The Truth About Amway And Their Brushes With The Law
- The Amway Lawsuits And Brushes With The Law
- Is Amway A Pyramid Scheme?
- Tax Evasion And Customs Fraud
- Copyright Infringement
- The Training Tools ‘Scam’
- Defamation
- Police Raids
- The Truth About The Amway Lawsuits
The Amway Lawsuits And Brushes With The Law
Is Amway A Pyramid Scheme?
Amway is consistently accused of being a pyramid scheme. In simple terms, a pyramid scheme is one where all the emphasis is on recruiting people into the business, with little or no focus on any sort of product or service. Since no credible product underpins the business, the only way to make money is to constantly add people into the business, and sooner or later the number of people you are required to add in order to make money becomes so great that it is unsustainable, and the pyramid collapses leaving all but those at the very top of the pyramid out of pocket. Pyramid selling is a scam, and is illegal in most countries.
In 1979 Amway was cleared of being a pyramid scheme in America by a Federal Trade Commission (FTC) investigation, and was subsequently cleared of the same allegations by a Belgian court in 1997, and a United Kingdom court in 2008. The FTC investigation in America was satisfied that the Amway compensation plan placed enough emphasis on retail sales of its products to customers, although they did order Amway to stop making exaggerated claims to distributors about the level of profits they could generally expect to make.
In 1986, Amway was fined $100,000 for breaching this ruling in an advertising campaign.
Tax Evasion And Customs Fraud
In 1983, Amway pleaded guilty to charges of criminal tax evasion and customs fraud in Canada. Co-founder Rich DeVos later claimed that Amway had only pleaded guilty for what he called ‘technical reasons’, and that in actual fact he believed they were innocent of all charges that they were accused of. The company, he insisted, had done nothing wrong. The Canadian courts disagreed, however, and Amway were fined a whopping $25million CAD. On top of this, they were required to settle the outstanding tax bill of $45million CAD. At the time, the fine imposed was the highest ever in Canadian history.
Copyright Infringement
In 1996 the Recording Industry Association of America (RIAA) sued Amway and some of its distributors as part of a crackdown on music piracy. The lawsuit centered around allegations that Amway were using copyrighted music on some of their promotional videos, without consent. Amway has always sold ‘training tools’ to its distributors, and these are hugely controversial anyway, but with the revelation that some of them were illegally flouting copyright laws, they became even more contentious.
Amway once again denied any wrongdoing, blaming a simple misunderstanding, but they eventually settled out of court for $9million.
The Training Tools ‘Scam’
Amway’s top distributors sell training videos, tapes and materials which they market as being essential tools for anyone who wants to succeed in the business. Many of them also act as motivational speakers at Amway events, charging large amounts of money to ‘motivate’ the audience, and then use it as a platform to sell their training tools.
Amway have been criticized for this practice on several levels. The first criticism, and perhaps the most important, is that a large proportion of these distributors’ incomes is derived from selling the training tools and being paid for public speaking. While they espouse the philosophy that Awmay is the pathway to untold richness, in reality most of them only make modest incomes from Amway, and actually make almost all their income from the sale of their tools. Newcomers to the business are often told that the tools are essential if you want to succeed, therefore placing huge pressure on the new distributor to part with their cash and buy the materials. This accusation is often denied by the distributors and by Amway, and remains the topic of much debate.
Second, many people claim that the training tools are similar to brainwashing techniques used by cults to mould and control the mind. Accusations of cult-like behaviour are commonly thrown at Amway, and you can read Neil Davidson’s Explosive investigation into The Amway Cult by clicking HERE. The cult accusations also extend to the fiercely insular nature of the organisation, and the aggressive dismissal of any outside criticism.
Defamation
In 2007, four Amway distributors were ordered to pay a total of $19.25million in damages to rival company Proctor And Gamble, following a court case which found that they had been responsible for spreading damaging lies about Proctor and Gamble and their CEO.
Amway as a company was cleared of all charges, and in their defense it can be said that the responsibility lay solely with the individual distributors, and not the company itself.
Police Raids In India
In 2006, Indian State Police raided the properties of Amway distributors in the state of Andhra Pradesh, and shut down all of Amway’s offices there. The claim was that the company were operating an illegal business model, like a pyramid scheme. The case has yet to be proven, and Amway distributors in the region remain in limbo.
The Truth About The Amway Lawsuits
Well, the truth is that despite all these claims, accusations, investigations, and law suits, Amway remains as one of the leading MLM companies in the world, in terms of both distributor numbers and cumulative sales. In a number of cases the company has been hindered by an inability to control its distributors, rather than by any actions that they have taken as an organisation. Where they have been at fault, they have paid their dues and deserve to be given another chance. Perhaps the worst thing that can be said about Amway is that they have become a victim of their own success, and have learned the hard way about what is and isn’t appropriate in business.
So Amway are by no means perfect, but they are not an inherently bad company, and are willing to take actions to remedy their shortcomings. The responsibility lies with the distributors to learn how to market their business and sell their products responsibly, without having to resort to the dirty tactics of the past. You can make money without the need to exploit others via training tools, or concoct lies to dispose of your competitors, or using music without permission. You just need to learn the blueprint behind adding 700 people into your Amway business legitimately and on the back of the products you are selling, and you will avoid the pitfalls listed in this investigation. And the best place to learn how to rock Amway legally is right here, on ExplosiveMLM.com.
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