Dierckx & Associates

Risk Management, Legal & Financial Investigations, Forensic Services, Christchurch New Zealand

Multi-level Marketing, Network Marketing, Pyramid Scheme

		Wednesday, 23 September 09 - 11:28 PM (GMT) By John ML Dierckx in Pyramid Scheme Alert

Time and time again I see those articles about whether or not multi-level marketing or as sometimes referred to network marketing (MLM) is a pyramid scheme. We all have heard the stories about those companies that offer you a “business opportunity.” In straight terms, these companies usually offer you an opportunity to be self employed whilst building a business is all about recruiting other into doing the same.

In these hard economic times more and more of these schemes are offered in all kinds of shapes and forms to those gullible under financial pressure or in search of “freedom.”

Apparently there are some MLM’s out there that actually are legitimate, yet I have to see the first that is actually offering a real opportunity. Most of the MLM’s out there end up being a money maker for a lucky few at the top of the pyramid and at the bottom there are thousands of “independent business owners,” independent distributors making the money for the lucky few at the top with these “proven systems.”  Across the board 90-99% of the people involved in these “businesses” end up making nothing or even lose money. So, you might as well keep working for a boss or keep looking around for something that offers real potential.

Read the full article here >>>

 

 

Introducing the False Profits Blog

		Wednesday, 30 July 08 - 12:02 AM (GMT) By John ML Dierckx in Pyramid Scheme Alert

As readers here are well aware, I have been a supporter of Pyramid Scheme Alert and the prominently heading by Robert Fitzpatrick as well as the efforts undertaken by Eric Scheibeler through his book and site Merchants of Deception detailing his experiences as an Amway distributor.  We can now add the False Profits Blog to the list of sites of interest.

Robert FitzPatrick, the publisher of the "False Profits Blog," is the co-author of the book, False Profits, the first book-length analysis of pyramid schemes and multi-level marketing ever published.

Definitely recommended reading for those interested in MLM and more importantly for those considering a 'career' as distributor.

Guest Article David Brear: ‘FREEDOM IS SLAVERY!’

		Thursday, 22 May 08 - 01:02 AM (GMT) By John ML Dierckx in Pyramid Scheme Alert

I am pleased to present an article kindly provided by David A. Brear, an Englishman living in France and author of the book "The Universal Identifying Characteristics of a Cult" (Axiom Books, London, 2005). Soon his long awaited new book, '' 'Amway'  The American Dream Made Nightmare", with a foreword by Edward. A. Lottick MD will be published.

Dr Lottick is the former chairman of CAN (Cult Awareness Network) and began studying cults after his son tragically committed suicide. Noah Lottick’s,  tragic death was later profiled in an award-winning ‘Time’ magazine article, ‘Scientology, The Thriving Cult of Greed and Power’, by Richard Behar. In this, Dr. Lottick and his wife had the guts to blame openly ‘Scientology’ for their son’s death. Dr. Lottick was reported as stating that he considered ‘Scientology’ to be a ‘school for psychopaths’.

!Freedom is Slavery!

The ‘Times’ article, “High court dismisses claims against Amway’ ” (14 . 5. 08 by David Brown), demonstrates how the billionaire, American instigators of the Utopian ‘Amway’ myth have (by maintaining an absolute monopoly of information presented using a constant repetition of thought-stopping ‘commercial’ words and images combined with pseudo-economic mystification) succeeded in infiltrating traditional culture to a degree where the truth about their grandiose criminal objectives has become almost unthinkable to casual observers. Self-evidently, the ‘Times’ article focused on Judge Norris’ highly-controversial decision not to order ‘Amway UK’ (a technically-insolvent, privately-controlled, limited-liability, commercial company first registered in 1973) to be wound up. This, and previous ‘Times’ articles, contained only a brief outline of the UK government’s localized challenge to the authenticity of the global ‘Amway’ myth. However, the latest chapter in ‘Amway’s’ shameful history is (as always) not quite what it appears. Consequently, it will beggar belief if UK government representatives do not decide to appeal against the High Court’s decision.

In reality, as a direct result of the recent UK government investigation, months ago the corporate officers of ‘Amway UK Ltd.’ effectively closed their own organization down. At the same time (in a last ditch attempt to dodge court proceedings), they announced what they described as, ‘Important Changes to the Amway Business Model:’
 

• All ‘Amway UK’s’ non-salaried commission agents (arbitrarily defined in all ‘Amway’ contracts for the past 34 years as, ‘Independent Business Owners’ or ‘IBOs’), were, henceforth, to be known as, ‘Amway Business Owners’ or ‘ABOs.’
• ‘Amway UK’s’ non-salaried commission agents (who, for the past 34 years have been virtually the only customers for ‘Amway’ products) were, henceforth, each to sell ‘Amway’ products to a minimum number of  5 genuine retail customers.
• The average, annual gross-income figures of ‘Amway UK’s’ non-salaried commission agents (the derisory nature of which has been deliberately occulted for the past 34 years by the corporate officers of ‘Amway UK’) were, henceforth, to be openly-declared in the UK.
• The sale to ‘Amway UK’s’ non-salaried commission agents of tickets to ‘non-Amway-approved Business Meetings’ and of ‘non-Amway-approved Business Support Materials’ (which for the past 34 years has comprised well over 90% of all financial activity within the organization, controlled by a handful of individuals in the USA and which has deliberately been occulted by the corporate officers of ‘Amway UK’) were, henceforth, to be banned.  
• The initial registration, and re-registration, fees (collected by ‘Amway UK’ for the past 34 years) were, henceforth, to be scrapped.
• Radical price cuts were, henceforth, to be maintained on (what the corporate officers of ‘Amway UK’ have for the past 34 years steadfastly pretended to be ‘good value exclusive’)  ‘Amway’ products.

The last ‘Important Change’ is apparently to bring all ‘Amway’s’ products into line with comparable products, widely-available in traditional retail outlets. Although, since the UK investigation, most ‘Amway’ prices have, in fact, remained unaltered and some have even been increased. As for the selected range of ‘Amway’ products which have been reduced, on average, the old prices were approximately 350% higher. I’ll repeat that so readers won’t think it’s a printing error: 350%. In other words, for 34 years, ‘Amway UK’s’ products have been tantamount to being unsaleable on the open-market, because anyone can simply walk into their local supermarket and buy essentially the same banal merchandise for much less. Tellingly, during the past 8 years ‘Amway UK’ has declared total, trading losses of approximately £24 millions ($50 millions). Indeed, according to the tax record, during its entire existence, ‘Amway UK’ has never once declared an annual trading profit.

At first sight (and in isolation), these commercially suicidal activities in the UK appear to be pointless and absurd rather than criminal and dangerous. They have only been made possible by a limitless flow of cash (declared in court) to have come from ‘Amway Korea’ via ‘Amway Europe.’ Furthermore, by ‘Amway UK’s’ own claimed numbers of non-salaried commission agents (which briefly approached 100 000 twenty five years ago), in excess of 1 million annual ‘Distributor’ contracts have been signed with the company since 1973. However, ‘Amway UK’s’ current, claimed numbers of ‘loyal’ agents (approximately 10 000) coupled with the organization’s previous, acknowledged, average annual drop-out rate (approximately 50%), proves that, by extrapolation, more than 1 million so-called ‘Amway Businesses’ have, in fact, disappeared in the UK alone during the past 34 years. On a global scale, since the Utopian ‘Amway’ myth was first released on an unsuspecting American public in 1959, the number of kamikaze contract holders who have ‘gone missing in action’, runs into the tens of millions. Yet ‘Amway’ propaganda still proudly proclaims ‘3 millions Distributors’  and ‘$6.4 billions turn-over world-wide.’ Informed readers will note that the mathematics of this vast, but ever-shifting, game of Orwellian make-believe are remarkably similar to those of ‘Scientology.’

In a previous article, ‘Times’ correspondents described ‘Amway’ as ‘one of the biggest marketing organizations in the world’; yet, they then went on to explain that when UK government investigators took a close look at the organization’s so-called ‘marketing’ activities during 2005-2006, they discovered that the overwhelming majority of ‘Amway’s’ claimed ‘retail sales’ in the UK were a complete fiction. Virtually the sole buyers for ‘Amway’s’ outrageously over-priced products were the organization’s own non-salaried agents whom government lawyers could only describe as ‘gullible’, ‘deluded’ and ‘vulnerable.’ In simple terms, the quantifiable evidence presented in court proved that all but an insignificant percentage of ‘Amway UK’s’ transactions during 2005-2006 were internal. Therefore, because ‘Amway’s’ so-called ‘Multilevel Marketing’ scheme has never had a consistent, external source of revenue, it has been impossible for the overwhelming majority of its contributing participants to receive an overall material benefit. This is what is commonly referred to as a ‘pyramid scam’ or a ‘Ponzi scheme’, but which should be more accurately described as a ‘premeditated closed-market swindle.’ It is also why Mark Cunningham QC, acting for the UK government, described ‘Amway’ in court as ‘inherently objectionable and pernicious’ and requested that the counterfeit ‘Direct Selling company’ be wound up on the grounds that it ‘trades unlawfully’ and is ‘not in the public interest.’ Not even ‘Amway’s’ team of highly-paid UK lawyers (apparently, financed by cash from Korea) could deny this ugly reality; instead they steadfastly pretended that everything has now been changed and, illogically (in respect of ‘Amway UK’s’ consistent multi-million pound losses and the disappearance of over 1 million so-called ‘Businesses’), requested that the company be ‘allowed to continue to trade.’ In the USA, when faced with the prospect of regulatory investigation in the past, the instigators of the ‘Amway’ myth have followed the reality-inverting tactic of seeking-out, and employing, law firms staffed by legally-qualified, former, high-level, federal law enforcement agents. Predictably, in the recent case, a former Deputy Director of the UK Serious Fraud Office, Peter Kiernan of Eversheds LLP, was cast in the conventional role of ‘Amway’s’ upstanding defence coordinator. In March of 2008, it was announced that Kiernan had left Eversheds and become a ‘partner’ in the London branch of the Washington-based Crowell and Moring LLP (a rising firm which: last year announced a gross annual revenue of $235.3 million; doubled its profit-shares per ‘partner’ to $818 000; has deep connections to ‘Amway’ via its controversial client, the security company ‘Blackwater USA’). Obviously, Kiernan vehemently denies any link between his services to ‘Amway UK’ and his lucrative new post.

The 10% of UK adherents of the ‘Amway’ myth whom (in previous articles) ‘Times’ correspondents casually described as having ‘made a profit’ during 2005-2006, were, in fact, persons who had merely received an annual ‘commission-payment’ from ‘Amway UK’ of more than the initial £28, or the annual £18 re-registration, fee to the organization. Amazingly, despite all the solemn undertakings given by ‘Amway’s’ upstanding defence team, it will apparently still remain possible for ‘Amway’ contract holders to buy outrageously over-priced products from the organization and receive ‘commission payments’ for their own purchases. Furthermore, no evidence was presented in court to prove that, since 1973, any UK ‘Amway’ adherent has received an overall material benefit from the operation of what the organization’s instigators have falsely defined as an ‘Independent Business.’ All ‘payments’ previously quoted in the ‘Times’ were, in fact, gross-incomes, not net-adjusted incomes (i.e. after the deduction of operating expenses). Indeed, when the ugly reality behind the Utopian ‘Amway’ myth was similarly investigated in Wisconsin in the 1980s, Assistant State Attorney, Bruce Craig (Dept. of Consumer Affairs), examined the audited tax returns of approximately 20 000 adherents. Typically, even the top 1% of the ‘Amway’ pyramid was discovered to be gradually bleeding to death financially (each so-called ‘Direct Distributorship’ was making an average, annual net-adjusted loss in excess of $900). At that time, ‘Amway’ was heavily fined for offering unobtainable income levels in its literature and at its meetings. Sadly, the company was allowed to continue to ‘trade’, because its upstanding defence team of highly-paid US attorneys promised that everything had been changed. Manifestly, they were lying. 

All this evidence (scandalous though it is) is almost beside the point, because the real money generated by total belief in the Utopian ‘Amway’ myth has always been, and continues to be, flowing elsewhere. To date, this underground torrent of illicit cash totals hundreds of millions of pounds from the UK alone and many billions of dollars on a global scale. Most of the profits have, in fact, derived from peddling what is arbitrarily defined by ‘Amway’s’ instigators as ‘Business Support Materials’ (i.e. books, tapes, CDs, tickets to meetings, etc.) to the insolvent participants in a ‘premeditated closed-market swindle’ on the pretext that these Materials contain an exclusive, secret knowledge vital to achieving Prosperity, Happiness and Freedom. This global racket - a form of advanced-fee fraud based on perverted Judaeo-Christian, and esoteric, ritual beliefs commonly known as the ‘Prosperity Gospel’ - has been operated behind an ever-changing and expanding labyrinth of (apparently independent) corporate structures pursuing lawful, and/or unlawful activities, which has been maliciously created in order to prevent and divert investigation and isolate the instigators of the ‘Amway’ myth from liability. Sadly, Judge Norris’ recent decision was based on evidence relating exclusively to ‘Amway UK Ltd.’ When the wider picture is examined, this blatantly- counterfeit corporate structure is revealed as just one piece of expendable bait in a vast cultic fraud. It is interesting to note that the main recipient of  the cash from the UK has been a former beer delivery-truck driver from Rome, New York, turned ‘Multi-Millionaire Amway Crown Ambassador Distributor’ and (self-styled) ‘pastor’, Dexter Yager. By searching for ‘Yager Amway/Quixtar’ on www.youtube.com , it is possible to witness 25 minutes of the ‘pastor’s’ wife, ‘Birdie’, addressing a closed-meeting in Charlotte, N. Carolina. There, an unquestioning flock of core-adherents of the ‘Amway’ myth sat spellbound whilst the sanctimonious Mme. Yager read out a miraculous message which she steadfastly pretended to have received directly from God (that very morning).

In recent years, one of the most courageous American witnesses to what lurks behind the ‘Amway’ myth has been Eric Scheibeler (a former federal auditor). He spent 10 years as an unquestioning believer, rising to a level in the pyramid known as ‘Emerald Distributor.’ During this period, the ‘Amway’ Ministry of Truth steadfastly pretended that Eric and his wife were Prosperous, Happy and Free. Typically, despite working himself to exhaustion (often without sleep) converting thousands more adherents, Eric lost approximately $100 000 and passed at least $4 millions to his ‘Network Leader.’ Most of this money came from the sale of books, tapes, CDs, tickets to meetings, etc. When Eric finally confronted the ego-destroying reality that he’d been systematically deceived and exploited, he was destitute, dissociated from all his previous social contacts, suffering from chronic, psychological deterioration symptoms and contemplating suicide. His nightmare experiences are recounted in a book, ‘Merchants of Deception,’ which can be downloaded for free from the Net. Eric also explains how the instigators of the ‘Amway’ myth have dodged a rigorous federal enquiry in the USA by giving huge amounts of money to the ‘Religious Right’ and to the Republican party. Eric now accepts that whilst involved with ‘Amway’ he was subjected to a battery of coordinated, devious procedures designed to shut-down his critical and evaluative faculties without his fully-informed consent. He had, in fact, been conditioned to believe that any quantifiable evidence or free-thinking individual challenging the authenticity of the ‘Amway’ myth, is  evil.  In short, for 10 years, Eric Scheibeler was the brainwashed, de facto slave of criminals.

As a result of my elder brother (a teacher) falling under the spell the ‘Amway’ myth in the UK in the 1990s, I have been investigating the organization and its origins for more than 13 years. At one stage my brother was so deluded that he gave up his job, believing that, in the 21^st century, all supermarkets would be finished in the UK, because the ‘Amway Business Model’ was taking-over. It is almost certainly as a result of my persistent complaints (supported by witnesses such as Eric Scheibeler) that the UK government’s ‘Companies Investigation Branch’ was forced to take action. I have to say that most people who have been deceived into signing a contract with one of ‘Amway’s’ myriad of corporate incarnations have left the organization (without complaint and within a relatively short period time) when they failed to receive a quantifiable benefit. However, a significant minority (with access to independent funds) have undergone a nightmarish transformation and dissipated all their mental, physical and financial resources to the benefit of hitherto, unknown persons whom they continued to trust and follow, no matter suffering this entailed. Since the recent UK court case, many previously silent, former core-adherents of ‘Amway’ have found the courage to come forward. Their testimonies - some of which are posted on Eric Scheibeler’s Website,  www.merchantsofdeception.com - make pretty grim reading. Unfortunately, my brother is not yet amongst them.

In its wake, the Utopian ‘Amway’ myth has left a trail of destitution, debt, depression, dissociation, divorce and even death. In truth, if it wasn’t for its serious consequences, then ‘Amway’ would be nothing more than a sick joke, but then the same could be said of any cultic movement.

Copyright  David Brear 2008

 

Amway Sued by Top Distributors

		Thursday, 23 August 07 - 04:32 AM (GMT) By John ML Dierckx in Pyramid Scheme Alert

A  new class action lawsuit against Amway/Quixtar brought by Amway insiders  -- "top gun" distributors -- confirms in detail what other victims have reported for years.

The lawsuit states:

• Quixtar's (Amway and Quixtar are both part of the same company) products are so overpriced they cannot be profitably retailed.
• Only 3.4% of product sales are made to customers outside of the Quixtar distribution network.
• The sole way to make money is for a (distributor) to continually recruit new distributors who are also willing to buy and self-consume, or give away, the Quixtar products.
• Quixtar a classic recruitment pyramid scheme.

The distributors say they want to "extricate themselves from continued forced participation in Quixtar's illegal pyramid scheme and pursue legitimate business opportunities instead." They say Amway not only induces people to participate in an illegal scam but also locks them into the scheme with non-compete contracts that prevent them from contacting their downlines to work with them in other businesses.

In short, Amway/Quixtar, they say, is not a "direct selling" business at all. It  is an "illegal pyramid scheme."

Who is calling Amway "illegal"? A bunch of malcontent "losers" or "anti-MLM zealots"? Far from it. These are Amway's most successful participants (If it is possible to call making money in a pyramid scheme being "successful") These are long term  distributors. No quitters here. Eight of the plaintiffs are among the largest Quixtar distributors, many of whom have had close relationships and private conversations with Quixtar/Amway founders and executive management for more than 30 years. These are the ultimate "insiders" and they are saying in plain English that Amway is a global fraud.

Amway is the oldest, largest and most politically connected MLM - the company that effectively created "multi-level marketing". This lawsuit, brought by its "top guns", is only one a series of blows in the last few years years and indicate a downward spiral and possibly a coming collapse. Amway has victimized tens of millions of people and now its very top leaders say they too are victims.

The lawsuit of the top guns is mirrored by another class action case brought by plaintiffs at the bottom of the Amway/Quixtar pyramid.

China has banned Amway from operating its recruitment scheme in that country, effectively stopping Amway from scamming the last part of the world it has not yet penetrated.

Regulators in the UK have effectively halted Amway operations in the UK and Ireland.

Amway offices have been raided in India and a recent court ruling supports the police in their investigation of Amway. The Police in the largest state in Southern India, Andhra Predesh, are charging that Amway is operating an "endless chain" fraud and causing widespread harm to Indian consumers.

Amway has poured millions into the coffers of President Bush and key Republican congresspeople -- either with contributions or "speaking fees." Now, Congressional power  has shifted and Amway has lost its protection of supporters such as Tom Delay and Rick Santorum who are no longer in Congress.

Source: Pyramid Scheme Alert.

Mannatech

		Friday, 20 July 07 - 08:54 AM (GMT) By John ML Dierckx in Pyramid Scheme Alert

Source: Pyramid Scheme Alert

TEXAS ATTORNEY GENERAL CHARGES MLM, MANNTECH, WITH ILLEGAL PRACTICES, SEEKS INJUNCTION
July, 2007

The Texas Attorney General claims that Mannatech, a multi-level marketing (MLM) company – very similar in type of product, company size, business model, and publicly traded status to Usana Health Science – is deceiving and misleading consumers with its product claims.
Like Usana, Mannatech sells products it says will improve health. However, the law strictly prohibits these companies from making claims of cures of any illnesses. Those who attend meetings report many blatant claims and testimonials about “cures.”
The reports of false and misleading claims of "miracle cures" are typical at MLM meetings. Often the fake testimonials and claims lure consumers into investing into the MLM pyramid recruiting pay plan, which is also "false and misleading." Miracle cure claims are matched with magical income promises.

The AG wants an injunction against the operation of Mannatech. Since the company is based in Texas and manufactures there, this is equivalent to seeking to close down the entire company.
The Texas AG did not charge the company with operating a pyramid scheme as it did in a recent prosecution of the “gas mileage pill” company, BioPerformance, also a multi-level marketing company. Both companies gain most revenue from new participants in the pay plan, not from retail customers and recruiting is required to earn a profit in the pay plan. Why didn’t the Texas AG charge Mannatech with violations of its anti-pyramid scheme statute?
One obvious reason is that the multi-level marketing industry’s lobbying organization, the Direct Selling Association, lobbied to change the law in Texas in 2000 so that MLMs are now generally exempt. This MLM-written law, which the DSA tried, but failed, to get into Congress, says that if payments and rewards are included in the price of products, the scheme is excluded from the law’s definition of a pyramid scheme. This is a huge loophole for pyramid schemes disguised with products. Mannatech is a member of the DSA!

For New Zealand: Mannatech http://www.dsanz.co.nz/membership/mannatech.html

So as you can see Mannatech is part of the direct selling Association here as well.

Burnlounge

		Friday, 20 July 07 - 08:49 AM (GMT) By John ML Dierckx in Pyramid Scheme Alert

 

FTC Charges MLM, Burnlounge, Is an Illegal Pyramid Scheme

Source: Pyramid Scheme Alert

June, 2007

The United States Federal Trade Commission (FTC) has filed a complaint in the U.S. District Court for the Central District of California against BurnLounge, Inc. and is seeking a permanent halt to the illegal pyramid practices as well as other illegal practices alleged in the complaint.

BurnLounge is one of the hottest new multi-level marketing schemes. It's "product" is downloaded music, similar to i-Tunes. Some of its top promoters were previously big recruiters with the MLM, Excel Communications. It has attracted superstars from sports and the music industry to endorse it. Many musicians have been lured into the scheme. Tens of thousands of consumers have invested over the last several years.

Like most MLMs it generated few consumer complaints despite thousands of people losing money. And, like most other MLMs, the scheme claimed that each participant could "retail" the products. In fact, making money was based almost entirely on recruiting other "retailers" in a classic endless chain.

Despite thousands of consumers joining the scheme, the news media has largely ignored it and no state regulatory agency had brought action against it. The initiative to bring charges came from the South Carolina Attorney General's Office. Reportedly, the Attorney General of SC had been recruited (he did not join). Some top sports figures in SC were highly public promoters of BurnLounge. South Carolina was reportedly a "hot spot" of BurnLounge recruiting.

BurnLounge recruited participants by selling them so-called “product packages,” ranging from $29.95 to $429.95 per year. More expensive packages purportedly provided participants with an increased ability to earn rewards through the BurnLounge compensation program.

The FTC specifically alleges that the defendants operate an illegal pyramid scheme, make deceptive earnings claims, and fail to disclose that most consumers who invest in pyramid schemes don’t receive substantial income, but lose money, instead. These practices violate the FTC Act, the agency alleges.

The FTC has asked the court to halt the deceptive practices and misrepresentations and to freeze the defendants assets, pending a trial. U. S. District Court Judge George Wu ordered that a full hearing on the FTC’s request for a preliminary injunction and asset freeze be held on June 19, 2007, after which he will rule on the FTC’s requests.

In addition to naming BurnLounge, Inc., a Delaware corporation based in New York City, the Commission’s complaint also names: Juan Alexander Arnold, of Studio City, California; John Taylor, of Houston, Texas; Rob DeBoer of Irmo, South Carolina; and Scott Elliott of Forney, Texas.

-----

Class Action Suit Against USANA in California State Court

		Thursday, 28 June 07 - 03:02 AM (GMT) By John ML Dierckx in Pyramid Scheme Alert

More news arrived in my mailbox today in relation to USANA, this time not through Pyramid Scheme Alert but through Insurance Journal.

ATTORNEYS GENERAL IN ALL 50 STATES ALSO ALERTED:PYRAMID SCHEME ALERT ASKS FEDERAL TRADE COMMISSION TO INVESTIGATE USANA HEALTH SCIENCES

		Wednesday, 23 May 07 - 12:53 PM (GMT) By John ML Dierckx in Pyramid Scheme Alert

The latest news from Pyramid Scheme Alert
May, 2007

In a letter to Deborah Platt Majoras, Chairman of the Federal Trade Commission, the consumer education and advocacy group, Pyramid Scheme Alert, has formally requested that the FTC open an investigation of the multi-level marketing company, Usana Health Sciences, headquartered in Utah.
The request is based on published reports in the Wall Street Journal of (1) extensive losses among consumers that are solicited and enrolled by Usana as distributors, (2) pyramid recruiting, (3) requirements of financial investment tied to rewards based on recruiting, (4) lack of retail sales and (5) over-pricing. The Wall Street Journal article also noted that it had applied the same test to Usana that the FTC itself used to prosecute other MLM scheme such as Equinox International. The test measured how much retail selling would be required for an MLM to operate legally. Usana failed the test by a wide margin.

Pyramid Scheme Alert also sent alert letters to the Attorneys General in all 50 statesinvestigation by the Securities & Exchange Commission.
The PSA letter to the State Attorneys General also noted the publicized evidence against Usana -- widespread consumer harm, absence of retailing, exorbitant pricing within a closed network, and executive tax avoidance.
The State AGs were directed to an in-depth analysis of Usana business model posted at http://www.pyramidschemealert.org/PSAMain/news/UsanaBusinessModelAnalysis.html notifying them that Usana is under

 

AMWAY/QUIXTAR ZERO TOLERANCE ON SYSTEM MONEY?

		Tuesday, 08 May 07 - 02:22 AM (GMT) By John ML Dierckx in Pyramid Scheme Alert

Many I spoke to or whose publications I read mentioned that the Amway system was in fact a double pyramid, first of all the Amway products system and secondly the pryamid of motivational material. Several publications showed convincngly how it was not the Amway system but te motivational material pyramids that made the bulk of money for the top kingpin Amway/Quixtar/A2K distributors. (See for instance  the book Merchants of Deception, which can be downloaded at www.merchantsofdeception.com).

People like Bo Short, Eric Scheibeler and refer back to the so called "Postma memo" in which the legality of the tools business was already questioned in January 1983 by Amway staff. What bothered for instance Eric Scheibeler is that knowing what was going on Amway did not interfere to put this illegal pyramid to a halt.

Recently I stumbled upon this article that could indicate that Amway is taking a new position on this matter.

Source www.mlmleads.eu

AMWAY/QUIXTAR ZERO TOLERANCE ON SYSTEM MONEY

Hi there hope you find the information below interesting, its implication are BIG! You are welcome to verify this by calling the phone numbers mentioned in the letter below. Regards, Demetrius Eto Alticor the $6 billion dollar MLM giant Sanctions its entire 30,000 UK sales force. War is about to break out, between MLM giants, the $6 billion turnover, Amway Corp. (Alticor and Quixtar.com in the US)and its 3 million sales force. It looks as though, what has been on the horizon for many years; is about to happen. War is about to break out, between MLM giants, the $6 billion turnover, Amway Corp. (Alticor and Quixtar.com in the US) and its various system wealthy multi millionaire, independent business owner (ibo) organisations, throughout the world.

There is approximately a 3 million ibo sale force, in over 50 countries, throughout the world, so developments over the next year should make interesting reading! What is all the fuss about? Well, starting with the United kingdom and Ireland. a very surprised and shocked sale force and just before a holiday break, received an email, which can be read below or on www.mlmleads.eu. In a nutshell, Amways seemingly soft touch with its ibo (independent business owner) sales force, over their lucrative, conference, speaker, books and cd systems, which many organisations run side by side with their Amway business, is about to come to an end.

This income that Amway has now blocked, is known as system money
by the ibo sales force and millions can be made from it by its successful ibos, they are known as "system lords". Amways zero tolerance on system money started with the UK and Ireland on May 4th 2007 and will then roll out to the rest of the world, that’s when surely war will break out. Starting with the UK and Ireland, it has banned all sponsoring for at least 8 weeks and banned all system conferences, books and cds. Which essentially are not run, or distributed by Amway.

Many ibos make good money from speaker fees. It would seem that Amway has finally got fed up with the negative media and Internet sites which have berated ibos who make more system money than they do out of their Amway networking business and are now making a stand, whatever the cost. Most people would agree, Amway itself is rarely attacked; it is the ibos themselves who tend to shoot themselves in the foot with their greed to make as much system money as they can, at the expense of the naive ibo, and this is where most of the complaints come from. ....

However the big boys, who earn mighty bucks from the multi million dollar system, are going to be rather angry; lawsuits are sure to fly and could lead to the break-up of the multi billion privately owned business. The implications on the numerous non-Amway professional speakers and writers and even hotels, will be interesting to see. If a good positive reading book comes out ibos can order one hundred thousand plus in one go.

The system lords, are also one of the largest conference and hotel room bookers in the world. It would appear that Alticor, the parent company has initially picked on one of the weaker countries as far as the business goes to implement its zero tolerance stance. The UK has always been a difficult country to crack and it would appear they are working on the principle of limited damage, i.e. lets see how the UK ibo sales force reacts and go on from there.

I notice they haven't picked on their own US business network yet. The UK would appear to be the first lamb to the system money slaughter. After one day the UK sales force doesn't appear to be reacting very well, they are in shock. They are already threatening to "go on strike". Many of the large US business ibos, who have very deep pockets, have business interests in the UK and have already instructed lawyers regarding such matters as: breach of contract, breach of human rights to hold meetings, and the implications of the free trade enterprise system and freedom of speech and the rights of a corporation to dictate to its independent sales force in such a way.

Why are ibos shocked. Well the very essence of a network marketing business or MLM business, is that you are your own boss, to a keen ibo JOB means Jackass Of the Boss, no security and guaranteed redundancy at some time in your career and probably no pension. In other words if you rely on the system, more fool you. Up to now the Amway has lived up to its word of providing a regular income for those ibos who have dedicated themselves to building the business. To receive an email like this, with no warning to the leaders, just before a holiday break, is just what ibos hate, corporate mind games and total lack of feeling for people financial futures.There had been no discussion or communication, before this email. One well-known ibo has commented "My faith in Amway and what it stands for is not dead but very badly shaken, I cannot believe that the co-founder Rich De Vos has sanctioned such a blatantly provocative email. (Emphasis reporter)

Read the full story here: http://www.mlmleads.eu/page.cfm/pageid/4682.

Why are those IBO's so Surprised?
But now the question is off course why are these IBO's so shocked really? Could it be maybe that in their dedication they forgot to look around what was really happening? Were they not aware of the history?

As said in the introduction of this article,  already back in 1983  the Postma  memo was written, an internal memo  by Ed POSTMA , outlining the  actual, situation and raising serious doubts about the legality of this  "tools business": the tapes and cd's, seminars, meetings and rallies. (A copy of the Memo can be found here) or what to think of this recording, in which Rich De Vos himself addresses the ibo's on this very subject matter  in clear terms: the tape is called directly speaking II.

The illegality of the tools business and the abuses coming with it are most certainly not new. It is in fact the most illegal; part of the pyramid scheme in that those tools are not meant to be going outside the downline. (Read Merchants of Deception at http://www.merchantsofdeception.com) and you will understand what I mean.

Or here a story that was sent to me:

• Signed up Sept 1998 aged 18.
• Chose not to renew my distributorship in 2005
• Showed 106 "one on one's" and sponsored 6 people over the first 18months. Was inactive from about 2001 but stayed signed up. Came across Bo Short's website www.formerdiamond.com by chance. Later found www.merchantsofdeception.com and www.amquix.com I read everything on these sites for a month.
• Saw all the truth in these websites and decided to do some research which you may have not come across. I called up Amway, got hold of a big wig there and found that Amway peaked in NZ in 1999 with 26,000 Distributors. The most recent figure he could give me was that in 2003 there were just 12,000 Distributors. I later realized since the NZ and Australian markets have joined in Sept 2005 that this hides any declining figures. All part of the deception.
• Just prior to coming across Bo Shorts site in Feb 2005 I did go to a major function (IDA Summer conference) and it was quite clear the business had declined greatly. Far less people being recognized for reaching new pin levels etc. There was particular emphasis on recruiting young people 18-30 age group which later made me feel sick.
• I have over 1600 tapes and CD's but don't want to sell them ... like others as that will only spread the evil.

Look: that seven years of membership and 1600 tapes and CD's, we are talking about between four and 5 tapes and CD's a week. And who profits from those sales? You guessed it and this is just one example. Can we now imagine why these kingpins cared mor for their own business than the Amway business? Can we now imgaine why they made such enormous amounts of money on the tools business?

Or what to think of this example, also send to me:

Dear Mr. John,

I happen to be browsing the web and came across your site. As usual,
you probably only get emails form disappointed Amway distributors like
myself.

Briefly, I was an Amway distributor in Malaysia under ... He now resides in New Zealand. I was a distributor for 8 years and as you know we aware all coerced into being loyal, investing into tapes and functions and all the other cult like activities.

Basically the reason I left was due to this: (briefly)

1) He started using the organization to spread his
religion of Christianity. Religious statements were also made during functions

2) He collected NZ$ 3 million from distributors in Australia, NZ and Malaysia to invest in some bogus investment schemes.

No returns were given and from what I know they money is gone. I was one of the investors. There were total 41 investors altogether. 9 of us got together and demanded of money back and got it after much pressure. The rest of the investors still think he has the best interest for them. I have all documentation pertaining this matter including the off shore accounts set up in Mauritius to transfer the
funds from NZ so that distributors could not trace the shareholders of the off shore account.

To make matters worst, when we brought this matter up to Amway Malaysia, they seem somewhat not wanting to get involved and condone his actions. Even the company is more concerned only on profits from distributors rather than upholding their code of conduct and ethics.

Today, I have realised the whole Amway business is a scam. The
Diamonds only make money from the tapes, books and functions. The
marketing plan sucks. In fact, the number of people becoming
financially free in none in his organization. Even he is broke and
has never re qualified Diamond since 1992.

The whole problem is most people who are in it cannot leave because of
'losing face' syndrome. Only when one gets financially, spiritually or
emotionally disappointed with the business, only then you hear the
truth like myself.

That's all for now. Hope this info helps.

Regards,

So, Amway finally appearing to make a stance should not come as a surprise. What is a surprise in my view is that it took them so incredibly long. Now let's see how real this stance will turn out to be.

Would you like to share your story?
Mail me at johnmodproject@gmail.com
and it does not have to be Amway/Quixtar/A2K/Alticor per se, other MLM's can be discussed here as well, such as
ACN, USANA, Melaluca (or whatever) any one will do.

The Empire Strikes Back

		Friday, 30 March 07 - 08:08 AM (GMT) By John ML Dierckx in Pyramid Scheme Alert

AMWAY/QUIXTAR CONTINUES LAWYER ASSAULT… A Pennsylvania court denied Quixtar (Amway) its claim that former Amway Emerald distributor and whistle-blower, Eric Scheibeler, must submit to Quixtar’s infamous “binding arbitration” process. The court ruling was a major defeat for Amway/Quixtar but it forced huge legal costs on the whistle-blower and sends a warning message to others.

Now, Amway has responded by filing yet another lawsuit, triggering more legal fees. This time, Amway claims that the company has been “defamed.”

Eric Scheibeler has written a widely read book, “Merchants of Deception” about by Quixtar “kingpins.” See http://www.merchantsofdeception.com.

Pyramid Scheme Alert has facilitated a legal defense fund to help defray the huge legal costs to defend his rights. Consumers from throughout the world have sent money to the fund. Funds are still needed. See http://www.pyramidschemealert.org/PSAMain/donate/LegalDefensedonate.html

Pyramid Scheme Alert has received inquiries and pleas for help from other consumers that Amway lawyers are pursuing. Some victims are charged with quitting Amway and joining other MLMs that promote entirely different products. Friends they recruited to Amway followed them. Like other MLMs, Amway has severe restrictions to limit “competition.” Few consumers understand these extraordinary restrictions on their freedom or their legal jeopardy when they sign up at an MLM “opportunity meeting.”

... More items are available in our News Archive