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Promises, promises...

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Mefiante
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« on: February 22, 2007, 18:42:18 PM »

Dr Luthon64 was 'phoned on Saturday by a friend who said that there was someone who wanted to talk about a "business opportunity."  We agreed to listen to a presentation on Tuesday evening, where it turned out to be a recruiting session for Amway, the largest Multi-level Marking (MLM) shysters on the globe.

Basically, the idea is to promise newbies incalculable wealth supposedly amassed through buying and selling household products.  These products are said to be "cheaper and better" than the ones you get at Pick'n'Pay or Woolies, but that just isn't so.  The real money is made through the sale of seminars, CDs/tapes and promotional material.  In essence, it's a thinly-veiled pyramid scheme, where those who signed up earliest score biggest.

So, if you get a call about a "fantastic business opportunity," be careful and do some research first before deciding, which is what Dr Luthon64 and I did.  Thereafter, we politely but firmly hinted about a long walk and a short pier and how these might be combined.  Plus, another friend likened Amway to Jehovah's Witnesses, a comparison not entirely without merit.

Most people who get suckered into this sort of thing are, I think, decent but uncritical sorts with nothing but good intentions.  The MLM business model, however, tends to corrupt well-meaning individuals with its focus on recruiting more and more people into the fold.  What set the alarm bells off for us were the following questions for which no adequate answers were given:
  • If these products are such high-quality, but nonetheless very cheap, items and Amway has been operating since the late '50s, why haven't they largely displaced all competing products?
  • Why are "loyalty discounts" paid back later in the month in the form of a cheque, rather than being given immediately - i.e. why is the flow of money so complicated?
  • Why is it necessary to fill in such an enormously detailed application form when supposedly we're only buying and selling household goods?
  • Why is everyone grinning like a Moonie?

Additional materials and resources here:

'Luthon64
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Mefiante
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« Reply #1 on: February 22, 2007, 18:42:44 PM »

From Jon M. Taylor's report, The 5 Red Flags, a sobering excerpt:
Quote
In a 1980 suit by the State of Wisconsin against Amway, the tax returns of the top 1% (about 200 out of 20,000) of Amway distributors were examined. Their average income was minus $900!

There may have been one or two that reported a significant net profit. As later research demonstrated, only a tiny number (at the top of a hierarchy of participants) profit in such programs. Later in this paper, recent evidence of the unprofitable nature of MLM for all except for a few at the top will be discussed.


And a class action suit against Amway was filed earlier this year in the US.  It'll be interesting to see if it is upheld by the courts.

'Luthon64
« Last Edit: February 22, 2007, 18:47:33 PM by Anacoluthon64 » Logged
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« Reply #2 on: March 23, 2007, 14:14:39 PM »

Here's an update and discussion of the class action lawsuit filed against Amway/Quixtar etc. earlier this year.  The reporter considers it likely that the "class has not [yet] been certified by the court" (meaning, presumably, that the court needs to satisfy itself that the plaintiffs indeed constitute a social class as defined in US law, rather than, say, another company).  Such certification may take a while.

The author voices the opinion that the case is a "pivotal" one since it focuses on "the core of what defines a pyramid scheme and what does not."  He may be right in this assessment: a successful prosecution will open the door to a flood of similar suits against Amway/Quixtar itself and other MLM companies.

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Mefiante
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« Reply #3 on: March 26, 2007, 07:00:40 AM »

Correction: "class" in this context means a group of people who suffered loss or injury in similar ways from similar causes.  US law considers the society it serves classless...  Undecided

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« Reply #4 on: March 26, 2007, 12:30:18 PM »

Nice links.

A thing that tickles me pink is that none of the people who are conned by these things (Amway, harbalife etc.) are ever concerned about the fact that there is more emphasis on recruiting members rather that sales.  More members will ultimately mean more competition...  Although these schemes are quite clever at disguising the member recruitment as 'sales'
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Mefiante
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« Reply #5 on: June 28, 2007, 08:54:45 AM »

Pyramid schemes, in particular promise-based ones, are on the rise again in SA.

A product-based pyramid that seems to have upped its TV advertising drive recently by several notches is Nature's Health Products.  Have a look at their Policies and Procedures to see why they're a pyramid scheme.  Also, on their "About Us" page it is written that they "have tens of thousands of distributors throughout Southern Africa and each month [they] are recruiting thousands of new distributors."

Why do most of these shysters concentrate on the health and nutrition market segment?  Could it be that people who are easily taken in by the promises such products usually make are also the kind of people who can't see they're being shamelessly used?  Or could it be simply that there are so darn many of them?

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« Reply #6 on: June 28, 2007, 11:37:15 AM »

First of all, I don't know the products that Nature's Health sell, so I don't know how effective they are. But it looks like it's mostly natural products that wouldn't be too harmful in the wrong hands. So you don't have to be an expert to sell them safely. Add to that the positive image you get as a seller of natural remedies and the good feeling of helping people. So anyone can do this and feel good about themselves. The perfect product for a pyramid scheme.
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Mefiante
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« Reply #7 on: July 02, 2007, 07:44:07 AM »

First of all, I don't know the products that Nature's Health sell, so I don't know how effective they are.
The products are predominantly supplements that purport to cover the usual spectrum of mostly non-specific human ailments such as stress, anxiety, aches, pains, immune system, libido, infections, stamina and so on.  There's no hint about them having been formally tested in any way so it's safe to assume that they're just as effective (or not) as competing products.


But it looks like it's mostly natural products that wouldn't be too harmful in the wrong hands. So you don't have to be an expert to sell them safely. Add to that the positive image you get as a seller of natural remedies and the good feeling of helping people. So anyone can do this and feel good about themselves. The perfect product for a pyramid scheme.
Yeah, that seems about right, except to add that the products are consumable too, so that people can be expected to continue buying and selling them.  Another factor assisting the easy pushing of this product type may be that they do not qualify as medications per se, so that they don't require registration.  But if people took to heart the advice of their doctors and nutritionists that, assuming an otherwise reasonably healthy diet, such supplements are largely a complete waste of money, one hopes they would also then quickly see through such scams.

Nonetheless, it would be interesting to see some representative and independently researched income figures for various levels in the Nature's Health Products hierarchy — figures we are not likely to see any time soon.

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« Reply #8 on: July 17, 2007, 02:58:58 AM »

Just saw an add on the tv for these products - it sure smells like a pyramid scheme
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« Reply #9 on: July 17, 2007, 09:54:30 AM »

Yes, it was a TV advert that first alerted us as well – on SABC1, if I remember correctly.  What annoys us is that these people seem intent on exploiting the next-to-poorest SA population segment.

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« Reply #10 on: January 10, 2008, 09:38:52 AM »

Some recent Amway happenings:

Quote from: Pyramid Scheme Alert
Amway/Quixtar Pyramid in Collapse

August, 2007

Amway, the oldest, largest and most politically connected MLM – the company that effectively created “multi-level marketing” – appears to be shaking and possibly on the verge of collapse. After millions of victims have lost billions in dollars, after millions of poor people in Third World countries were misled and ruined by Amway's dream machine, and millions in ill-gotten Amway money were poured into the campaign coffers of politicians to prevent federal investigations, the full truth about the Amway/Quixtar scheme is being revealed. Regulators in India, China and England are taking action. Investigations by US regulators cannot be far away.

(Read more…)




Quote from: Pyramid Scheme Alert
"In the Public Interest"
England Wants to Kick Amway Out of the Country

December, 2007

The largest and oldest of US-based MLMs, Amway, is on trial right now in England for operating as a deceptive fraud.

(Read more…)


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« Reply #11 on: January 16, 2008, 16:59:56 PM »

Network 21, an Amway “sponsorship”/marketing network front, once again rears its deceitful head in South Africa.  That would be the same lot who prompted the starting of this thread.  The reader should have no great difficulty seeing through an assortment of misrepresentations and rhetorical subterfuges Amway deploys in the linked-to challenge/response article.  The essence of the responses uniformly boils down to, “Oh, but we are so totally misunderstood!” and all of them are – not unexpectedly – tailored to make Amway look respectable.  A devoted cynic might argue that such efforts are doomed to be fruitless.  Elsewhere, the article’s author further explains her disdain for Amway.

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« Reply #12 on: March 04, 2008, 17:22:18 PM »

A new one is U-Care. You pay R125 per month (Debit order so you can't stop easily). A portion goes for "sponsorship" and the rest to the people above you. You have to recruit more and then you receive some. Pyramid!
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Mefiante
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« Reply #13 on: August 27, 2008, 10:30:08 AM »

Two updates concerning arch-deceivers Amway:

Update
Pyramid Scheme Class Action Suit against Amway/Quixtar to Go Forward

April, 2007

Amway has lost its legal effort to stop the largest and potentially most damaging class action lawsuit ever brought against the multi-level marketing scheme from going forward. A federal judge has ruled that Amway’s rules for settling disputes are “unconscionable” and unenforceable. He denied Amway’s defense. The case will now proceed.

(Read more…)




Update
Government of England Renews Case to Throw Amway Out of Country

July, 2008

After a judge’s ruling that severely restricted Amway’s operation in England, the English government has appealed the ruling and renewed its case to close Amway down and kick it out of the country.

(Read more…)


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