Individual / Social Impact
A Typical Phone Call from an Amway (or other MLM) Hopeful
10/28/2011 10:43 AM
MLM Hopeful: I just read your article, “The 10 Big Lies of Multi-Level Marketing.” I was wondering when you wrote it and if you still stand by it?
FitzPatrick: Are you asking me about something in particular?
MLM Hopeful: Well, I’ve heard that Amway is now a $10 billion dollar business with millions of customers and has been around since the 1960s, so how could you say it doesn’t work? You probably wrote that article around 2000. But Amway keeps growing.
FitzPatrick: Okay, well first of all, Amway is a private company and nobody outside the owners really knows how big it actually is. The numbers could be hype. They aren’t verified. But I think you are saying that because Amway is so large it must be legitimate, right?
MLM Hopeful: It is huge! So how can you write about lies and collapse? Read More...
FitzPatrick: Are you asking me about something in particular?
MLM Hopeful: Well, I’ve heard that Amway is now a $10 billion dollar business with millions of customers and has been around since the 1960s, so how could you say it doesn’t work? You probably wrote that article around 2000. But Amway keeps growing.
FitzPatrick: Okay, well first of all, Amway is a private company and nobody outside the owners really knows how big it actually is. The numbers could be hype. They aren’t verified. But I think you are saying that because Amway is so large it must be legitimate, right?
MLM Hopeful: It is huge! So how can you write about lies and collapse? Read More...
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Amway's Deceptions
11/25/2010 08:13 AM
The settlement of the consumer class action suit in which, responding to criminal fraud charges, Amway has agreed to pay $150 million in restitution raises, again, the unavoidable questions: What, if anything, is true and legitimate about Amway? How deep is its deception?
As early as the 1980s, a CBS 60 Minutes exposé concluded that Amway “sells hope, not soap.” On that show, the Asst. Attorney General of Wisconsin explained that a review of tax records of Amway salespeople in that state revealed that 99% had lost money. The “income opportunity,” Amway’s most famous claim to legitimacy, was a cruel hoax.
For many people, including seasoned journalists and veteran government regulators, the concept that Amway’s business could be a total sham and that it might be ravaging, not helping, Main Street America, cannot be comprehended. If true, Amway’s fraud would be too intrinsic, too extensive and too outrageous to be believed. The official version of Amway as a company offering financial opportunity to millions with a “direct selling” business based on honesty and integrity just cannot be squared with a criminal and fraudulent reality. And so the contradiction is usually ignored and the question is seldom raised.
The facts about Amway, as claimed in the recent lawsuit and which Amway paid $150 million to settle, would indict a wide web of political, business, religious, and civic leaders and organizations that take money or in other ways provide Amway cover and support.
Amway’s website, under the “values” tab, states, “Integrity is essential to our business success. We do what is right, not just whatever "works." Amway’s success is measured not only in economic terms, but by the respect, trust and credibility we earn.”
Such a statement is contradicted with Amway’s actual record that includes tax evasion in Canada, resulting in a fine that was the largest in Canadian history at that time. It is challenged by the actions of the government of England to shut down Amway “in the public interest.” England, like the state of Wisconsin 25 years before, examined tax records and discovered that 99% of all English consumers who invested in Amway as salespeople never earned a profit. This massive loss rate had gone on for 30 years. To these examples, many other cases of fraud accusations, law suits, and book-length revelations of deception can be added. The Amway/Quixtar Hall of Shame list compiled on the Amquix.info website is a shocking rap sheet of Amway and some of its top distributors. But the true record remains behind the high wall of silence maintained by millions of disillusioned, shamed and fearful victims in countries worldwide.
Many consumers and some lawsuits focus on what some consider the most egregious trickery associated with Amway. This is the “secret” business connected to Amway in which its top recruiters essentially shake down new recruits for payments that many recruits are led to believe are “necessary” for success in the Amway business. The payments are for “tools,” books, CDs and seminars for “motivation” and training. Lawsuits contend that these payments from recruits constitute the main source of the top level recruiters’ income, not commissions from the sales of Amway products. Many consumers believed that their payments for the tools generated no profits at all to their leaders, but were provided “at cost.” In fact, the leaders were gaining large profits. Moreover, their high pressure sale of these goods to vulnerable and dependent recruits is a clear conflict of interest, since they are supposedly responsible for training and managing those recruits. The sales of tools by the top distributors also provide Amway with greater income from higher inventory purchases. As it turns out, the “tools” are largely worthless. 99% of all recruits lose money, year after year, regardless of how many buy the costly tools or attend the “motivation” seminars.
And then there are the charges and evidence that Amway operates as a destructive cult, employing mind control techniques in order to achieve its financial fleecing of new recruits. This charge has been made in mainstream media, and countless anecdotal reports of ex-Amway salespeople. The nation’s top expert on cult practices, Steve Hassan, offers analyses of the charges. His “BITE” model offers the tools for evaluating tactics employed in Amway’s persuasion program and its inducements to get consumers to invest and recruit. Including Behavior, Information, Thought and Emotional control.
Yet, perhaps the most fundamental of all charges regarding Amway deception is that of false identity as a “direct selling” business. The claim to be a channel of sales to end-user customers is the cornerstone of Amway’s legal defense and the foundation of the “business opportunity” that it sells to millions of people worldwide.
Lawsuits brought by top recruiters, tax records gained by regulators, and mountains of anecdotal evidence from recruits at the bottom indicate that Amway is not a sales company. Rather, its business is based upon inducing inventory purchases and fee payments from consumers who are signed up as its salespeople, and then offering them rewards to draw in others to make similar purchases and fee payments. Few “salespeople” ever sell Amway goods to retail customers, the charges state. There is no hard data showing any sustainable retail income earned by Amway salespeople. Amway’s own “income disclosure” does not include retail profits.
An admission that retail profit is non-existent may be inferred in the settlement of the recent class action lawsuit and in the settlement Amway reached with regulators in England. Amway agreed to substantially lower pricing in both cases. Uncompetitive pricing of many Amway goods speaks to lack of retailing. It also serves as evidence of an “endless chain” recruitment scheme. The higher the price paid by the recruits,, the more the commission to the “upline” and profit to Amway. No need to be price competitive in the open market when the scheme operates as a “closed market” (salespeople selling only or mainly to salespeople). Under the plan that the lawsuit charged Amway perpetrated, each new recruit’s income depends, not on selling products to customers, but on a hopeless quest of “endlessly” expanding the sales organization. The “unlimited” income promise makes price comparisons irrelevant.
As early as the 1980s, a CBS 60 Minutes exposé concluded that Amway “sells hope, not soap.” On that show, the Asst. Attorney General of Wisconsin explained that a review of tax records of Amway salespeople in that state revealed that 99% had lost money. The “income opportunity,” Amway’s most famous claim to legitimacy, was a cruel hoax.
For many people, including seasoned journalists and veteran government regulators, the concept that Amway’s business could be a total sham and that it might be ravaging, not helping, Main Street America, cannot be comprehended. If true, Amway’s fraud would be too intrinsic, too extensive and too outrageous to be believed. The official version of Amway as a company offering financial opportunity to millions with a “direct selling” business based on honesty and integrity just cannot be squared with a criminal and fraudulent reality. And so the contradiction is usually ignored and the question is seldom raised.
The facts about Amway, as claimed in the recent lawsuit and which Amway paid $150 million to settle, would indict a wide web of political, business, religious, and civic leaders and organizations that take money or in other ways provide Amway cover and support.
Amway’s website, under the “values” tab, states, “Integrity is essential to our business success. We do what is right, not just whatever "works." Amway’s success is measured not only in economic terms, but by the respect, trust and credibility we earn.”
Such a statement is contradicted with Amway’s actual record that includes tax evasion in Canada, resulting in a fine that was the largest in Canadian history at that time. It is challenged by the actions of the government of England to shut down Amway “in the public interest.” England, like the state of Wisconsin 25 years before, examined tax records and discovered that 99% of all English consumers who invested in Amway as salespeople never earned a profit. This massive loss rate had gone on for 30 years. To these examples, many other cases of fraud accusations, law suits, and book-length revelations of deception can be added. The Amway/Quixtar Hall of Shame list compiled on the Amquix.info website is a shocking rap sheet of Amway and some of its top distributors. But the true record remains behind the high wall of silence maintained by millions of disillusioned, shamed and fearful victims in countries worldwide.
Many consumers and some lawsuits focus on what some consider the most egregious trickery associated with Amway. This is the “secret” business connected to Amway in which its top recruiters essentially shake down new recruits for payments that many recruits are led to believe are “necessary” for success in the Amway business. The payments are for “tools,” books, CDs and seminars for “motivation” and training. Lawsuits contend that these payments from recruits constitute the main source of the top level recruiters’ income, not commissions from the sales of Amway products. Many consumers believed that their payments for the tools generated no profits at all to their leaders, but were provided “at cost.” In fact, the leaders were gaining large profits. Moreover, their high pressure sale of these goods to vulnerable and dependent recruits is a clear conflict of interest, since they are supposedly responsible for training and managing those recruits. The sales of tools by the top distributors also provide Amway with greater income from higher inventory purchases. As it turns out, the “tools” are largely worthless. 99% of all recruits lose money, year after year, regardless of how many buy the costly tools or attend the “motivation” seminars.
And then there are the charges and evidence that Amway operates as a destructive cult, employing mind control techniques in order to achieve its financial fleecing of new recruits. This charge has been made in mainstream media, and countless anecdotal reports of ex-Amway salespeople. The nation’s top expert on cult practices, Steve Hassan, offers analyses of the charges. His “BITE” model offers the tools for evaluating tactics employed in Amway’s persuasion program and its inducements to get consumers to invest and recruit. Including Behavior, Information, Thought and Emotional control.
Yet, perhaps the most fundamental of all charges regarding Amway deception is that of false identity as a “direct selling” business. The claim to be a channel of sales to end-user customers is the cornerstone of Amway’s legal defense and the foundation of the “business opportunity” that it sells to millions of people worldwide.
Lawsuits brought by top recruiters, tax records gained by regulators, and mountains of anecdotal evidence from recruits at the bottom indicate that Amway is not a sales company. Rather, its business is based upon inducing inventory purchases and fee payments from consumers who are signed up as its salespeople, and then offering them rewards to draw in others to make similar purchases and fee payments. Few “salespeople” ever sell Amway goods to retail customers, the charges state. There is no hard data showing any sustainable retail income earned by Amway salespeople. Amway’s own “income disclosure” does not include retail profits.
An admission that retail profit is non-existent may be inferred in the settlement of the recent class action lawsuit and in the settlement Amway reached with regulators in England. Amway agreed to substantially lower pricing in both cases. Uncompetitive pricing of many Amway goods speaks to lack of retailing. It also serves as evidence of an “endless chain” recruitment scheme. The higher the price paid by the recruits,, the more the commission to the “upline” and profit to Amway. No need to be price competitive in the open market when the scheme operates as a “closed market” (salespeople selling only or mainly to salespeople). Under the plan that the lawsuit charged Amway perpetrated, each new recruit’s income depends, not on selling products to customers, but on a hopeless quest of “endlessly” expanding the sales organization. The “unlimited” income promise makes price comparisons irrelevant.
Naked Truth: Penn & Teller Nail MLM
07/14/2010 10:16 AM
Since I published the book, False Profits, in 1998, I have been interviewed by scores of journalists, including CBS 60 Minutes, Wall Street Journal, London Times, BBC and many daily newspapers, each inquiring into my research and perspective on muilti-level marketing. Each media inquiry produced the journalists’/editors’ own take on the subject in subsequent news stories, feature articles or radio and television reports.
Yet, it was not a news reporter but a comedy/satire show on Cable TV that got it dead-on right. Aired July 8, 2010, on the Show-Time Network, the show was presented by world famous magicians, satirists and comedians, Penn and Teller, and is provocatively and aptly entitled, Bull_it! The segment on multi-level marketing is also aptly entitled, Easy Money.
The show’s producers taped an interview with me for much of an entire day. Their questions and approach indicated that they fully grasped the sad and disturbing realities of America’s greatest con and that Penn and Teller intended to puncture MLM’ false, manipulated and distorted image. MLM survives only due to the calculated dis-information about income opportunity. If truth were widely known, the MLM “industry” would disappear like the now extinct practice of “alchemy.” Read More...
Yet, it was not a news reporter but a comedy/satire show on Cable TV that got it dead-on right. Aired July 8, 2010, on the Show-Time Network, the show was presented by world famous magicians, satirists and comedians, Penn and Teller, and is provocatively and aptly entitled, Bull_it! The segment on multi-level marketing is also aptly entitled, Easy Money.
MLM's Version of Glengarry Glen Ross
09/04/2009 12:49 PM
In David Mamet’s classic film, Glengarry Glen Ross, an arrogant and abusive sales manager informs a struggling real estate sales team that there will be a one-week sales contest. The winner gets a Cadillac. The runner up gets a set of steak knives and the rest are fired. The desperate and brow-beaten salesmen are further told that the company has a set of new “golden” leads of sales prospects. However, they won’t get access to any of them during the contest. Those lucrative leads will be enjoyed only by the winners.
This scene in the movie is a close analogy to the situation MLM recruits are placed in. They are given a hopeless challenge, with each one pitted againt the others in a futule quest to build a pyramid “downline.” All are promised leads, tools and big incomes – after they build up their downline. Read More...
This scene in the movie is a close analogy to the situation MLM recruits are placed in. They are given a hopeless challenge, with each one pitted againt the others in a futule quest to build a pyramid “downline.” All are promised leads, tools and big incomes – after they build up their downline. Read More...