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.