In the 1960s and ’70s, Ed and Elsa Prince advanced God’s Kingdom from the end of a cul-de-sac just a few miles from Lake Michigan. There, they taught their four children—Elisabeth (Betsy), Eileen, Emilie and Erik—a deeply religious, conservative, free-market view of the world, emphasizing the importance of self-reliance and sending them to private schools that would reinforce the values they celebrated at home, small-government conservatism chief among them.
Before we get into a detailed discussion on whether Amway is a Ponzi scheme or not, it is important to understand how Amway and other multi-level marketing(MLM) companies go about their business. An MLM company like Amway appoints independent distributors to sell its products. Amway sells products like diet supplements, toothpastes, shampoos, multi-purpose liquid cleaners, soaps, grooming products etc. These distributors are not employees of the company. They make money by selling Amway products.
Methodology: Source Euromonitor International Limited. Claim verification based on Euromonitor research and methodology for Amway Corporation conducted from August to September 2012. Euromonitor studied nine leading direct selling companies in Colombia, as provided by Amway, and through interviews with company distributors and company employees Euromonitor tried to determine if any of the companies had implemented an internal Facebook page exclusive to distributors that provides tools for customization, retailing and content management. None of the nine leading direct selling companies had this capability at the time of the research. To the extent permissible, Euromonitor does not accept or assume responsibility to any third party in respect of this claim. Further information is available upon request.
As secretary, it’s likely DeVos will pursue a national expansion of school choice and charters. In this, DeVos has an ally in President-elect Trump. “There's no failed policy more in need of urgent change than our government-run education monopoly,” Trump said in a September 8 speech. “It is time to break up that monopoly.” In that speech, Trump proposed a $20-billion block grant program to fund national vouchers administered at the state level. “Parents will be able to send their kids to the desired public, private or religious school of their choice,” Trump said.
While noting that the settlement is not an admission of wrongdoing or liability, Amway acknowledged that it had made changes to its business operations as a result of the lawsuit. The settlement is subject to approval by the court, which was expected in early 2011. The economic value of the settlement, including the changes Amway made to its business model, totals $100 million.
And these inconveniences pale beside the emotional shock of entering Josh and Jean’s apartment. Not big to begin with, its thorough occupation by Amway Corporation made it positively claustrophobic. The living room was dominated by huge metal cabinets displaying Amway cleaning and food products; shelves along the wall were devoted to toiletries; boxes of cereal lined the top of the couch. Next to the window was an eraser board listing upcoming World Wide Dreambuilders meetings; free wall space and the outside of cabinets were decorated with motivational slogans (“I AM A WINNER!”) drawn in crayon.
Amway: The True Story of the Company That Transformed the Lives of Millions reads like an extended advertisement. Its author, Wilbur Cross, became acquainted with Amway cofounders Rich DeVos and Jay Van Andel when they commissioned him to write the first ‘official’ history of the Amway Corporation, Commitment to Excellence, published in 1986. In Amway, Cross repeatedly references the work of Shad Helmstetter, PhD, a ‘motivational expert’ specializing in ‘programming’ yourself to change negative self-talk into positive self-talk. Negativity is expressly verboten in the world of Amway, as it breeds doubt – distributors are advised to get rid of any negative people in their downline as soon as possible if they can’t train them to be positive.
Fittingly, my encounter with Amway began during a long-term temp assignment at Andersen Consulting’s ENTERPRISE 2020 project, an ongoing exhibit to which consultants would bring potential clients to scare them about the future. The main attraction was a battery of “industry experts” who produced customized nightmare scenarios to help manufacturing executives from across the globe see the Third Wave coming at them. The experts would discourse gravely about globalization, accelerating technology, managed chaos, self-organizing supply chains, flex-this, flex-that, and nano-everything, eventually arriving at the message of this elaborate sideshow: The future is not to be faced without an Andersen consultant on retainer.
The problem for Amway distributors (or any other genuine MLM company) entering the game late is that it is difficult for them to sponsor new distributors. It is also difficult for them to sell Amway products given that there are so many distributors already operating in the market and they have selling relationships in place. Also, products sold by MLM companies typically tend to be more expensive than similar products being sold in the open market, making it more difficult to get customers willing to buy.
There's a concept in the social sciences that runs along this line. Basically the idea that we hold 3 types of capital, social, cultural, and economic. We can exchange those capitals for other other types of capital and pyramid schemes prey on the people who are willing to exchange their social capital (reputation with friends) for supposed economic capital (money).
In September 2006, following a public complaint, Andhra Pradesh and Telangana state police (CID) initiated raids and seizures against Amway distributors in the state, and submitted a petition against them, claiming the company violated the Prize Chits and Money Circulation Schemes (banning) Act. They shut down all corporate offices associated with the Amway organization including the offices of some Amway distributors. The enforcement said that the business model of the company is illegal. The Reserve Bank of India (RBI) had notified the police that Amway in India may be violating certain laws regarding a "money circulation scheme" and the IB Times article writes that "some say ... Amway is really more about making money from recruiting people to become distributors, as opposed to selling products". In 2008, the state government of Andhra Pradesh enacted a ban on Amway media advertisements.
With its affiliates around the world, Amway Global is a leader in the $80 billion global direct-selling industry. Established in 1959 as a seller of household cleaners, the company expanded and diversified over the years and today is a leader in Health and Beauty through its NUTRILITE brand of nutritional supplements and the ARTISTRY brand of skin care and cosmetics.
Directly across the state from my family, on Florida’s Atlantic coast, is the Windsor country club. Home architecture here is strictly regulated. Residents drive around on golf carts, on and off the eighteen-hole course. There’s an equestrian center, tennis courts, a concierge, and a gun club. Occasionally Prince Charles pays a visit. This is where you go when you bypass Palm Beach on your way to vacation – there’s no kitsch in Windsor, only the highly refined. Among its residents are retail billionaire W. Galen Weston, the Swarovski clan – and the DeVoses, who own three houses here and spend eight weeks a year or more on the waterfront.
The Amway Center is a sports and entertainment venue in Orlando, Florida, located in the Downtown area of the city. It is part of Downtown Orlando Master Plan 3: a plan that also involves improvements to Camping World Stadium and the completion of the Dr. Phillips Center for the Performing Arts. The arena is home to the Orlando Magic of the NBA, the Orlando Solar Bears of the ECHL, and hosted the 2012 NBA All-Star Game, plus the 2015 ECHL All-Star Game.
These five distributors now appoint five distributors each. So we now have 25 distributors at the second level. Each of these distributors now in turn appoints five distributors. So we now have 125 distributors at the third level. If the chain continues, at the 12th level we will have around 24.45 crore distributors. This is equal to around 20% of India's population. The total number of distributors will be around 30.51 crore.
Amway aims to help people become independent business owners by selling their products. Even with a small capital, anyone can start a business through the company. However, Amway is a multi-level marketing company wherein members will need to recruit others and teach them how to recruit more people in order to make more money. Of course, there is a wide array of products that can be sold to people as well.
I was sitting next to Elizabeth and couldn’t imagine what she was thinking. (True to form, Brad didn’t mention Amway for over an hour.) At first, she laughed and clapped with the rest of the audience; as the evening wore on, however, there was a lag. Her responses became more tentative as the crowd of hundreds became more wildly, foot-stompingly enthusiastic. Afterwards, she was dazed and hollow-eyed. In the parking lot, Josh, Jean, and Sherri encircled her, urging her to meet with them the next day to learn more about The Business. Cornered, she agreed. After a few minutes in the car with Sherri, however, she regained enough strength to put the meeting off to the indefinite future. (Months later, she was still on Josh’s “hopeful” list.)
Worse than the girlfriend sabotage, Kyritsis burned a couple bridges with the one person on Earth most likely to put up with all this malarkey: his mother. Kyritsis got angry that she wouldn't buy any of the overpriced products and support his "success." When he started realizing everyone around him was done listening to his sales pitch, Kyritsis decided he needed to expand his market, which he did by inflicting himself on his parents' social circle, out of desperation.
Attaining goals for greater success and profitability depends on each distributor’s ability to sponsor other distributors, who comprise their ‘downline.’ Patience is a characteristic much required in this step because a distributor can advance in profitability and standing only to the extent that the downline distributors actually sell products and keep on generating volume.
Such a model can be represented as a binary tree with each node representing a person and the 2 children nodes under it representing the referred friends. It is also called “Pyramid scheme”. As you would have realized or the organizers might have suggested, in order to just recover the money that you have spent for membership, you need to have atleast 3-4 levels under you and only the levels beyond that will start fetching you some passive income as and when new members join. Just recollect the formula for number of nodes at the “n”th level of a binary tree. It is 2^n (2 power n). We shall use this formula in the following analysis.
In Western Michigan, what matters isn’t how Amway is run, but what the DeVoses have done for the community. Drive through downtown Grand Rapids, Michigan’s second-largest metropolis, and the family’s contributions are omnipresent. There’s the Helen DeVos Children’s Hospital. A few blocks west, hugging the Grand River that bisects the city, you’ll find the sleek DeVos Place Convention Center, the DeVos Performance Hall and the Amway Grand Plaza Hotel. Across the water, the campus of Grand Valley State University is anchored by the spacious Richard M. DeVos Center. A few blocks north is the DeVos Learning Center, housed at the Gerald R. Ford Presidential Museum. (You would be forgiven if you assumed that DeVos, not Ford, had been president.)
But it turns out to be so much more complicated. In 1979, the F.T.C., after investigating Amway, a multilevel marketing company with a vast product line, decided that the company’s business model passed muster — even though recruitment was at the heart of it — because it claimed to take certain steps that (among other things) supposedly showed that its recruits were selling the company’s products to real customers, not just to other recruits. Very quickly, other multilevel marketing companies adopted the “Amway rules” to stay on the right side of the F.T.C.
There is a good possibility that this point would not have any impact on you, but for me it is a negative aspect. In the training, you will be taught to make a list of friends, family and acquaintances and yes, you guessed correctly – you will have to call them and get them to buy or join your business. I absolutely hate to drag my friends or family into buying something, they will buy, because they love me, but I don’t want to put them in that situation because that’s not what friends and family are for – I might be wrong, and this is merely my opinion.
But unlike E2020, which catered to the executive class, Scott offered salvation to the common worker, the middle-level manager, the petit bourgeois professional. Moreover, he offered them something so entrepreneurial, so Third Wave, so purely capitalist that it transcended Darwinian struggle, allowing people to escape into early retirement. He held up a copy of Success magazine trumpeting the “Young and Rich in America.” “It’s still possible to make it in this country,” he declared. “There’s no hammer and sickle over this deal yet!”
Amway's eSpring water filter was introduced in 2000. According to Amway, it was the first system to combine a carbon block filter and ultraviolet light with electronic-monitoring technology in the filter cartridge and it became the first home system to achieve certification for ANSI/NSF Standards 42, 53, and 55. According to Amway, eSpring was the first water treatment system to receive certification for all fifteen NSF/ANSI 401 contaminants which include pharmaceuticals, pesticides and herbicides. The company also claims that, in addition to these 15 contaminants, eSpring is certified for more than 145 potential contaminants, including lead and mercury.
There are two ways you can quickly judge Amway. The first is by taking a community college Economics 101 class. MLM relies on obtaining wealth directly from those below you. You’ll hear a lot of Amway people making faulty comparisons to how other companies work – but the fact of the matter is that the growth of employees of, say, McDonalds is due to the outside demand of the wider public while the growth of “Members” of Amway is due to the internal need of Amway to become self-sustaining. There’s a reason why Amway focuses all its energy on its “networks” rather than the products it actually sells. It should be noted, however, that most of what Amway does is COMPLETELY LEGAL. It’s the equivalent of asking your friends to give you a quarter for every dollar they spend and then encourage them to make the same deal with their friends (with you taking an uptop percentage.) This is why Amway does indeed “partner” with large businesses…such large businesses realize the simplicity of Amway and are more than happy to take a portion of that profit! The issue, however, is whether there is an actual career in Amway – and the simple answer is not unless you either got in early or have lots and lots of family, friends, and poor souls you can get to agree to be below you in your “network.”
Of the Amway distributors who testified in the case, Rich says, ‘I have nothing against someone who tries Amway and concludes the business is not for them. But I wish they would take responsibility for their own actions instead of trying to blame the business.’ Likewise naysayers and disgruntled former Amway distributors simply do not understand how business works and are at fault for their own failures because they lack faith in their ability to succeed, and thus the necessary determination.