Founders: Richard DeVos, Jay Van Andel
Price: $62 for the starter kid + Upsells
Overall: (1 / 5)
Date when it started: 1959
Verdict: Pyramid Scheme
You may have heard about the company Amway that sell a variety of products, primarily in the health, beauty, and home care markets to nearly over 3 million independent business owners world wide. It’s a huge business, but the Amway business opportunity has been proven year after year that it produces billions for the company and very little for the independent business owners that are actually doing the work.
Amway was founded back in 1959 by Jay Van Andel and Richard DeVos, and it’s now an multinational american company that uses a MLM (multi-level marketing) model to run their business. The California Vitamin Company/Nutrilite created one of the first MLM schemes and is owned by Amway.
Amway has been subject to investigation as a pyramid scheme in the past but the FTC couldn’t find Amway fitting the definition of a pyramid scheme. The FTC did, however, find Amway “guilty of price-fixing and making exaggerated income claims” and the company was ordered to stop retail price fixing and allocating customers among distributors and was prohibited from misrepresenting the amount of profit, earnings or sales its distributors are likely to achieve with the business. Amway was ordered to accompany any such statements with the actual averages per distributor, pointing out that more than half of the distributors do not make any money, with the average distributor making less than $100 per month. The order was violated with a 1986 ad campaign, resulting in a $100,000 fine.
Robert Carroll, of the Skeptic’s Dictionary, has described Amway as a “legal pyramid scheme”, and has said that the quasi-religious devotion of its affiliates is used by the company to conceal poor performance rates by distributors.
So why is there so much about Amway and allegations about whether it is a pyramid scheme or a legitimate business? Well, let’s find out the truth.
This the “business opportunity” they promote on their website.
It claims to help you earn an extra income, while working at your own schedule, and it’s not a “get rich quick” scheme. However, all over YouTube you can find videos by Amway IBO like this one where the intro song repeatedly claims these people have found a way to beat the recession and travel the world, with lyrics like, “Anyone with eyes can see we are successful”. If you sit through the song long enough you’ll see Amway distributor Patrick Joe’s epic introduction before he starts excitedly screaming and getting the audience to chant like he just found Jesus.
Another video by an Amway IBO, “praising the company”
The reality of the compensation plan in Amway.
Well, it’s the compensation plan is quite complicated with Amway. How long would it take for a company to explain to someone how much you get paid and for what? For many companies, it’s pretty straightforward. But, if you are an Amway IBO, the answer is very difficult. In fact, a lot of people who have signed up with Amway can’t explain how they make money. New recruits often get a lot of misinformation. As Amway IBOs buy product from the company and get others to do the same, they move up in this complicated plan. As distributors advance, they gain access to product discounts and commissions that are paid when distributors in their downline (those who they’ve recruited and their recruits’ recruits etc.) make purchases from the company. The recruiting distributor, or sponsor, often doesn’t explain how difficult and expensive it is to advance in the plan. Instead, recruits are told that with hard work, they can make a lot of money from Amway. Sadly, too often they are not told the most important pieces of information any new recruit should know: the failure rate for Amway IBOs is 99%, and out of all the Amway IBOs only 53% are considered “active”.
So how can you really earn with this “business opportunity” with Amway?
Firstly, you will have to sign up as an Amway IBO for the starter kid at $62 and the optional product starter kid at $99.99. There are also some optional items they will offer you when you sign up as an Amway IBO:
- 100 PV = $300
- KATE (voicemail) = $20
- Website fees + $20
- Standing Order (Tape/cd subcription) $42
- Extra tapes/cds (two per week) $56
- Book of the Month $10
- Functions/Major functions (averaged out) $125
- Monthly Open Meeting $8
So the typical expenses for an Amway IBO will add up to over $500 per month, and average monthly income for an “active” IBO is $183, which is a non-profit by $327 per month. Instead of making money, you will most probably lose money.
You sell Amway products for a profit, or you buy them for yourself. But if you want to make the “real money”, you sign up other “distributors”. They’ll be your “downline”, and when they sell anything, you get paid a commission (they call it a “bonus”). Note that you can get commission on sales of both products and so-called “sales tools”, example: motivational books, videos, and audio tapes that constantly stream out of Amway and many of its top distributors. (As I mentioned above) Top Amway IBOs make most of their income from books, tapes, and appearances.
The diagram below from their compensation plan shows how much can you earn from your “downline”. What does this look like? A Pyramid.
Ethan Vanderbuilt (online’s scam buster) explains why Amway is a scam.
Complaints I found from BBB.
Finale Verdict: Amway is a product-based pyramid scheme (MLM scam).
After reading this post, I would appreciate if you share this with anyone you know who is going through the Amway. You will be saving more lives from this scam. This is our fight. To prevent anyone else from being victims and to shut down this fraud. If you have lost money to this scam, please contact the FBI here www.ic3.gov
Lastly, if you have gone through the Amway, you can share your experience with me down below! I would be happy to talk to you. 🙂
“Rather fail with honor than succeed by fraud.”