Mon 21 July 08 · Filed under Pyramid Schemes & MLM, Scam Busting
I’m no fan of multi-level marketing companies (MLMs), and Amway - Quixtar - Alticor is the mother of all MLMs. Amway Corporation was founded in 1959 by Rich DeVos and Jay Van Andel. It was originally called Ja-Ri Corporation, and the name was changed to Amway in 1963.
A reorganization occurred in 1999, through which Alticor became the holding company for Amway, an internet-based company called Quixtar, Access Business Group, and Pyxis Innovations. In 2001, the Quixtar name replaced “Amway” for the North American MLM business. (They were apparently trying to get away from all the negative feelings associated with “Amway.”)
The Amway name was retained in the rest of the world. In 2007, the company announced that the Quixtar name would be phased out, and the Amway name would again be used worldwide. Alticor reported sales of $7.2 billion in 2007.
Amway and Quixtar sell these brand names: Artistry Skin Care and Color Cosmetics, Nutrilite Vitamins and Food Supplements, the eSpring Water Purifying System, and the SA8 Laundry System products.
Recently Amway has started a massive public relations campaign that seeks to change the negative image people have of Amway and Quixtar. What’s so negative about this company? For starters, many people believe the company runs a barely-legal pyramid scheme. While the products are touted, the real business is the business of recruiting new people into the scheme.
There’s also a “tools” business that fuels the negative image of Amway and Quixtar. People in the upper levels of the distributor chain are known to make a ton of money selling motivational tapes and books, both of which do little to help anyone be successful with this MLM. Yet hopeful distributors pour money into these items month after month, looking for the key that will unlock the door to financial freedom for them.
Yet few distributors are making much money with Amway Quixtar. One website shows the following statistics:
According to Quixtar scam’s own disclosure document the average monthly gross income for an “active” IBO is $115 (or $1,380 annually).
In the Amway scam business, only 41% meet these criteria as being “active.” This also means that 59% of all distributors are NOT active.A with a business where over half of all the people aren’t doing anything to increase their business?
Out of ALL distributors, only 0.82% qualifies as a Direct-level distributor. This means that 99.18% of all distributors do not qualify as a Direct-level distributor.A company where 99.18% are unsuccessful.
If you are earning 70$ per month you are in the top 11% of earners at Amway & Quixtar scam.
No source is cited for these statistics, but they make sense in light of other studies done on the company. Multi-level marketing expert Robert FitzPatrick recently released a report on 11 MLMs, including Amway. He found that over 99% of distributors for Amway/Quixtar do not turn a profit.
Some details of FitzPatrick’s findings:
- 0.9% (1 in 111) of distributors received 24% of the commission payout
- Amway/Quixtar is the most controversial of all MLMs. Numerous private lawsuits, class action lawsuits and many consumer protest and exposé websites all charge deception about the income opportunity and the operation of a harmful pyramid scheme.
- A recent lawsuit brought against Amway by a group of its top level distributors claimed the Amway is an illegal pyramid, that its products are too highly priced to be retailed and that less than 4% of it products are ever purchased by retail customers. All others are purchased only by the distributors, who are on the pyramid chain.
- The average payout per distributor in 2001 was $1,380, with the kingpins averaging $36,321 and the lower levels averaging $1,060.
- 34% of recruits earn no commissions at all
- The bottom 99.4% of the all distributors earned on average just $12.19 per week — before product purchases and all business expenses. This average income is far less than the costs of running the business. This means that more than 99% make no profit.
- In real numbers, approximately 497,000 out of 500,000 are in losing positions at the bottom of the chain. Despite the massive losses among the salespeople, Amway advertises itself as the “greatest business in the world!”
FitzPatrick also mentions the tools business of the Quixtar/Amway kingpins:
As the report showed, the Amway “kingpins” make most of their money by deceptively recruiting people, not from selling Amway products. At recruitment meetings the kingpins claim that they have become wealthy in the Amway business and that new recruits can also gain this wealth by joining the company as distributors (called IBOs). In fact, these kingpins are gaining huge profits from selling books, tapes and seminars to new recruits, which they tell them are needed in order to achieve “success.” In reality, many at the top levels are in a net loss position (after expenses) from their Amway business. They are profiting only from money gained from recruiting program itself.
Former Amway distributor Eric Scheibeler recounts his experience with the company in his book, Merchants of Deception. Eric and his wife made it to the level of Founder’s Emerald, and worked for almost ten years to build their “business.” While with Amway Quixtar, Scheibeler reports that the following happened:
… I inadvertently discovered what documentation now appears to reveal as two decades of systematic, global fraud running into a sum currently in excess of forty billion dollars. When I initially discovered the deception, I naively thought it only involved Kingpin level distributors in the field. I immediately reported it to Amway/Quixtar senior management with nearly 50 pages of corroborating documentation. The documentation of the fraud was also reported directly to then President Dick DeVos (incredulously now running for Governor of Michigan) by both fax and certified mail. What was the response under Dick DeVos’ leadership? The details are well documented in the book which includes the correspondence sent directly to Mr. DeVos.
Their response was more shocking than the fraud I had discovered. Instead of taking action against the Kingpin level distributors that were clearly defrauding the masses, they began to make threats of taking punitive action against me. Fortunately, I had them do it all in writing. I had begun to make details of the deception known to other distributors, to whom I was accountable. Quixtar ultimately shut off my sole income in what appeared to be an effort to starve me into silence.
Eric contributed to the NBC Dateline expose of Amway, and he says this about the opportunity with Quixtar Amway:
There is no legitimate “business opportunity” with a near 100% loss rate for participants. This appears to have been a well organized investment scam, which has culled billions from the public, for the last twenty years. The truth is in the tax returns of the IBO victims and Amway/Quixtar may soon be forced to make those public. If you are contacted by anyone to see Amway or Quixtar, ask them for their last three years tax returns before you consider investing a penny of your money or time into “the business”. Ask them if you will be expected to spend near $6,000 a year on Amway or Quixtar products, books, tapes, CD’s, DVD’s seminars, travel, phone bills, hotels, online services, e-commerce meetings, training sessions and voice mail systems to receive your “average IBO income” of about $115 a month.
So why do I think that Amway Quixtar Alticor suck?
They use religion to convince people that the scheme is legitimate and the recruiters are looking out for “your best interest.”
Organized crime expert G. Robert Blakely says that Amway is very similar to organized crime groups:
It is my opinion that the Amway business is run in a manner that is parallel to that of major organized crime groups, in particular the Mafia. The structure and function of major organized crime groups, generally consisting of associated enterprises engaging in patterns of legal and illegal activity, was the prototype forming the basis for federal and state racketeering legislation that I have been involved in drafting. The same structure and function, with associated enterprises engaging in patterns of legal and illegal activity, is found in the Amway business.
All good MLM members are taught to stay away from negative people. Ignore the naysayers. They’re just losers who wanted a get-rich-quick scheme and didn’t work hard and are generally lazy. They want to steal your dreams. It’s all a grand scheme to convince Amway members that they should not listen to logic and reason. After all, they have to pretend Amway Quixtar is a good business or they couldn’t sell it to others, right?
The company is a garden variety multi-level marketing company that uses questionable tactics to take money from consumers. That $7 billion the company pulls in each year? 99% of participants lose money and have no hope of turning a profit, yet they are filling the pockets of the owners and highest level of distributors… usually with hard-earned money that should go to feed their families.
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The Words of “One Tin Soldier” sum up this truly pernicious business cult”
Listen, children, to a story
That was written long ago
About a Kingdom on a mountain
And a valley folk down below.
On the mountain was a treasure
Buried deep beneath a stone
And the valley people swore
They’d have it for their very own.
Go ahead and hate your neighbor.
Go ahead and cheat a friend.
Do it in the name of heaven.
You can justify it in the end.
But there won’t be any trumpets blowing
Come the judgment day.
On the bloody morning after
One tin soldier rides away.
At the end of this song, the valley people turn over the stone where the treasure was supposed to be. Do you remember what they found?
That’s right, nothing but a broken dream and a message “Peace on Earth” is all it said. It is my heart felt desire that this message be told and that people in harms way be warned. I feel like that One Tin Soldier that rides away. Why did he ride away, so he could tell the world about the treasure.
People locked into the grind of living the dream blind themselves while this company profits and the tool kingpin deceivers exact their own pound of flesh. Do they care when a family house gets foreclosed, and the wolf is at the door?
Quixtar/Amway can only hold out to these destitute believers a empty treasure chest to go with their now empty dream.
Amway’s current efforts at “reputation” rebuilding only to serve to continue the big con on their own distributors. Consumer, please be forewarned, these commercials don’t say it, but a recruitment scam lurks behind those Amway Global name tags. NOW YOU (REALLY) KNOW!
Tex wrote @ July 21st, 2008 at 10:05 am
Tracy,
With all due respect, you missed the boat. The problem is the well documented tool scam, and NOT the other issues.
You misused various statistics. For example:
“According to Quixtar scam’s own disclosure document the average monthly gross income for an “active” IBO is $115 (or $1,380 annually).” —- That’s because most IBO’s don’t do anything, or get ripped off by the tool scam while trying to do something.
“In the Amway scam business, only 41% meet these criteria as being “active.” This also means that 59% of all distributors are NOT active.A with a business where over half of all the people aren’t doing anything to increase their business?” —– Some of these people are lazy, changed their minds, got blown out when they got rejected by their friend/neighbor, etc. The real problem is many of them got ripped off by the tool scam (as well as any small downline that is nearly impossible to keep in for the same reason), and are still technically IBO’s, and probably like some of the products, so they keep their IBO number in order to buy at lower prices.
Out of ALL distributors, only 0.82% qualifies as a Direct-level distributor. This means that 99.18% of all distributors do not qualify as a Direct-level distributor.A company where 99.18% are unsuccessful. —- If it takes over 100 IBO’s to create a single Direct (now called Platinum), this is exactly what the percentage SHOULD be. This statistic is not a prediction of future success, it is a snapshot of the business in a moment in time.
If you are earning 70$ per month you are in the top 11% of earners at Amway & Quixtar scam. —- See above.
I could go on, but your various sources are also dog-paddling in the ocean.
Please don’t take this personally, but in the spirit of the upcoming Presidential election, “It’s the tool scam, stupid.” Focus, focus, focus.
Tex wrote @ July 21st, 2008 at 10:08 am
QIAC,
All of the slick songs and poems aren’t enough, either.
Not that I mind them, but don’t you want to be taken seriously?
If so, stay mostly with the facts.
Also, we need to get organized and ALL submit complaints to the FTC, our Senators/Representatives, Attorneys General, etc.
No, Tex, YOU have missed the boat. If you think that 99%+ of people lose money in Amway because they’re lazy losers who don’t try, then you’re truly brainwashed. Yes, there are some who don’t try. But it’s not 99%.
You’re trying to use those “active” statistics to suggest that people aren’t trying. Your logic says that if only 41% are active, then the other 59% aren’t trying. How on earth would you know any such thing? How could you know about their past or present efforts in Away.
The scam is the problem, and the tools scam is the second problem.
Tex wrote @ July 21st, 2008 at 11:10 am
Tracy,
Read my post again.
I NEVER said 99%+ lose money because they are “lazy losers”, I said there are a variety of reasons. YOU are mixing up a bunch of statistics and not critically examining what is happening. The FACT is the tool scam takes advantage of the other reasons why many IBO’s don’t turn a profit and has been able to hide in the background rather than being singled out as THE major problem. I don’t expect all IBO’s to stay in if the tool scam is fixed, but the current state of affairs allows the LCK’s to go on their merry way, except in the UK, of course.
Do YOU know what the definition of “active” is? The threshold is VERY low, and I wouldn’t consider the definition as anything approaching “active.”
The tool scam is THE problem, and people like you who twist and turn statistics are another problem.
I noticed you didn’t respond to my specifics, I assume because you realize I am right and have nothing to offer to the contrary, except your emotional diatribe.
Get with the program and THINK, Tracy.
I have to agree with Tracy on this one.
“With all due respect, you missed the boat. The problem is the well documented tool scam, and NOT the other issues.”
>> Even if the tool scam a well documented problem, it doesn’t mean there are not other problems, I guess.
—–
“According to Quixtar scam’s own disclosure document the average monthly gross income for an “active” IBO is $115 (or $1,380 annually).” —- That’s because most IBO’s don’t do anything, or get ripped off by the tool scam while trying to do something.
>> We really don’t know that, do we?
Let’s rephrase the statement: “Regardless of what IBO’s do or not do about their business, try as they might, or lazy as they fall, the average monthly gross income for an “active” IBO STILL is $115 (or $1,380 annually)”.
—————-
“In the Amway scam business, only 41% meet these criteria as being “active.” This also means that 59% of all distributors are NOT active.A with a business where over half of all the people aren’t doing anything to increase their business?” —– Some of these people are lazy, changed their minds, got blown out when they got rejected by their friend/neighbor, etc. The real problem is many of them got ripped off by the tool scam (as well as any small downline that is nearly impossible to keep in for the same reason), and are still technically IBO’s, and probably like some of the products, so they keep their IBO number in order to buy at lower prices.
>> I don’t see why these numbers should be left out of the statistics, keeping in mind what I’ve stated in the answer above.
I think IBO’s get ripped off both ways…
——
Out of ALL distributors, only 0.82% qualifies as a Direct-level distributor. This means that 99.18% of all distributors do not qualify as a Direct-level distributor.A company where 99.18% are unsuccessful. —- If it takes over 100 IBO’s to create a single Direct (now called Platinum), this is exactly what the percentage SHOULD be. This statistic is not a prediction of future success, it is a snapshot of the business in a moment in time.
>>> Nice snapshot. For a Direct Selling company, that’s strange at best.
————————
“Also, we need to get organized and ALL submit complaints to the FTC, our Senators/Representatives, Attorneys General, etc.”
>>> Now a question: how much can you trust FTC? I mean, Amway has been around for decades, the 1979 lawsuit defined rules that are clearly obsolete nowadays, but I don’t see FTC much worried about investigating, closing down or sanction many (or almost any) MLM-pyramid-look-alikes.
From this distance, I find USA’s approach on this subject a really big mess. You have a “Fair Trading Act” where pyramid schemes should fit in somehow, even if there isn’t a simple definition or explanation on what they are exactly or how they should be targeted (but you do have zillions of approaches on the matter); then you have each of your 52 states with different approaches on the matter (”here it is legal, but across the border it is a scam”); and finally it looks like nobody is trying hard enough to enforce the law - the estate only acts when a lot of people decide to complain, and then you have a lawsuit once in a while, which almost certainly will never reach a conviction, for whatever reason that is.
Not to mention political lobbying…. and DSA…
Best Regards.
Tex - This is the last time you will be abusive and insulting on this site. I normally do not allow as much latitude to MLM-lovers as I have to you, but that will come to an end if you continue this way.
Yes, the threshold for active is very low, but that still doesn’t validate the cause-and-effect that you’re promoting. Your observation is incorrect.
I have studied MLMs in great depth, and the 99% failure rate is detrimental to consumers. Millions of consumers lose billions of dollars to MLMs each year. Yes, LOSE. They get almost nothing for their money.
I’ve critically examined the MLM business model and it stinks.
There’s nothing “emotional” about this post. It deals in facts about MLMs, specifically Amway. I’m sorry that I didn’t respond to your flawed analysis of the statistics. What can I say except I reject your analysis? 99% failure means 99% failure, and there’s no way to spin that into a good thing, as you’ve tried to do.
arrhhhgg!
Sorry… about… typos… I’m a real expert on those.
B.R.
Tex wrote @ July 21st, 2008 at 11:33 am
Pedro,
There are other problems, but if you get sidetracked and don’t focus on THE big one, you can tie yourself up in all kinds of tangled logic.
Plus, we DO know many IBO’s don’t do anything or are getting ripped off by the tool scam.
Also, the reason many IBO’s don’t get ripped off is because they don’t do much/anything.
You may find the “snapshot” statistic strange or not, just don’t misuse it.
Regarding “trusting” the FTC, Is there anything to LOSE by contacting the FTC?
Tex wrote @ July 21st, 2008 at 11:43 am
Tracy,
I’m trying to “shake” you into thinking why you and many other critics can’t make headway with this issue.
If you are against MLM in general, I feel sorry for you, because you obviously are comparing MLM to perfection rather than traditional businesses, which also have a high failure rate.
You were the one trying to make something significant out of being active, not me. I was merely pointing out how low the threshold is, and therefore using this statistic does not provide much insight.
You can reject my analysis, but I stated reasons why your “analysis” is flawed, and you had no reasons to support why I am wrong. Just that you have “studied” the MLM model with flawed logic and came to flawed conclusions. GI-GO (Garbage In - Garbage Out).
I never said 99% failure is a good thing, only the reasons for it allow the LCK’s to clean via the tool scam while the “critics” spin their wheels.
You won’t have to “ban” me Tracy, I won’t post here unless there is something meaningful to comment on. I’ve been “banned” from many sites, and I always pop up somewhere else.
Tex wrote: “That’s because most IBO’s don’t do anything, or get ripped off by the tool scam while trying to do something.”
Tracy responds: You have no proof of that.
Tex wrote: “Some of these people are lazy, changed their minds, got blown out when they got rejected by their friend/neighbor, etc. The real problem is many of them got ripped off by the tool scam”
Tracy responds: You have no proof of that.
Tex wrote: “If it takes over 100 IBO’s to create a single Direct (now called Platinum), this is exactly what the percentage SHOULD be. This statistic is not a prediction of future success, it is a snapshot of the business in a moment in time.”
Tracy responds: Historically 99% of people in MLMs lose money. This statistic has never changed. That’s a pretty good indicator of what’s going to happen in the future - 99% will fail.
You really have nothing substantive supporting any of your claims. All you have is the ability to call others stupid. That’s not going to get you very far here.
Tex wrote @ July 21st, 2008 at 12:32 pm
Tracy,
I have plenty of proof of my statement, “That’s because most IBO’s don’t do anything, or get ripped off by the tool scam while trying to do something.” This is my PERSONAL experience, the similar experience of MANY former IBO’s on various blogs, and I have a well documented list of documents that PROVE the upline make SEVERAL more times via the tools than A/Q, AND most IBO’s don’t generally get to a net profit scenario until they get to about the Platinum level. I encourage you to read all of the documents found here: http://quixtarisacultintervention.blogspot.com/2008/07/deep-throat-big-hat-blows-covers-off-of.html No wonder most IBO’s quit. It all points to the tool scam.
Tracy, I was scammed for 12 YEARS, and have been researching the tool scam for the past 3 years. You may know a lot of generic information, but I ensure you I have LIVED this business and would put my practical experience coupled with my in-depth and informed research against your generic research ANY day.
Your misuse of the 99% Direct (Platinum) statistic again shows your lack of understanding. Just because an IBO isn’t a Platinum or above does NOT make them a “failure”, but together with the tool scam they certainly will be operating at a net loss.
The “stupid” quote was well referenced to the past campaign slogan regarding the economy, I thought I made that and the fact that you were NOT to take it personally VERY clear. In the context it was CLEARLY made, the word “stupid” means “uninformed” or “misinformed”, not the traditional meaning of “stupid.”
When I say 99%, I am referring to this:
The bottom 99.4% of the all distributors earned on average just $12.19 per week — before product purchases and all business expenses. This average income is far less than the costs of running the business. This means that more than 99% make no profit.
And please don’t take it personally if I refer to you as an idiot.
If you are against MLM in general, I feel sorry for you, because you obviously are comparing MLM to perfection rather than traditional businesses, which also have a high failure rate.
Incorrect, as usual. Please find where 99% of real businesses don’t make any money.
And again, please read the studies that are abused which say most of the businesses that are started are not in existence 5 years later. The ‘tools’ tell you it is because they failed. The actual information tells you tells you the real story - ‘most’ businesses do quite well and aren’t in existence after 5 years because they are sold, closed because the demand was met (with profit), and closed because the owner used that business to begin something else (with profit). Some do fail, but not with the almost sure rate of failure with this particular MLM.
Right now, the British government is trying to shut ‘Amway UK’ down in the ‘interest of the British public. ‘ On paper, ‘Amway UK Ltd.’ has never made a profit . It’s lost over $50 million in the last 8 years, but the chronically sick company is paying out millions of dollars more to attorneys to keep it alive. This doesn’t make any sense until you understand what’s hiding behind the MLM façade. The real money, which is probably hundreds of millions of dollars in the UK, has been made from selling the lie that ‘anyone can achieve financial freedom in 2-5 years. ‘ The whole set up is an advanced fee fraud using essentially the same tactics as the Nigerian Bank scam. ‘Amway’ is the bait. Victims are led to believe there’s a fat packet of money to collect, but they’ve first to hand over their own cash in order to get it.
Let’s face it, If MLM worked, there would be no need for all the supporting materials .
Joecool wrote @ August 14th, 2008 at 3:38 pm
The tools scam is Tex’s priority and he thinks that everyoen else needs to get with hsi program. Not true, the busienss has many issues, some of which have nothing to do with tools. The business model is set up so that the majority do the work to profit the minority.
Hello everyone,
I’m a part-time Quixtar IBO and also own a Internet business. Quixtar is a legit mlm business but to succeed in it is very hard. Many people in the business do not “totally” understand that business is mostly about money and profit. If you are a Quixtar IBO making $1,000 a month but you are spending $2,000 a month buying their overpriced core products, you will not be in business for long. This is what happens to many people in the business, I heard of IBOs at the 4,000 pv level quitting because they are not making profit.
I’m a person that is very open minded but I’m also a critical thinker and very independent. While in the biz, I studied my upline and other IBOs very closely. A few things that I noticed about the active Quixtar IBOs is that they believe in the system way too much that they don’t see the flaws. It’s almost like they are brainwashed (meant this in a nice way). In order to build a successful business, you first need to build it on faith because you are not going to see results right away. You need to be persistence, committed and very patient…if you are going to invest less than 20 hours per a week in the biz. You are better off quitting because you will most likely fail. Then again, any true business owners know that failing is a good thing in business because that means you are one step closer to succeeding!
I followed my upline for about 6 months and did not like the results so I took my own path. I ended up combining all the knowledge I learned from my upline with my knowledge and found a way to “better the wheel”. After 3 months of going on my own, I started to break even at the 300 pv level. I did this by canceling the CDs and other unnecessary cost, signing up more customers, and finding more effective way to find “targeted” customers and potential IBOs. The trick is to have people invest their time in you instead of you investing your time in them. Easier said then done!
Every mlm business has its flaws because there are always people in the business that will take advantage of you. If you think that the Quixtar biz is a gift from heaven then you are just lying to yourself. To all Quixtar IBOs - you are no better than anybody else. If you do become successful, remember that the reason why you are successful is because of other people in the world. Without them you are nothing! Treat everybody like they are multi-millionaires and you might one day become one. Peace!
Forgot two thing:
1. If you are a Quixtar IBO, you are actually not a Independent Business Owner but more of a distributor. As a Quixtar IBO, Quixtar pretty much owns you. If you do not follow their rules of conduct…bye bye! Quixtar changed the name to IBO because it just sounds more “professional”.
2. The amount of money claimed by platinum, emeralds and diamonds make per year is bogus. Some diamonds say they make over $200,000 per year but they are lucky if they make 6 figures. If we are talking about profit (revenue - cost) then the amount of money they make is even less. Sorry to disappoint you all.
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