing with the hassles that a business owner has to deal with (people pay late, people smell, have annoying children, pets, and on and on).

2. Yes, Amway is a sound business model. I think of it like this, there are a number of ways to run the Amway business. You could find a bunch of others to go out and just sponsor people. That's it. A person could also treat it like a regular business, which I did. I supplied coffee to a few companies, toiletries and household items to others.



Keep in mind, I don't care for Amway or any other business, I am not defending it. I just hate misconceptions, and there are plenty of them here in this thread.

[apocalypse]

There is a legal definition of "Pyramid Scheme." Amway does not qualify for the legal definition because all money transfers involve actual product sales. The fact that the products cost four times as much as they should doesn't matter. But in the informal sense, they are obviously a scheme with a pyramidal structure.

As a former member, Antiquehunter has probably heard the Amway propaganda which stresses that it is not an illegal pyramid scheme. They never refer to themselves as a "legal pyramid scheme," which is pretty much what it is.

1. In my experience, the products I used were more cost-effective than what I could buy at the store. That is why my customers and I purchased them. It's not hard to do the math and determine which items are a value and which are not. The ones that are not were not purchased.

2. A "legal" pyramid scheme is an oxymoron. The business is typically shown with an exponential growth diagram and most people instantly think "illegal". I could use the same diagram to describe a Costco franchise.


Here is a description of a Costco (or large buying club) franchise.

See, what you do is give me $1.5 million. That gives you the right to open a Mega-Warehouse with our name on it. Then you build the giant warehouse to hold all of this crap, some of it is good, some is garbage, but that doesn't matter. The fact that people have to pay $45.00 per year to come here will inherently make them think they are getting a good deal. Now, since a number of people who buy their membership won't actually save $45.00 a year, but will on average pay more for their items, you're getting profit on top of profit, it's win-win!

Now, find another person to open another franchise somewhere and do the same thing, and we'll give you some kind of bonus, hurray!



Franchises, MLM, traditional businesses, whatever. They are all valid business models. Some have more misconceptions than others.

[Antiquehunter]

Having spent time researching MLM business models (and from personal experience), I'll give my 2 cents.

The business model works - for the upper elite. It is extremely difficult for someone being newly recruited to make a run of it - much more so than if they purchased a franchise, opened a traditional business etc... However, their risks MAY not be as great (although in some cases, people get badly burned just as they do in regular business) and their 'support system' if they have no small business experience does add value. Combined with the low barrier to entry (a couple of hundred bucks and a small minimum monthly purchase as opposed to $50k++ and no profit for the first year or two for many franchises) makes MLM businesses attractive to those looking for an additional income stream.

Downside:

- Most MLM's self destruct eventually because the products fail / have legal problems / give negligible value.
- When recruiting, people buy in to a get rich quick mentality - not a 'get rich slowly with a whole lotta work, work that I may not find particularly fulfilling or exciting' viewpoint.
- It takes so long and so much effort to build up any sort of meaningful cash flow that people become disillusioned and do not follow through.
- The networks of vendors become so large that the corporate entities cannot regulate their people in the field - which is how problems start with unethical recruiting processes, false claims for products - and end up with legal issues.

The fact that MLM professionals who are highly successful jump from program to program demonstrates that the model will burn itself out. The ones that have been around longest (like Amway) have addressed some of these problems by diversifying their product line into other areas. Oh - and those pesky tapes/books/seminars...

If I had a (very) high-margin consumable product that was easy to ship, as of HIGH quality, and had a long shelf-life, I would seriously look at MLM as one marketing option. Amway sells a LOT of soap.

That said - would I consider getting involved as a distributor in another MLM? No. However - if the products were genuinely good / didn't involve spurious claims, and if I was getting in on the absolute ground floor - preferably being brought in by a successful MLMer at the top level - I would give it a second look.

-AH.

[gnome]

I can't quote the legal references for illegal pyramid scheme, but I believe the 'loophole' used by most MLMs is that a product or service changes hands. The theory being I suppose, that someone COULD resell the products they buy at 'wholesale' (generally at or above full retail) and make a profit through simply being a retailer. Of course, the real money is not in reselling, and the time and effort required to make $20 on a purchase of soap or what have you is crazy.

That is an insufficient loophole, however... at least for Amway... the court ruling clearly stated that it wasn't good enough that the products COULD be resold... it said that a certain portion of them had to ACTUALLY be resold.

[Bob Klase]

...I could use the same diagram to describe a Costco franchise.

Here is a description of a Costco (or large buying club) franchise.

See, what you do is give me $1.5 million....

Now, find another person to open another franchise somewhere and do the same thing, and we'll give you some kind of bonus, hurray!.

The problem being with that last sentence. The entire basis of Amway and other prymaids (legal and illegal) are based on "finding another person to open another franchise". Costco is not. Amway distributors spend the vast majority of their 'business' time looking for people to open another franchise. Costco (and similar businesses) spend the vast majority (or all) of their 'business' time running their business and little or no time trying to find others to open a franchise.

[Almo]

The fact of the matter is that actual products move hands and people can earn more than their sponsors are two reasons on how this is not a pyramid scheme. Pyramid schemes are illegal, just ask Ponzi...

But... how common is it that Amway distributors make most of their money on products? If it's very uncommon, the it still largely functions as a pyramid scheme. It's like gambling: some people do make out well. But over all, it's a losing investment.

[gnome]

You could find a bunch of others to go out and just sponsor people. That's it. A person could also treat it like a regular business, which I did. I supplied coffee to a few companies, toiletries and household items to others.

It sounds like you operated legally, but unless I'm misreading the court order, someone that "just sponsors people" is operating their line as an illegal pyramid.

[CurtC]

1. For me, all of my profit was from normal customers as I didn't care to sponsor people. That is not how I wanted to work my business. I treated my business more like a buying club, Sam's, Costco, etc. The only difference was the goods were delivered to my house and I didn't have to travel to a store. My customers either picked it up from me or I went to them to deliver it.It's great that you weren't pushing it on your friends. On the other hand, you didn't make any money to speak of, and it was a fair amount of work (right?). That supports my impression that it's a pyramid - the only way anyone can make money is to do other things than what you were doing.

Your statement that it's not a pyramid seems to be based on the fact that it's legal, while pyramids are illegal. But we're using the word to mean something that could still remain legal, but exploits those at the bottom rung. It still looks to me like Amway is a legal pyramid.

[apocalypse]

On the other hand, you didn't make any money to speak of, and it was a fair amount of work (right?).

I made a decent amount of money, I just got tired of dealing with other people's bullsh!t. I have my own problems and I grew tired of dealing with others. Since I made more not having to deal with anything other than a PC by day-trading I did not want to do this anymore.

There really wasn't much work actually, as everyone is already in this business (as I used to present it), they are not getting paid for it is all. I just explained this fact to people.

[apocalypse]

It sounds like you operated legally, but unless I'm misreading the court order, someone that "just sponsors people" is operating their line as an illegal pyramid.

Someone who just sponsors people is still not illegal. Think of that person as a "headhunter". This happens all the time in real life from temp agencies to actual headhunters. There is only money changing hands, yet this is legal.

By just sponsoring people, there is no income generated. This is self-defeating. One could sponsor 100 people and get a small check, if I recall correctly it would be about $175.00 or so. That doesn't pay the bills.

[apocalypse]

But... how common is it that Amway distributors make most of their money on products? If it's very uncommon, the it still largely functions as a pyramid scheme. It's like gambling: some people do make out well. But over all, it's a losing investment.

Boy oh boy, I feel like I never left this business answering all these questions!

How common it is for distributors to make money on products only? It is really the only way to make money. Keep in mind though, that by just sponsoring a person, you get nothing. By sponsoring a person who actual purchases things that is when money is made. The profit is not made directly off that person.

Think of it this way. You shop at a store and get a good deal. You tell a friend. That friend purchases something at the same store and tells the cashier you referred them. For that the store gives you $1.00 back.

You wouldn't have gotten anything if your friend didn't buy anything. That $1.00 did not come from your friend either, they paid the same price you did, not $1.00 more so that it could go into your pocket. The $1.00 came from the store selling more than they would have based on your referral.

The price is marked up already, and the store sells thousands of that item. It can easily give you $1.00 because they are making $10.00 on every item sold. But by giving you $1.00, you are more likely to tell more people about that deal which in turn should increase sales of that item. This makes a huge profit for the store, but a small one for you.

[Steven Howard]

There really wasn't much work actually, as everyone is already in this business (as I used to present it), they are not getting paid for it is all. I just explained this fact to people.

I'm not.

[apocalypse]

I'm not.

Did you buy anything over the last year? Guess what, you just performed an act of the Amway business.

[Steven Howard]

Did you buy anything over the last year? Guess what, you just performed an act of the Amway business.

:rolleyes:

That's like saying "If you had sex with anybody in the past year, you just performed an act of the prostitution business."

[Kopji]

The MLM once had a place in the business world but with the advent of direct sale tools like e-bay and paypal the MLM is simply obsolete.

If you are selling a product for 5x markup right now, what keeps you from selling the product at 3x on the internet instead? You'd make money by economy of scale and reduced sales overhead.

The people at the top could figure that out any minute, putting the bloated sales hierarchy underneath them out of business.

[Antiquehunter]

I agree Kopji that MLM as a business model has been changed radically by Ebay, Paypal and Ecommerce in general - however I think its too early to drive a nail in the coffin.

Look at the fiscal success of USANA as a company - making squillions in MLM, leveraging Ecommerce tools.

[gnome]

Someone who just sponsors people is still not illegal. Think of that person as a "headhunter". This happens all the time in real life from temp agencies to actual headhunters. There is only money changing hands, yet this is legal.
It is not. It is against "official" Amway policy and a 1979 court order. I have found more info--it violates something called the "10-customer rule" which requires distributors to sell products to at least 10 NON-distributors each month, or else they do not get their bonuses. (Found many references online but I'm still looking for one that's definitive) This is the same rule that Amway points to when defending the legality of its actions.

And yet I have met at least a few distributors who act as though this rule does not exist. Whether it is because Amway is unaware, or is lax in enforcement, is unknown to me. I also have found many accounts online of people who were pressured into joining Amway by being told that the sales to actual customers were unnecessary.

[Psiload]

Boy oh boy, I feel like I never left this business answering all these questions!

How common it is for distributors to make money on products only? It is really the only way to make money.

***SNIP***

This is not true for upper level distributors, for whom the majority of their revenue is generated from the sale of "tools", and ticket sales from the seminars that they host.

[apocalypse]

This is not true for upper level distributors, for whom the majority of their revenue is generated from the sale of "tools", and ticket sales from the seminars that they host.

There is no PV/BV on tools, therefore no income generated by just sponsoring people or pushing the sale of tools.

[apocalypse]

:rolleyes:

That's like saying "If you had sex with anybody in the past year, you just performed an act of the prostitution business."

Only if you were paid for performing the sexual act.

[Antiquehunter]

There is no PV/BV on tools, therefore no income generated by just sponsoring people or pushing the sale of tools.

Apocalypse - I have to disagree with you there. True - there is no 'Amway' (PV/BV) income generated, however the tools/tapes/seminars are NOT sold at cost. Profits are made and shared among the most senior reps.

[Renfield]

Apocalypse - I have to disagree with you there. True - there is no 'Amway' (PV/BV) income generated, however the tools/tapes/seminars are NOT sold at cost. Profits are made and shared among the most senior reps.

And that's where the money is, according to what I've read in this thread. Its structured like a pyramid scheme, but because there is a product beind sold(the motivational tapes/seminars/etc) it is legal.

If you made money selling Amway products, you are definately in a very small, select group, apocalypse. Its very rare that anyone manages to make any signifigant amount of money selling the actual products.

[fishbait]

Quixtar aside, he's a great guy. So, what would be a good way of telling him to stuff it? Doesn't seem to matter what you tell someone whos been in the business so long, they have a quick answer for you. Any help?If he's such a great guy, he'll have your best interest at heart and respect your decision.

You already said you discovered it to be a bunch of lies. His "quick answers" are just more lies. Are you really afraid of offending a liar?

You sound like you're playing the victim here. Find your spine. Take responsibility for yourself and stop letting people live in your head rent free.

[Steven Howard]

Only if you were paid for performing the sexual act.

Explain to me again how I'm in the Amway business, then.

[apocalypse]

Explain to me again how I'm in the Amway business, then.

You're not offering anything to this thread except off-hand comments. I shan't be replying further.

[ZirconBlue]

You're not offering anything to this thread except off-hand comments. I shan't be replying further.

:eek: Hold on. you made a pretty bold assertion here:

Did you buy anything over the last year? Guess what, you just performed an act of the Amway business.

And I don't think it's unreasonable to ask you to back it up.

[Psiload]

There is no PV/BV on tools, therefore no income generated by just sponsoring people or pushing the sale of tools. There are millions of dollars being made on the sale of tools. True, the tools and seminar scam is not sanctioned by Amway, so you won't see any of this income reflected on PV/BV report, but to deny the fact that the tools and seminar scam doesn't exist because the income generated isn't officially recognized by Amway is just plain foolish.

http://www.amquix.info/leonard_hall.html

"Tools in Amway organizations are a major source of income. The Amway pay plan is one of the worst in the industry so tools help make up the difference." Former Amway Crown - Leonard Hall

Amway once tried to shut down the tools scam, but the scam is too big, and they failed miserably.

http://www.amquix.info/amway.html

In 1983, the Amway Distributors' Association, now the IBOA, squeezed Rich DeVos to point of financial ruin when the Britt and the Yager lines enacted a 90 day boycott to protest Rich DeVos's, crack down on the tools kingpins and their abusive motivational systems. Unfortunately Rich DeVos could not stand the pressure and gave-in when sales dropped 24% on a yearly basis before the boycott ran its 90 days. Rich saw the imminent demise of Amway, and thousands of Amway employee jobs if he did not let the king pins continue to rip off the common IBO with their abusive motivational systems. When Rich DeVos retired even his son, Dick DeVos, who is now running for governor in Michigan against Jennifer Granholm, made no attempts to stop the scam.

And if you're going to attempt to use the arguement that this happened over twenty years ago, and Amway/the tools scam has changed over the last two decades, then I'll refer you to this:

http://search.ebay.com/search/search.dll?cgiurl=http%3A%2F%2Fcgi.ebay.com%2Fws%2 F&fkr=1&from=R8&satitle=amway+tapes&category0=

I assure you, the tools are alive and well, and bigger than ever.

[sistathinker]

Amwayers tend toward the fairly religious... Is it at all a possibility that you say "God came to me and said he insists I leave Amway or he'd take my life."
I'm so not trying to be stupid here... It's worked for me once or thrice.