6 votes

Amway

And other MLM Companies..

Legitimate or pyramid schemes?

Should they be regulated or left to themselves?

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

Civil court overhaul

The Libertarian policy for reduced regulations and a smaller government, includes a drastically overhauled civil court system to take up some of the slack.

Small claims court could be done on a web site with web cams, for example. This would eliminate big granite buildings, parking lots, bailiffs, steno secretaries, cop type security measures, clerk's offices, etc., drastically lowering the cost of a legal action for everybody.

"Timid men prefer the calm of despotism to the tempestuous sea of liberty" TJ

go even further

in other lawsuits, that should be allowed as well (not for trials though but for regular appearances). Right now there is "court call" but it costs $75 a hearing to use it, the judge has the right to deny it, and often the disembodied voice in the courtroom comes off a little ridiculous.

Court reporters only exist in my state due to their extensive lobbying efforts. There were sound-activated video systems that functioned very well 20 years ago. There's no reason that couldn't be used, or video with quality audio, as the official record. Except that it wouldn't cost a ton to hire a certified court reporter for every deposition, hearing, trial, etc.

"Two things are infinite: the universe and human stupidity; and I'm not sure about the the universe."-- Albert Einstein

What regulation? We have enough laws on the books

What regulation? We have enough laws on the books for the likes of MLMs. If there's money but no product, its fraud. If what's advertised is not what's sold, its fraud.

Amway's survived many a suit over its apparent pyramid structure, but they beat it out because they sell real products as advertised.

They may use sappy and grimy methods of coercion, but that's never been against the law. Otherwise, all our auto and insurance salesmen would be in prison.

"Cowards & idiots can come along for the ride but they gotta sit in the back seat!"

Not a pyramid scheme

But Amway is very saturated and difficult to build a business compared to back in the 60s and 70s. You can just sell the products, bu the products are good, but are substantailly overpriced.

MLM In general is not a pyramid scheme as long as goods and services are involved and it isn't just money changing hands.

All retail is has a pyramid format. The question is how that pyramid is shaped. Ara least in MLM, many more people share in the profits.

that is debatable

I believe if the issue were to come up before a court and be properly presented, Amway would in fact be considered a pyramid scheme. I also question your assertion that in MLM "many more people share in the profits."

Do I think our governemnt should outlaw it? I don't really, but to me, it is a pyramid scheme. A pyramid scheme is profitable by new persons paying for memberships. In AMWAY they hide this element behind payments over time, in the form of overpaying for items purchased. A $5.00 trip the grocery store is a $25 expense with Amway. Sure, you get really good toothpaste, but you should be for what you are paying. And then you ask yourself, if this expensive stuff were for sale, would I buy it at a regular store? Would anyone? And hte answer there is no.

They do make great vitamins, which I believe in.

"Two things are infinite: the universe and human stupidity; and I'm not sure about the the universe."-- Albert Einstein

Good points

The courts already ruled that it is not a pyramid scheme because goods and services are exchanged. Someone can also chose not to build a "downline" and just retail the products. I agree they are way overpriced and would never compete in a retail store. The line they give you about the products being so much more concentrated is very questionable in my opinion.

How much profit do non corporate people make off of dial soap? How much do People in the Amway hierarchy make off of Amway soap? I would argue Amway people share more in the profits.

I'm not saying it is a great model, just a different type of pyramid. The structure I like way more are businesses like Winco where employees all own a piece. It is also the cheapest grocery store around.

I think the judgement stated

I think the judgement stated that if each retailer sold products to at least 10 other people then it would not be a pyramid scheme. I don't know if those guidelines are followed or not though.

Recently I think the FTC set a precedent of establishing 70 as the percentage of sales that must occur to non-representatives/ non-IBOs ie people outside the pyramid for the company to be a legitimate MLM. I don't see that happening anytime soon though. These companies have powerful connections. Newt Gingrich, Rick Santorum and the Bushes have openly endorsed Amway.

Makes me

Never want to buy Amway, not that I would anyway. I think they do it to pander to the pevalent religious right element in Amway.

that decision left a little to be desired

The judge seemed like he was almost flippant in the comments that were quoted in the appellate opinion. And it was clear they didn't address the facts that though Amway makes it possible to not build a downline, your upline will invariably discourage that and emphasize that building a downline is key. And in that case it did not seem that they addressed the fact that the wayyyy overpriced products, learning aids, seminars, etc. were in effect a way of hiding the fact that what makes money in Amway is building membership structure and not selling product.

Again, not saying I think it should be illegal, but I do think it is a pyramid, though one cleverly designed to pay cat and mouse with the government's interpretations of what is and isn't a pyramid.

"Two things are infinite: the universe and human stupidity; and I'm not sure about the the universe."-- Albert Einstein

I despise Amway

Simply for the fact that I think it turns people into shady douchebags. I can't tell you how many times I've had people come up to me, strike up a conversation as if they're really interested in who I am or something. And then after a few minute's of getting my ass kissed I get the classic:

"Ya know' you really seem to have a good head on your shoulders, how would you like to make RESIDUAL income???"

There were literally a couple times where people were just being super-friendly and talkative to me and I was like "No offense when i say this but....you're not with Amway or something are you?" One person turned red and said yes and still tried to butter me up. The second person said "Psssh, NO" and he ended the conversation soon after which led me to believe he was indeed with Amway...

I've gotten good at spotting these people. And it's even taken hold of a couple past friends- after saying no to joining 100 times they never spoke to me again. Even though we were buddies, because they had no use for me anymore. They lived, slept and breathed Amway- ended up not making any real money and lost all of their friends....BRILLIANT.

"I am Troll fighter, number one"

-Ernest

http://www.youtube.com/watch?v=LxWb-ViejPg

Yeah, had that experience

once at a mountain biking clinic, at the end of a hot day, this one instructor handed out these drinks. Everyone was beat and sitting in the sun. He starts talking about the importance of supplements. His drinks tasted like weak gatorade with some chalky substance in them, like they hadn't figured out yet how to dissolve what was in them. I joking asked "you're not amway are you" and it turns out, they were pushing an MLM.

A friend recently started talking to me about this coffee with a special ingredient. I also asked him, jokingly, this isn't MLM where I have to have a downline is it? He denied it, but sure enough, it is. What bullshit. And of course the coffee tastes like ass and is far more expensive than Starbucks.

"Two things are infinite: the universe and human stupidity; and I'm not sure about the the universe."-- Albert Einstein

LOL thanks for the post

Good laugh. They can get pretty creative on how they try to "getchya." Mountain biking clinic when everyone is dehydrated and tired, clever...

"And of course the coffee tastes like ass and is far more expensive than Starbucks."

Yeah, but Starbucks doesn't have the "Special Ingredient"...

"I am Troll fighter, number one"

-Ernest

http://www.youtube.com/watch?v=LxWb-ViejPg

Ok, I asked this question

Ok, I asked this question mostly because a dear friend recently joined an MLM company and has been proselytizing and converting people in our circle.

I even went to one of their 'business conferences' at his insistence but the whole "Ra Ra Ra we're going to be millionaires and pay 'cash down' for homes and luxury cars" didn't really resonate with me.

I didn't like the fact that the speakers asked you to put your mind aside and listen to your heart and said 'Would your friend ever lie to you?' I thought that was emotional blackmail.

At the end of the conference they came and talked to me and told me that prices were going up next month so it was best if I could 'swipe the card' right away (my friend had already used this trick three months ago).

The amount was $5000-$10000 and the promise was for total financial independence.

Now because the company sells incredibly overpriced things ($1000 watches of no recognisable brand, new age energy pendants etc) no one would ever buy if not for the 'business opportunity'. That means it is a closed pyramid which will inevitably lead to funnelling of wealth from the lowest levels all the way to the top (it is a binary compensation plan). Thus, by definition, in order to enrich a few, many must lose their savings on false dreams.

When I confided to my friend his reply was simply that he completely trusts his upline and the company donates to charity so how could it be so evil.

Non intervention and free market beliefs would suggest I let things go on but I feel uneasy doing so.

What are the DP's experiences with MLM companies and friends or relatives who have 'seen the light'?

Heartbreaking

I hate to see people being taken that way. A relative was suckered into something similar, although not nearly so costly, through someone at her church. When she realized what was going on she had a very hard time getting them to leave her alone. They made it so uncomfortable for her that for a while she was about to leave that church entirely just to get away from it.

But as long as the company isn't being fraudulent, and even if they're being misleading, I don't know that it's something that should be regulated. People have to learn not to be gullible, not have the government protect them from every bad idea floating around.

If it's a good friend I would think your first goal should be to preserve the friendship. But I don't see anything wrong about being blunt about what you think is going on. Maybe appeal to your friend on the grounds that even if *they* do well in the scheme, it would have to be at the expense of people below them in the pyramid who end up losing. That's just mathematically undeniable. And who could want to be a part of it after realizing that they'd only gain if they hurt other people?

I've had similar experiences with Amway to what others have described. A roommate was selling it for a while, but was too nice and honest a guy to take advantage of other people. A couple approached me like they wanted to be friends, etc., but when they found out I didn't want to do Amway I never heard from them again. Etc.

Here is the issue. Can people

Here is the issue.

Can people be brainwashed or subjected to mind control without administration of any substances?

Are you still exercising your free will when you have been brainwashed/ subjected to mind control?

Are you still subject to the same responsibility for your choices?

Nice nickname :) I wish this WAS a doggydog world...

Human beings are irrational

Especially the ones who think they aren't irrational. We're all prone to things like confirmation bias. It's the way human brains work. The best we can do is to try to understand those tendencies, and by being aware of them try to avoid the pitfalls that they create.

So I wouldn't call it brainwashing. When someone commits to something, even for very poor reasons, they will have a bias toward continuing with it. The more they've committed money, time and reputation to it the harder it becomes to change their mind. It becomes costly, psychologically, to admit they were wrong. And if they've got someone leading them down that path with schemes that are well-designed to take advantage of human weaknesses, they can become very, very entrenched.

As someone put it below, it sounds like your friend is going to learn a very expensive lesson. Part of being a successful adult is learning not to be gullible about such things. In many ways it would be worse for him if he wins, if he comes up with enough downline suckers to come out ahead. Learning to rationalize treating other people that way is not a positive life lesson.

Depends on the MLM!

No, we need no regulations. People need to decide for themselves if want to get involved.

Private groups even have ratings for MLMs! MLMs thrive on selling marked up products. The question for me is this: how unique and useful is that product? Is it worth the markup?

There are some instances where the answer is YES! but majority of the instances: the answer is NO!

I personally don't believe Amway had anything unique to offer. I felt the products where marked up and I could get similar products cheaper. I haven't heard about the Amway products having any kind of superior quality so I dismissed them. To my knowledge there's nothing fraudulent about Amway. It does pay you if you can sell. It's legit. And it's been a top rated MLM. I just don't care for their products.

I don't dismiss ALL MLMs nor do I dismiss the concept. There are some good ones and they are very few. You absolutely don't need the govt to get involved. Just DYODD and make the best decision for yourself.

Your friend is getting an expensive education.

Just be ready to console him when it all goes pear shaped. What you describe sounds just awful and a perfect example of the genre. The "heart` that you are being told to listen to is chronically unreliable.

As the prophet Jeremiah said "The heart is deceitful above all things, and desperately sick; who can understand it?"

As Jesus said "For out of the heart come evil thoughts, murder, adultery, sexual immorality, theft, false witness, slander. These are what defile a person."

Doesn't sound like a reliable source of financial advice to me.

Your friend is "being played" as they say amongst the confidence fraternity. He is deaf to your pleas to his reason so as I say just get ready for the day of judgement. It is a-comin'.

"Jesus answered them: 'Truly, truly, I say to you, everyone who commits sin is a slave to sin. The slave does not remain in the house forever; the son remains forever. So if the Son sets you free, you will be free indeed.'" (John 8:34-36)

I'm fairly biased since I'm

I'm fairly biased since I'm an IBO for a MLM company, but there is nothing pyramid scheme ish about paying customers for word of mouth advertising. With that said, there are practices by some MLM companies that are certainly unethical, but I don't think that govt regulations will fix anything. Participation in network marketing is completely voluntary.

I think you will agree that

I think you will agree that more often it is the 'business opportunity' that brings people into the fold rather than 'word of mouth' advertising.

There are too many grey areas for me to make a judgement either way though. Its true that people CAN make money from this and I never had a problem with weapons manufacturers who make instruments of death so why should I be against this far less pernicious business?

Legit - Former IBO

I was in Amway. Actually Quixtar which was a web subsidiary of Amway at the time. It was very difficult but I learned a lot. They do show plans where you can make $150K plus, but that only happens to .001% of the participants.

If you do the math, you have better chances of making that amount in the normal job market. Now I will say I learned some very good habits from them. Reading leadership books daily was one of them. People skills another. I couldn't handle the constant push of religious undertones from the group I was in.

I took what I learned there and applied it in a normal business. I worked my way from the warehouse to being president of the company in 8 years. I took over as president at 30 years old. We are a $200M company. I wouldn't have had the skills to do this without what I learned in Amway, even though their actual program didn't work out for me.

So for me it is legit. Cheers!

"Only government can take perfectly good paper, cover it with perfectly good ink, and make the combination worthless."

My husband always says, "If you'll knock a thousand doors

for me and get me a thousand bucks, I'll give you one tenth of it--Isn't that a swell deal?"

I've said for years that if people would put the kind of effort into real jobs that they put into Amway, they would really go somewhere. Looks like you've proved my point. Congratulations on your hard work and success!

Christians should not be warmongers! http://www.lewrockwell.com/vance/vance87.html

That's great. I've heard most

That's great.

I've heard most MLM companies pay a lot of attention to training and mentorship programmes.

In fact, they are the most important factors after the compensation plan.

MLM is based upon a well established principle.

"Never give a sucker an even break."

It may take time to cure people of this sickness of believing there is a shortcut to riches beyond the dreams of avarice and they may spend a few thousand learning the lesson but it is an important lesson to learn. Therefore leave MLM to do the teaching that it is well equipped to do.

As Jesus said: " It is NECESSARY that temptations come but woe to them by whom they come."

The tempters will have to face their day of reckoning. Let's not prevent them teaching their hard lessons in the interim.

"Jesus answered them: 'Truly, truly, I say to you, everyone who commits sin is a slave to sin. The slave does not remain in the house forever; the son remains forever. So if the Son sets you free, you will be free indeed.'" (John 8:34-36)

Haha, that is one way of

Haha, that is one way of putting it...

However, as some MLMs use cult like techniques for recruitment, do you think gov't. Should have some role or there should be a legal recourse for victims?

I am serious.

And you are correct. I went to an Amway recruiting meeting once in 1977 and the crowd were singing Hallelujah Amway! This was after a film showing everyone how much stuff they could accumulate as an Amway distributor. One picture was of an off-road vehicle called Renegade. I thought "How appropriate".

As I say leave them alone to do their teaching. That's the libertarian way.

Making laws against it or having a legal recourse for victims will just give the government and lawyers justification for killing honest businesses to help their donors and cronies who can't deal with competition.

Remember John D. Rockefeller's maxim: "Competition is a Sin". He loved government regulations.

"Jesus answered them: 'Truly, truly, I say to you, everyone who commits sin is a slave to sin. The slave does not remain in the house forever; the son remains forever. So if the Son sets you free, you will be free indeed.'" (John 8:34-36)

Legal and Legit

'pyramid schemes'. Just like Social Security!

Social security is surely

Social security is surely more akin to a retirement fund.

I'm talking closed market pyramid schemes with little or no retail outside the pyramid.