Amway (short for "American Way") is an American
multi-level marketing
Multi-level marketing (MLM), also called network marketing or pyramid selling, is a controversial marketing strategy for the sale of products or services in which the revenue of the MLM company is derived from a non-salaried workforce selling th ...
(MLM) company that sells health, beauty, and
home care Homecare (also spelled as home care) is health care or supportive care provided by a professional caregiver in the individual home where the patient or client is living, as opposed to care provided in group accommodations like clinics or nursing ho ...
products.
The company was founded in 1959 by
Jay Van Andel
Jay Van Andel (June 3, 1924 – December 7, 2004) was an American billionaire businessman, best known as co-founder of the Amway Corporation, along with Richard DeVos.
He also served as chairman of the U.S. Chamber of Commerce from 1979 to 1980
...
and
Richard DeVos
Richard Marvin DeVos Sr. (March 4, 1926 – September 6, 2018) was an American billionaire businessman, co-founder of Amway with Jay Van Andel (company restructured as Alticor in 2000), and owner of the Orlando Magic basketball team. In 2012 ...
and is based in
Ada, Michigan
Ada Township ( ) is a civil township of Kent County in the U.S. state of Michigan. The population was 14,388 at the 2020 census.
The majority of the township is included in the Forest Hills census-designated place, which is used only for stati ...
.
Amway and its sister companies under
Alticor reported sales of $8.4 billion in 2019.
It conducts business through a number of affiliated companies in more than a hundred countries and territories.
Amway has been investigated in various countries and by institutions such as the
Federal Trade Commission
The Federal Trade Commission (FTC) is an independent agency of the United States government whose principal mission is the enforcement of civil (non-criminal) antitrust law and the promotion of consumer protection. The FTC shares jurisdiction ov ...
(FTC) for alleged
pyramid scheme
A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products. As recruiting multiplies, recruiting becomes quickly im ...
practices. It has never been found guilty, though it has paid tens of millions of dollars to settle these suits.
History
Founding
![Amway Japan Head Office](https://upload.wikimedia.org/wikipedia/commons/0/07/Amway_Japan_Head_Office.jpg)
Jay Van Andel and Richard DeVos had been friends since school days and business partners in various endeavors, including a hamburger stand, an air charter service, and a sailing business. In 1949, they were introduced to the Nutrilite Products Corporation by Van Andel's second cousin Neil Maaskant. DeVos and Van Andel signed up to become distributors for
Nutrilite
Nutrilite is a brand of mineral, vitamin, and dietary supplements developed in 1934 by Carl F. Rehnborg. Nutrilite products are currently manufactured by Access Business Group, a subsidiary of Alticor whose products are sold via Amway worldwide ...
food supplement
A dietary supplement is a manufactured product intended to supplement one's diet by taking a pill, capsule, tablet, powder, or liquid. A supplement can provide nutrients either extracted from food sources or that are synthetic in order ...
s in August.
They sold their first box the next day for $19.50, but lost interest for the next two weeks. They traveled to Chicago to attend a Nutrilite seminar soon afterward, at the urging of Maaskant, who had become their sponsor. They watched promotional filmstrips and listened to talks by company representatives and successful distributors, then they decided to pursue the Nutrilite business. They sold their second box of supplements on their return trip to Michigan, and rapidly proceeded to develop the business further.
Earlier in 1949, DeVos and Van Andel had formed the Ja-Ri Corporation (abbreviated from their respective first names) to import wooden goods from South American countries. After the Chicago seminar, they turned Ja-Ri into a Nutrilite distributorship instead. In addition to profits on each product sold, Nutrilite offered
commissions on sales made by new distributors introduced to the company by existing distributors—a system known as
multi-level marketing
Multi-level marketing (MLM), also called network marketing or pyramid selling, is a controversial marketing strategy for the sale of products or services in which the revenue of the MLM company is derived from a non-salaried workforce selling th ...
or network marketing. By 1958, DeVos and Van Andel had built an organization of more than 5,000 distributors. However, they and some of their top distributors formed the American Way Association, or Amway, in April 1959 in response to concerns about the stability of Nutrilite and in order to represent the distributors and look for additional products to market.
Their first product was called Frisk, an organic cleaner developed by a scientist in Ohio. DeVos and Van Andel bought the rights to manufacture and distribute Frisk, and later changed the name to LOC (Liquid Organic Cleaner). They subsequently formed the Amway Sales Corporation to procure and inventory products and to handle sales and marketing plans, and the Amway Services Corporation to handle insurance and other benefits for distributors. In 1960, they purchased a 50% share in Atco Manufacturing Company in Detroit, the original manufacturers of LOC, and changed its name to Amway Manufacturing Corporation. In 1964, the Amway Sales Corporation, Amway Services Corporation, and Amway Manufacturing Corporation merged to form the Amway Corporation.
[From MLM Law Library]
FTC Final Order from May 8, 1979 (93 F.T.C. 618)
.
Amway bought a controlling interest in Nutrilite in 1972 and full ownership in 1994.
International expansion
Amway expanded to Australia in 1971, to parts of Europe in 1973, to parts of Asia in 1974, to Japan in 1979, to Latin America in 1985, to
Thailand
Thailand ( ), historically known as Siam () and officially the Kingdom of Thailand, is a country in Southeast Asia, located at the centre of the Indochinese Peninsula, spanning , with a population of almost 70 million. The country is bo ...
in 1987, to China in 1995, to Africa in 1997, to India and Scandinavia in 1998, to
Ukraine
Ukraine ( uk, Україна, Ukraïna, ) is a country in Eastern Europe. It is the second-largest European country after Russia, which it borders to the east and northeast. Ukraine covers approximately . Prior to the ongoing Russian inv ...
in 2003, to Russia in 2005, and to
Vietnam
Vietnam or Viet Nam ( vi, Việt Nam, ), officially the Socialist Republic of Vietnam,., group="n" is a country in Southeast Asia, at the eastern edge of mainland Southeast Asia, with an area of and population of 96 million, making i ...
in 2008.
In 2014, a Russian loyalty card program called "Alfa-Amway" was created when Amway joined with
Alfa-Bank
ALFA-BANK JSC (Alfa-Bank), is the largest of the private banks in Russia. It was founded in 1990 by Russian businessman Mikhail Fridman, who is still the controlling owner today. Headquartered in Moscow, it operates in seven countries, providin ...
.
Amway was ranked by ''
Forbes
''Forbes'' () is an American business magazine owned by Integrated Whale Media Investments and the Forbes family. Published eight times a year, it features articles on finance, industry, investing, and marketing topics. ''Forbes'' also re ...
'' as the 42nd-largest
privately held company
A privately held company (or simply a private company) is a company whose shares and related rights or obligations are not offered for public subscription or publicly negotiated in the respective listed markets, but rather the company's stock is ...
in the United States in 2018, and as the number one largest company on the ''Direct Selling News'' Global 100 list in 2018.
Quixtar
The founders of the Amway corporation established a new holding company in 1999, named
Alticor, and launched three new companies: a sister (and separate) Internet-focused company named
Quixtar
Amway North America (formerly known as Quixtar North America) is an American worldwide multi-level marketing (MLM) company, founded 1959 in Ada, Michigan, United States. It is privately owned by the families of Richard DeVos and Jay Van Andel ...
,
Access Business Group, and Pyxis Innovations. Pyxis, later replaced by Fulton Innovation, pursued research and development and
Access Business Group handled manufacturing and logistics for Amway, Quixtar, and third-party clients.
The main difference was that all "Independent Business Owners" (IBO) could order directly from Amway on the Internet, rather than from their
upline "direct distributor", and have products shipped directly to their home. The Amway name continued being used in the rest of the world. After virtually all Amway distributors in North America switched to Quixtar, Alticor elected to close Amway North America after 2001. In June 2007 it was announced that the Quixtar brand would be phased out over an 18-to-24-month period in favor of a unified Amway brand (
Amway Global
Amway North America (formerly known as Quixtar North America) is an American worldwide multi-level marketing (MLM) company, founded 1959 in Ada, Michigan, United States. It is privately owned by the families of Richard DeVos and Jay Van Andel ...
) worldwide.
In 2006, Quixtar published ''The Quixtar Independent Business Owner Compensation Plan'', in which the company reported that the average monthly gross income for "Active" IBOs was $115.
Global markets
According to the Amway website, the company operated in over 100 countries and territories, organized into regional markets: the Americas, Europe, greater China, Japan and Korea, and SE Asia/Australia. Amway's top ten markets are China, Korea, the United States, Japan, Thailand, Taiwan, India, Russia, Malaysia and Italy.
In 2008, Alticor announced that two-thirds of the company's 58 markets reported sales increases, including strong growth in the China, Russia, Ukraine and India markets.
Amway Australia
* See ''
Amway Australia''
Amway China
Amway China launched in 1995. In 1998, after abuses of illegal
pyramid scheme
A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products. As recruiting multiplies, recruiting becomes quickly im ...
s led to riots, the Chinese government enacted a ban on all
direct selling
Direct selling consists of single-level marketing (in which a direct seller makes money by buying products from a parent organization and selling them directly to customers) and multi-level marketing (in which the direct seller may earn money f ...
companies, including Amway. After the negotiations, some companies like Amway,
Avon, and
Mary Kay
Mary Kay Inc. is an American privately owned multi-level marketing company. According to '' Direct Selling News'', Mary Kay was the sixth largest network marketing company in the world in 2018, with a wholesale volume of US$3.25 billion. continued to operate through a network of retail stores promoted by an independent sales force. China introduced new direct selling laws in December 2005, and in December 2006, Amway was one of the first companies to receive a license to resume direct sales. However, the law forbids teachers, doctors, and civil servants from becoming direct sales agents for the company and, unlike in the United States, salespeople in China are ineligible to receive commissions from sales made by the distributors they recruit.
In 2006, Amway China had a reported 180,000 sales representatives, 140 stores, and $2 billion in annual sales. In 2007, Amway Greater China and South-east Asia Chief Executive Eva Cheng was ranked no. 88 by ''Forbes'' magazine in its list of the World's Most Powerful Women.
In 2008, China was Amway's largest market, reporting 28% growth and sales of 17 billion yuan (US$2.5 billion).
According to a report in ''
Bloomberg Businessweek
''Bloomberg Businessweek'', previously known as ''BusinessWeek'', is an American weekly business magazine published fifty times a year. Since 2009, the magazine is owned by New York City-based Bloomberg L.P. The magazine debuted in New York City ...
'' in April 2010, Amway had 237 retail shops in China, 160,000 direct sales agents, and $3 billion in revenue.
Since then, Amway has been continuing to expand in China, even as the government has been imposing greater restrictions on the company, and launched a
WeChat
WeChat () is a Chinese instant messaging, social media, and mobile payment app developed by Tencent. First released in 2011, it became the world's largest standalone mobile app in 2018, with over 1 billion monthly active users. WeChat has bee ...
mini-program in 2021.
Brands
Amway's product line grew from LOC, with the laundry detergent SA8 added in 1960, and later the hair care product Satinique (1965) and the cosmetics line
Artistry (1968). Today Amway manufactures over 450 products, with manufacturing facilities in China, India and the US, as well as Nutrilite organic farms in Brazil, Mexico and the US (California and
Washington state
Washington (), officially the State of Washington, is a state in the Pacific Northwest region of the Western United States. Named for George Washington—the first U.S. president—the state was formed from the western part of the Washington ...
). Amway brands include Artistry, Atmosphere, Body Blends, Bodykey, Body Works, Clear Now, eSpring, Glister, iCook, Legacy of Clean, Nutrilite, Peter Island, Perfect Empowered Drinking Water, Personal Accents, Ribbon, Satinique, Artistry Men and
XS.
In 2018, nutrition and wellness products were 52% of total sales, and beauty and personal care products were 26% of total sales.
Household cleaners
Amway is best known in North America for its original multi-purpose cleaning product LOC, SA8 laundry detergent, and Dish Drops dishwashing liquid. In the January 2007 issue of ''
Consumer Reports
Consumer Reports (CR), formerly Consumers Union (CU), is an American nonprofit consumer organization dedicated to independent product testing, investigative journalism, consumer-oriented research, public education, and consumer advocacy.
Founded ...
'', SA8 with Bioquest was rated the best-performing laundry detergent. ''Consumer Reports'' did, however, criticize SA8's pricing, a situation which was disputed by Amway. Consumer Reports conducted blind testing of detergents in 2010 and ranked versions of Amway's Legacy of Clean detergents 9th and 18th of 20 detergents tested. ''Consumer Reports'' program manager Pat Slaven recommended against buying the products because consumers can "go to the grocery store and get something that performs a whole lot better for a whole lot less money".
Health and beauty
Amway's health and beauty brands include Artistry, Satinique, Hymm, Body Series, Glister, Moiskin (South America), Nutrilite, Nutriway (Scandinavia and Australia/New Zealand), Attitude (India), eSpring, Atmosphere and iCook as well as XL and XS Energy drinks. Other Amway brands that were discontinued or replaced include Tolsom, Eddie Funkhouser New York, or beautycycle (Eastern Europe).
Artistry
Amway's Artistry products include skin care, cosmetics, and
anti-aging cream
Anti-aging creams are predominantly moisturiser-based cosmeceutical skin care products marketed with the promise of making the consumer look younger by reducing, masking or preventing signs of skin aging. These signs are laxity (sagging), rh ...
s and serums. In 2011, Artistry brand reached sales of $2.8 billion.
Nutrilite
Amway's largest-selling brand is the Nutrilite range of health supplements (marketed as Nutriway in some countries), and in 2008 Nutrilite sales exceeded $3 billion globally. In 2001,
NSF International
NSF (an initialism for National Sanitation Foundation) is a product testing, inspection, certification organization with headquarters in Ann Arbor, Michigan. NSF also offers consulting and training services worldwide.
History
NSF Internatio ...
issued its first five dietary supplement certifications to Nutrilite.
In 2011, Nutrilite brand of vitamins and dietary supplements led Amway's sales, totaling almost $4.7 billion.
According to Euromonitor International, in 2014, Nutrilite was the world's No. 1 selling vitamins and dietary supplements brand.
In 2015, it was reported that according to Euromonitor International, Amway was the largest vitamin and dietary supplement vendor in China, with 11% of a market that generated 100 billion yuan ($15.6 billion) in annual sales.
In 2015, it was reported that according to China Confidential consumer brands survey, Amway Nutrilite was the most popular vitamin and dietary supplement brand in China.
In January 2009, Amway announced a voluntary
recall
Recall may refer to:
* Recall (bugle call), a signal to stop
* Recall (information retrieval), a statistical measure
* ''ReCALL'' (journal), an academic journal about computer-assisted language learning
* Recall (memory)
* ''Recall'' (Overwatch ...
of Nutrilite and XS Energy Bars after learning that they had possibly been manufactured with
Salmonella
''Salmonella'' is a genus of rod-shaped (bacillus) Gram-negative bacteria of the family Enterobacteriaceae. The two species of ''Salmonella'' are ''Salmonella enterica'' and ''Salmonella bongori''. ''S. enterica'' is the type species and is fur ...
-contaminated ingredients from
Peanut Corporation of America
Peanut Corporation of America (PCA) was a peanut-processing business which is now defunct as a result of one of the most massive and lethal food-borne contamination events in U.S. history. PCA was founded in 1977 and initially run by Hugh Parne ...
. The company indicated that it had not received any reports of illness in connection with the products.
In 2012, the
Center for Science in the Public Interest
The Center for Science in the Public Interest (CSPI) is a Washington, D.C.-based non-profit watchdog and consumer advocacy group that advocates for safer and healthier foods.
History and funding
CSPI is a consumer advocacy organization. Its f ...
(CSPI), accused Amway of making unsubstantiated and illegal claims about Nutrilite Fruits & Vegetables 2GO Twist Tubes and threatened to launch a class action lawsuit against the company unless it took remedial action.
Amway responded that the claims made about the products were properly substantiated and that they did not plan to change the product's labeling but nevertheless would review the statements that CSPI has questioned. CSPI later reported that Amway had agreed to changing product labels by the end of 2014.
eSpring
Amway's eSpring water filter was introduced in 2000. According to Amway, it was the first system to combine a
carbon block filter and
ultraviolet light
Ultraviolet (UV) is a form of electromagnetic radiation with wavelength from 10 nm (with a corresponding frequency around 30 PHz) to 400 nm (750 THz), shorter than that of visible light, but longer than X-rays. UV radiation i ...
with electronic-monitoring technology in the filter cartridge and it became the first home system to achieve certification for
ANSI
The American National Standards Institute (ANSI ) is a private non-profit organization that oversees the development of voluntary consensus standards for products, services, processes, systems, and personnel in the United States. The organi ...
/NSF Standards 42, 53, and 55.
According to Amway, eSpring was the first water treatment system to receive certification for all fifteen NSF/
ANSI
The American National Standards Institute (ANSI ) is a private non-profit organization that oversees the development of voluntary consensus standards for products, services, processes, systems, and personnel in the United States. The organi ...
401 contaminants which include pharmaceuticals, pesticides and herbicides.
The company also claims that, in addition to these 15 contaminants, eSpring is certified for more than 145 potential contaminants, including lead and mercury.
eSpring was the first commercial product which employed Fulton Innovation's
eCoupled wireless power induction technology.
In December 2006, Amway sister company, Fulton Innovations, announced that it would introduce eCoupled technology in other consumer electronic products at the 2007
Consumer Electronics Show
CES (; formerly an initialism for Consumer Electronics Show) is an annual trade show organized by the Consumer Technology Association (CTA). Held in January at the Las Vegas Convention Center in Winchester, Nevada, United States, the event typi ...
.
Companies licensing this technology include
Visteon
Visteon Corporation (VC) is an American global automotive electronics supplier and Fortune 500 company spun off from the Ford Motor Company in 2000. Visteon is composed of multiple businesses that design, engineer, and manufacture vehicle cockpit ...
, Herman Miller,
Motorola
Motorola, Inc. () was an American Multinational corporation, multinational telecommunications company based in Schaumburg, Illinois, United States. After having lost $4.3 billion from 2007 to 2009, the company split into two independent p ...
and Mobility Electronics.
Fulton was a founding member of the Wireless Power Consortium which developed the
Qi (inductive power standard)
Qi (pronounced ; from the Chinese word 气 qi; traditional Chinese: 氣) is an open interface standard that defines wireless power transfer using inductive charging over distances of up to 4 cm (1.6 inches). It is developed by the Wireles ...
.
In 2007 eSpring was ranked fifth out of 27 brands in a comparison of water filters by ''Consumer Reports''.
XS
On January 14, 2015, Amway announced that it had acquired XS Energy, a California-based brand of energy drinks and snacks. The XS Energy brand has been sold as an Amway product since 2003. As of January 2015, it has been distributed in 38 countries, generating annual sales of $150 million.
According to Euromonitor International, the XS Energy was the first exclusively sugar-free energy drink brand sold globally.
Ditto Delivery
Ditto Delivery is Alticor's automatic, monthly replenishment program that fills orders based on customers' predetermined needs. As of May 2001, Ditto Delivery accounted for 30% of Quixtar's North American sales.
Business model
Amway combines direct selling with a
multi-level marketing
Multi-level marketing (MLM), also called network marketing or pyramid selling, is a controversial marketing strategy for the sale of products or services in which the revenue of the MLM company is derived from a non-salaried workforce selling th ...
strategy. Amway distributors, referred to as "independent business owners" (IBOs), may market products directly to potential customers and may also sponsor and mentor other people to become IBOs. IBOs may earn income both from the retail markup on any products they sell personally, plus a performance bonus based on the sales volume they and their downline (IBOs they have sponsored) have generated.
People may also register as IBOs to buy products at discounted prices.
Harvard Business School
Harvard Business School (HBS) is the graduate business school of Harvard University, a private research university in Boston, Massachusetts. It is consistently ranked among the top business schools in the world and offers a large full-time MBA p ...
, which described Amway as "one of the most profitable direct selling companies in the world", noted that Amway founders Van Andel and DeVos "accomplished their success through the use of an elaborate pyramid-like distribution system in which independent distributors of Amway products received a percentage of the merchandise they sold and also a percentage of the merchandise sold by recruited distributors".
Commercial sponsorships
In December 2006, Alticor secured the
naming rights
Naming rights are a financial transaction and form of advertising or memorialization whereby a corporation, person, or other entity purchases the right to name a facility, object, location, program, or event, typically for a defined period of t ...
for the
Orlando Magic
The Orlando Magic are an American professional basketball team based in Orlando, Florida. The Magic compete in the National Basketball Association (NBA) as a member of the league's Eastern Conference Southeast Division. The franchise was establ ...
's home basketball arena in
Orlando
Orlando () is a city in the U.S. state of Florida and is the county seat of Orange County. In Central Florida, it is the center of the Orlando metropolitan area, which had a population of 2,509,831, according to U.S. Census Bureau figures rele ...
, Florida. The Orlando Magic are owned by the DeVos family. The arena, formerly known as the TD Waterhouse Centre, was renamed the
Amway Arena
Amway Arena (originally known as Orlando Arena and later TD Waterhouse Centre) was an indoor arena located in Orlando, Florida. It was part of the Orlando Centroplex, a sports and entertainment complex located in Downtown Orlando. The arena wa ...
. Its successor, the
Amway Center
Amway Center is an indoor arena located in Downtown Orlando, Florida. The arena is home to the Orlando Magic of the NBA, the Orlando Solar Bears of the ECHL, and the Orlando Predators of the National Arena League.
Amway Center hosted the 2012 N ...
, was opened in 2010, and the older arena was demolished in 2012.
In 2009, Amway Global signed a three-year deal with the
San Jose Earthquakes
The San Jose Earthquakes are an American professional soccer team based in San Jose, California. The Earthquakes compete as a member club of the Western Conference of Major League Soccer (MLS). Originally as the San Jose Clash, the franchise ...
Major League Soccer
Major League Soccer (MLS) is a men's professional soccer league sanctioned by the United States Soccer Federation, which represents the sport's highest level in the United States. The league comprises 29 teams—26 in the U.S. and 3 in Canada ...
team to become the jersey sponsor.
In March 2009, Amway Global signed a multi-year deal to become the presenting partner of the
Los Angeles Sol
The Los Angeles Sol was an American professional soccer club that was based in the Los Angeles suburb of Carson, California that participated in Women's Professional Soccer.
The team was co-owned and operated by Blue Star, LLC and AEG, a subsidia ...
of
Women's Professional Soccer
Women's Professional Soccer (WPS) was the top-level professional women's soccer league in the United States. It began play on March 29, 2009. The league was composed of seven teams for its first two seasons and fielded six teams for the 2011 sea ...
. The deal, however, would last only one year, as the Sol folded in 2010.
In 2011, Amway signed a three-year deal to be the presenting sponsor of the
National Hockey League
The National Hockey League (NHL; french: Ligue nationale de hockey—LNH, ) is a professional ice hockey league in North America comprising 32 teams—25 in the United States and 7 in Canada. It is considered to be the top ranked professional ...
's
Detroit Red Wings
The Detroit Red Wings (colloquially referred to as the Wings) are a professional ice hockey team based in Detroit. The Red Wings compete in the National Hockey League (NHL) as a member of the Atlantic Division (NHL), Atlantic Division in the East ...
.
Since 2012, Amway has been the
title sponsor
Naming rights are a financial transaction and form of advertising or memorialization whereby a corporation, person, or other entity purchases the right to name a facility, object, location, program, or event, typically for a defined period of t ...
of the
Canadian Championship, an annual soccer tournament.
Politics and culture
Political contributions
In the 1990s, the Amway organization was a major contributor to the
Republican Party (GOP) and to the election campaigns of various GOP candidates. Amway and its sales force contributed a substantial amount (up to half) of the total funds ($669,525) for the
1994 political campaign of Republican congresswoman and Amway distributor
Sue Myrick
Sue Myrick (née Wilkins; born August 1, 1941) is an American businesswoman and the former U.S. Representative for , serving from 1995 to 2013. She is a member of the Republican Party. She was the first Republican woman to represent North Caroli ...
(N.C.).
According to two reports by ''
Mother Jones
Mary G. Harris Jones (1837 (baptized) – November 30, 1930), known as Mother Jones from 1897 onwards, was an Irish-born American schoolteacher and dressmaker who became a prominent union organizer, community organizer, and activist. She h ...
'' magazine, Amway distributor Dexter Yager "used the company's extensive voice-mail system to rally hundreds of Amway distributors into giving a total of $295,871" to Myrick's campaign.
According to a campaign staffer quoted by the magazine, Myrick had appeared regularly on the Amway circuit, speaking at hundreds of rallies and selling $5 and $10 audiotapes.[ Following the 1994 election, Myrick maintained "close ties to Amway and Yager", and raised $100,000 from Amway sources, "most notably through fundraisers at the homes of big distributors", in the 1997–98 election cycle.][
In October 1994, Amway gave the biggest corporate contribution recorded to that date to a political party for a single election, $2.5 million to the ]Republican National Committee
The Republican National Committee (RNC) is a U.S. political committee that assists the Republican Party of the United States. It is responsible for developing and promoting the Republican brand and political platform, as well as assisting in fu ...
(RNC), and was the number one corporate political donor in the United States.[ In the 2004 election cycle, the organization contributed a total of $4 million to a conservative ]527 group
A 527 organization or 527 group is a type of U.S. tax-exempt organization organized under Section 527 of the U.S. Internal Revenue Code (). A 527 group is created primarily to influence the selection, nomination, election, appointment or defeat ...
, Progress for America Progress for America (PFA) (a 501(c)(4)) and its affiliate Progress for America Voter Fund (PFA-VF) (a 527 committee) are national tax-exempt organizations in the United States. PFA was established in 2001 to support George W. Bush's "agenda for Ame ...
.
In July 1996, Amway co-founder Richard DeVos was honored at a $3 million fundraiser for the Republican Party, and a week later, it was reported that Amway had tried to donate $1.3 million to pay for Republican "infomercials" and televising of the GOP convention on Pat Robertson
Marion Gordon "Pat" Robertson (born March 22, 1930) is an American media mogul, religious broadcaster, political commentator, former presidential candidate, and former Southern Baptist minister. Robertson advocates a conservative Christian ...
's Family Channel, but backed off when Democrats criticized the donation as a ploy to avoid campaign-finance restrictions.
In April 1997, Richard DeVos and his wife, Helen, gave $1 million to the RNC,[ which, at the time, was the second-largest soft-money donation ever, behind Amway's 1994 gift of $2.5 million to the RNC.][ In July 1997, ]Senate Majority Leader
The positions of majority leader and minority leader are held by two United States senators and members of the party leadership of the United States Senate. They serve as the chief spokespersons for their respective political parties holding t ...
Trent Lott
Chester Trent Lott Sr. (born October 9, 1941) is an American lawyer, author, and politician. A former United States Senator from Mississippi, Lott served in numerous leadership positions in both the United States House of Representatives and the ...
and House Speaker Newt Gingrich
Newton Leroy Gingrich (; né McPherson; born June 17, 1943) is an American politician and author who served as the 50th speaker of the United States House of Representatives from 1995 to 1999. A member of the Republican Party, he was the U ...
slipped a last-minute provision into a hotly contested compromise tax bill that granted Amway and four other companies a tax break on their Asian branches that totaled $19 million.[
In a column published in the '']Fort Worth Star-Telegram
The ''Fort Worth Star-Telegram'' is an American daily newspaper serving Fort Worth and Tarrant County, the western half of the North Texas area known as the Metroplex. It is owned by The McClatchy Company.
History
In May 1905, Amon G. Carter acc ...
'' newspaper in August 1997, reporter Molly Ivins
Mary Tyler "Molly" Ivins (August 30, 1944 – January 31, 2007) was an American newspaper columnist, author, political commentator, and humorist.
Born in California and raised in Texas, Ivins attended Smith College and the Columbia Univers ...
wrote that Amway had "its own caucus
A caucus is a meeting of supporters or members of a specific political party or movement. The exact definition varies between different countries and political cultures.
The term originated in the United States, where it can refer to a meeting ...
in Congress...Five Republican House members are also Amway distributors: Reps. Sue Myrick of North Carolina, Jon Christensen of Nebraska, Dick Chrysler of Michigan, Richard Pombo
Richard William Pombo, GOIH (born January 8, 1961) is an American lobbyist for mining and water-management companies and former Republican member of the United States House of Representatives, having represented California's 11th congressional ...
of California, and John Ensign
John Eric Ensign (born March 25, 1958) is an American veterinarian and former politician from Nevada. A member of the Republican Party, Ensign was a Congressman and United States Senator from Nevada; he served in the latter seat from January 2001 ...
of Nevada. Their informal caucus meets several times a year with Amway bigwigs to discuss policy matters affecting the company, including China's trade status."
A 1998 analysis of campaign contributions conducted by ''Businessweek
''Bloomberg Businessweek'', previously known as ''BusinessWeek'', is an American weekly business magazine published fifty times a year. Since 2009, the magazine is owned by New York City-based Bloomberg L.P. The magazine debuted in New York City ...
'' found that Amway, along with the founding families and some top distributors, had donated at least $7 million to GOP causes in the preceding decade.[ Political candidates who received campaign funding from Amway in 1998 included Representatives ]Bill Redmond
William Thomas Redmond (born January 28, 1954) is an American politician and minister who served as a Republican member of the United States House of Representatives from New Mexico.
Early life and education
Redmond was born in Chicago. He gr ...
(R–N.M.), Heather Wilson
Heather Ann Wilson (born December 30, 1960) is the 11th President of the University of Texas at El Paso. She previously served as the 24th Secretary of the United States Air Force from 2017 through 2019. Wilson was the 12th president of the So ...
(R–N.M.), and Jon Christensen (R–Neb).[
According to a report by the ]Center for Public Integrity
The Center for Public Integrity (CPI) is an American nonprofit investigative journalism organization whose stated mission is "to reveal abuses of power, corruption and dereliction of duty by powerful public and private institutions in order to c ...
, in the 2004 election cycle, members of the Van Andel and DeVos families were the second, third and fifth largest donors to the Republican party.
Dick DeVos
Richard Marvin DeVos Jr. (born October 21, 1955) is an American businessman and author. The son of Amway co-founder Richard DeVos, he served as CEO of the multi-level marketing company from 1993 to 2002. In 2006, DeVos ran for Governor of ...
, son of Amway founder Richard DeVos and past president of the company, served as Finance Chairman of the Republican National Committee, and his wife Betsy DeVos
Elisabeth Dee DeVos ( ; ' Prince; born January 8, 1958) is an American politician, philanthropist, and former government official who served as the 11th United States secretary of education from 2017 to 2021. DeVos is known for her support for s ...
served as chair of the Michigan Republican Party
The Michigan Republican Party is the state affiliate of the national Republican Party in Michigan, sometimes referred to as MIGOP. Ronald Weiser was elected chairman in 2021.
Ronna Romney McDaniel was the chairwoman of the party, having been el ...
from 1996 to 2000 and 2003 to 2005.
In May 2005, Dick DeVos ran against incumbent Governor Jennifer Granholm
Jennifer Mulhern Granholm (born February 5, 1959) is a Canadian-American lawyer, educator, author, political commentator, and politician serving as the 16th United States secretary of energy since 2021. A member of the Democratic Party, she pre ...
in Michigan's 2006 gubernatorial election. DeVos was defeated by Granholm, who won 56% of the popular vote to his 42%.
In August 2012, gay rights activist Fred Karger
Fred S. Karger (born January 31, 1950) is an American political consultant, gay rights activist and watchdog, and former actor. His unsuccessful candidacy for the Republican nomination for the 2012 US presidential election made him the first o ...
began a movement to boycott Amway in protest of the contribution from a private foundation of Amway President Doug DeVos
Doug DeVos (born October 6, 1964) is an American businessman and sailor. He is co-chairman (with Steve Van Andel) of Amway, which was co-founded by their fathers. DeVos is the chairman of the executive committee of the National Constitutional C ...
to the National Organization for Marriage
The National Organization for Marriage (NOM) is an American non-profit political organization established to work against the legalization of same-sex marriage in the United States. It was formed in 2007 specifically to pass California Proposit ...
, a political organization which opposes legalization of same-sex marriage
Same-sex marriage, also known as gay marriage, is the marriage of two people of the same Legal sex and gender, sex or gender. marriage between same-sex couples is legally performed and recognized in 33 countries, with the most recent being ...
in the United States.
On February 7, 2017, Betsy DeVos
Elisabeth Dee DeVos ( ; ' Prince; born January 8, 1958) is an American politician, philanthropist, and former government official who served as the 11th United States secretary of education from 2017 to 2021. DeVos is known for her support for s ...
was confirmed by the Senate as the 11th Secretary of Education.
Religion
Several sources have commented on the promotion of Christian conservative ideology within the Amway organization. ''Mother Jones
Mary G. Harris Jones (1837 (baptized) – November 30, 1930), known as Mother Jones from 1897 onwards, was an Irish-born American schoolteacher and dressmaker who became a prominent union organizer, community organizer, and activist. She h ...
'' magazine described the Amway distributor force as "heavily influenced by the company's dual themes of Christian morality and free enterprise" and operating "like a private political army".[ In ''The Cult of Free Enterprise'', Stephen Butterfield, who spent time in the Yager group within Amway, wrote " mwaysells a marketing and motivational system, a cause, a way of life, in a fervid emotional atmosphere of rallies and political religious revivalism."][ '']Philadelphia City Paper
''Philadelphia City Paper'' was an alternative weekly newspaper in Philadelphia, Pennsylvania. The independently owned paper was free and published every Thursday in print and daily online at citypaper.net. Staff reporters focused on labor issues, ...
'' correspondent Maryam Henein stated that "The language used in motivational tools for Amway frequently echoes or directly quotes the Bible, with the unstated assumption of a shared Christian perspective."[
'']Businessweek
''Bloomberg Businessweek'', previously known as ''BusinessWeek'', is an American weekly business magazine published fifty times a year. Since 2009, the magazine is owned by New York City-based Bloomberg L.P. The magazine debuted in New York City ...
'' correspondents Bill Vlasic and Beth Regan characterized the founding families of Amway as "fervently conservative, fervently Christian, and hugely influential in the Republican Party", noting that "Rich DeVos charged up the troops with a message of Christian beliefs and rock-ribbed conservatism."[
High-ranking Amway leaders such as Richard DeVos and Dexter Yager were owners and members of the board of Gospel Films, a producer of movies and books geared toward conservative Christians, as well as co-owners (along with ]Salem Communications
Salem Media Group, Inc. (NASDAQ: SALM; formerly Salem Communications Corporation) is an American radio broadcaster, Internet content provider, and magazine and book publisher formerly based in Camarillo, California (moved most operations to Ir ...
) of a right-wing, Christian nonprofit called Gospel Communications International. Yager, interviewed on ''60 Minutes
''60 Minutes'' is an American television news magazine broadcast on the CBS television network. Debuting in 1968, the program was created by Don Hewitt and Bill Leonard, who chose to set it apart from other news programs by using a unique styl ...
'' in 1983, admitted that he promotes Christianity through his Amway group, but stated that this might not be the case in other Amway groups.
''Rolling Stone
''Rolling Stone'' is an American monthly magazine that focuses on music, politics, and popular culture. It was founded in San Francisco, San Francisco, California, in 1967 by Jann Wenner, and the music critic Ralph J. Gleason. It was first kno ...
's'' Bob Moser reported that former Amway CEO and co-founder Richard DeVos is connected with the Dominionist political movement in the United States. Moser states that DeVos was a supporter of the late D. James Kennedy
Dennis James Kennedy (November 3, 1930 – September 5, 2007) was an American pastor, evangelist, Christian broadcaster, and author. He was the senior pastor of Coral Ridge Presbyterian Church in Fort Lauderdale, Florida, from 1960 until hi ...
, giving more than $5 million to Kennedy's Coral Ridge Ministries D. James Kennedy Ministries (DJKM), formerly “Coral Ridge Ministries,” is an evangelical Christian media outreach founded by minister and evangelist D. James Kennedy in 1974. The group is listed as an anti-LGBT hate group by the Southern Pover ...
. DeVos was also a founding member and two-time president of the Council for National Policy
The Council for National Policy (CNP) is an umbrella organization and networking group for conservative and Republican activists in the United States. It was launched in 1981 during the Reagan administration by Tim LaHaye and the Christian righ ...
, a right-wing Christian organization.
Sociologist David G. Bromley
David G. Bromley (born 1941) is a professor of sociology at Virginia Commonwealth University, Richmond, VA and the University of Virginia, Charlottesville, VA, specialized in sociology of religion and the academic study of new religious movements ...
calls Amway a "quasi-religious corporation" having sectarian
Sectarianism is a political or cultural conflict between two groups which are often related to the form of government which they live under. Prejudice, discrimination, or hatred can arise in these conflicts, depending on the political status quo ...
characteristics. Bromley and Anson Shupe
Anson D. Shupe, Jr. (21 January 1948 – 4 May 2015) was an American sociologist noted for his studies of religious groups and their countermovements, family violence and clergy misconduct. He was affiliated with the New Cult Awareness Network, a ...
view Amway as preaching the gospel of prosperity
Prosperity theology (sometimes referred to as the prosperity gospel, the health and wealth gospel, the gospel of success, or seed faith) is a religious belief among some Protestant Christians that financial blessing and physical well-being are ...
. Patralekha Bhattacharya and Krishna Kumar Mehta, of the consulting firm Thinkalytics, LLC, reasoned that although some critics have referred to organizations such as Amway as "cults" and have speculated that they engage in "mind control", there are other explanations that could account for the behavior of distributors. Namely, continued involvement of distributors despite minimal economic return may result from social satisfaction compensating for diminished economic satisfaction.[''Socialization in network marketing organizations: is it cult behavior?'' by Patralekha Bhattacharya and Krishna Kumar Mehta, Journal of Socio-Economics. 29(4):361–374.]
Chamber of commerce
Amway co-founder Jay Van Andel
Jay Van Andel (June 3, 1924 – December 7, 2004) was an American billionaire businessman, best known as co-founder of the Amway Corporation, along with Richard DeVos.
He also served as chairman of the U.S. Chamber of Commerce from 1979 to 1980
...
(in 1980), and later his son Steve Van Andel (in 2001), were elected by the board of directors of the United States Chamber of Commerce
The United States Chamber of Commerce (USCC) is the largest lobbying group in the United States, representing over three million businesses and organizations. The group was founded in April 1912 out of local chambers of commerce at the urging ...
to be the chairman of the private American lobbying organization.
Accreditation program
In 2006, Amway (then Quixtar in North America) introduced its ''Professional Development Accreditation Program'' in response to concerns surrounding business support materials (BSM), including books, tapes and meetings. In 2010 this was superseded by its ''Accreditation Plus'' program to ensure that all BSM content is consistent with Amway's quality assurance standards, which approved providers of BSM must abide by. The quality assurance standards state that
* Promoting political causes or other issues of a personal nature in the Amway Business environment is not permitted
* Spiritual references are not allowed as the message or focus and presenters may not use the stage as a platform to promote religious and/or personal social beliefs
* Endorsement or denouncement of specific candidates, political parties, and/or issues, unless specifically related to the operation of an Amway Business is not allowed.
Pyramid scheme accusations
Robert Carroll, of the ''Skeptic's Dictionary
''The Skeptic's Dictionary'' is a collection of cross-referenced skeptical essays by Robert Todd Carroll, published on his website skepdic.com and in a printed book. The skepdic.com site was launched in 1994 and the book was published in 2003 wi ...
'', has described Amway as a "legal pyramid scheme", and has said that the quasi-religious devotion of its affiliates is used by the company to conceal poor performance rates by distributors.
FTC investigation
In a 1979 ruling, the Federal Trade Commission
The Federal Trade Commission (FTC) is an independent agency of the United States government whose principal mission is the enforcement of civil (non-criminal) antitrust law and the promotion of consumer protection. The FTC shares jurisdiction ov ...
found that Amway did not fit the definition of a pyramid scheme because (a) distributors were not paid to recruit people, (b) it did not require distributors to buy a large stock of unmoving inventory, (c) distributors were required to maintain retail sales (at least 10 per month), and (d) the company and all distributors were required to accept returns of excess inventory from down-level distributors.
The FTC did, however, find Amway "guilty of price-fixing
Price fixing is an anticompetitive agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given ...
and making exaggerated income claims"; the company was ordered to stop retail price fixing and allocating customers among distributors and was prohibited from misrepresenting the amount of profit, earnings or sales its distributors are likely to achieve with the business. Amway was ordered to accompany any such statements with the actual averages per distributor, pointing out that more than half of the distributors do not make any money, with the average distributor making less than $100 per month. The order was violated with a 1986 ad campaign, resulting in a $100,000 fine.
Studies of independent consumer watchdog agencies have shown that between 990 and 999 of 1000 participants in MLMs that use Amway-type pay plans in fact lose money.[Amway Forever: The Amazing Story of a Global Business Phenomenon]
, p. 178 According to The Skeptic's Dictionary, "In the United States, the Federal Trade Commission requires Amway to label its products with the message that 54% of Amway recruits make nothing and the rest earn on average $65 a month."
Amway India
In September 2006, following a public complaint, Andhra Pradesh
Andhra Pradesh (, abbr. AP) is a state in the south-eastern coastal region of India. It is the seventh-largest state by area covering an area of and tenth-most populous state with 49,386,799 inhabitants. It is bordered by Telangana to the ...
and Telangana
Telangana (; , ) is a States and union territories of India, state in India situated on the south-central stretch of the Indian subcontinent, Indian peninsula on the high Deccan Plateau. It is the List of states and union territories of India b ...
state police (CID) initiated raids and seizures against Amway distributors in the state, and submitted a petition against them, claiming the company violated the Prize Chits and Money Circulation Schemes (Banning) Act. They shut down all corporate offices associated with the Amway organization including the offices of some Amway distributors. The enforcement said that the business model of the company is illegal. The Reserve Bank of India (RBI) had notified the police that Amway in India may be violating certain laws regarding a "money circulation scheme" and the ''IB Times'' article writes that "some say ... Amway is really more about making money from recruiting people to become distributors, as opposed to selling products". In 2008, the state government of Andhra Pradesh enacted a ban on Amway media advertisements.
On August 6, 2011, Kerala Police
The Kerala Police is the law enforcement agency for the Indian state of Kerala. Kerala Police has its headquarters in Thiruvananthapuram, the state capital. The motto of the force is "Mridhu Bhave Dhrida Kruthye" which means "Soft in Temperamen ...
sealed the offices of Amway at Kozhikode
Kozhikode (), also known in English as Calicut, is a city along the Malabar Coast in the state of Kerala in India. It has a corporation limit population of 609,224 and a metropolitan population of more than 2 million, making it the second la ...
, Kannur
Kannur (), formerly known in English as Cannanore, is a city and a municipal corporation in the state of Kerala, India. It is the administrative headquarters of the Kannur district and situated north of the major port city and commercial hu ...
, Kochi
Kochi (), also known as Cochin ( ) ( the official name until 1996) is a major port city on the Malabar Coast of India bordering the Laccadive Sea, which is a part of the Arabian Sea. It is part of the district of Ernakulam in the state of K ...
, Kottayam
Kottayam () is a municipal town in the Indian state of Kerala. Flanked by the Western Ghats on the east and the Vembanad Lake and paddy fields of Kuttanad on the west. It is the district headquarters of Kottayam district, located in south-we ...
, Thrissur
Thrissur (), formerly Trichur, also known by its historical name Thrissivaperur, is a city and the headquarters of the Thrissur district in Kerala, India. It is the third largest urban agglomeration in Kerala after Kochi and Kozhikode, and t ...
, Kollam
Kollam (), also known by its former name Quilon , is an ancient seaport and city on the Malabar Coast of India bordering the Laccadive Sea, which is a part of the Arabian Sea. It is north of the state capital Thiruvananthapuram. The city i ...
and Thiruvananthapuram
Thiruvananthapuram (; ), also known by its former name Trivandrum (), is the capital of the Indian state of Kerala. It is the most populous city in Kerala with a population of 957,730 as of 2011. The encompassing urban agglomeration populati ...
following complaints. In November 2012, the Economic Offences Wing of Kerala Police conducted searches at the offices of Amway at Kozhikode, Thrissur and Kannur as part of its crackdown on money chain activities and closed down the firm's warehouses at these centres. Products valued at 21.4 million rupees (about US$400,000 at the time) were also seized. Later, Area manager of Amway, P. M. Rajkumar, who was arrested following searches was remanded in judicial custody for 14 days.
On May 27, 2013, Crime Branch officials of Kerala Police
The Kerala Police is the law enforcement agency for the Indian state of Kerala. Kerala Police has its headquarters in Thiruvananthapuram, the state capital. The motto of the force is "Mridhu Bhave Dhrida Kruthye" which means "Soft in Temperamen ...
arrested William S. Pinckney, Managing Director & CEO of Amway India Enterprises along with two other directors of the company from Kozhikode
Kozhikode (), also known in English as Calicut, is a city along the Malabar Coast in the state of Kerala in India. It has a corporation limit population of 609,224 and a metropolitan population of more than 2 million, making it the second la ...
. The three were arrested on charges of running a pyramid scheme. They were granted bail the next day and the business was unaffected. On June 8, 2013, Kozhikode Court lifted the freeze on Amway offices in Kerala. On May 26, 2014, Pinckney was arrested by Andhra Pradesh
Andhra Pradesh (, abbr. AP) is a state in the south-eastern coastal region of India. It is the seventh-largest state by area covering an area of and tenth-most populous state with 49,386,799 inhabitants. It is bordered by Telangana to the ...
police on the basis of a consumer complaint that alleged unethical circulation of money by Amway. He was subsequently arrested in other criminal cases registered against him in the state on allegations of financial irregularities by the company. Pinckney was jailed for two months until being released on bail.
In 2017, a Chandigarh
Chandigarh () is a planned city in India. Chandigarh is bordered by the state of Punjab to the west and the south, and by the state of Haryana to the east. It constitutes the bulk of the Chandigarh Capital Region or Greater Chandigarh, which al ...
court framed charges, under Section 420 of the Indian Penal Code
Section 420 in the Indian Penal Code deals with ''Cheating'' and ''dishonestly inducing delivery of property''. The maximum punishment which can be awarded under this section is imprisonment for a term of 7 year and fine.
Definitions
:* Chea ...
and the Prize Chits and Money Circulation Scheme (Banning) Act, against two directors of Amway India, William Scot Pinckney and Prithvai Raj Bijlani. This was based on a cheating case filed by eight complainants in 2002, following which the Economic Offences Wing had filed chargesheet in 2012. A revision plea moved by the two Amway officials against the framed charges was dismissed in 2018.
In April 2022, the Enforcement Directorate
The Directorate of Enforcement (ED) is a law enforcement agency and economic intelligence agency responsible for enforcing economic laws and fighting economic crime in India. It is part of the Department of Revenue, Ministry of Finance, Gover ...
attached both movable and immovable assets of Amway India worth including the firm's factory in Dindigul
Dindigul, also spelt Thindukkal (), is a city in the Indian state of Tamil Nadu. It is the administrative headquarters of the Dindigul district. Dindigul is located southwest from the state capital, Chennai, away from Tiruchirappalli, away ...
along with bank accounts under the Prevention of Money Laundering Act
Prevention of Money Laundering Act, 2002 is an Act of the Parliament of India enacted by the NDA government to prevent money-laundering and to provide for confiscation of property derived from money-laundering. PMLA and the Rules notified th ...
(PMLA).
U.S. class action settlement
On November 3, 2010, Amway announced that it had agreed to pay $56 million—$34 million in cash and $22 million in products—to settle a class action
A class action, also known as a class-action lawsuit, class suit, or representative action, is a type of lawsuit where one of the parties is a group of people who are represented collectively by a member or members of that group. The class actio ...
that had been filed in Federal District Court in California in 2007. The class action, which had been brought against Quixtar and several of its top-level distributors, alleged fraud, racketeering
Racketeering is a type of organized crime in which the perpetrators set up a coercive, fraudulent, extortionary, or otherwise illegal coordinated scheme or operation (a "racket") to repeatedly or consistently collect a profit.
Originally and of ...
, and that the defendants operated as an illegal pyramid scheme.
Amway, while noting that the settlement is not an admission of wrongdoing or liability, acknowledged that it had made changes to its business operations as a result of the lawsuit. The settlement is subject to approval by the court, which was expected in early 2011.[ The economic value of the settlement, including the changes Amway made to its business model, totals $100 million.
]
Class action in Canada
A 2009 class action case lodged in Canada was rejected by the Federal Court and confirmed on appeal by the Federal Court of Appeal
The Federal Court of Appeal (french: Cour d'appel fédérale) is a Canadian appellate court that hears cases concerning federal matters.
History
Section 101 of the Constitution Act, 1867 empowers the Parliament of Canada to establish "addit ...
, with costs awarded to Amway and the plaintiffs directed to arbitration
Arbitration is a form of alternative dispute resolution (ADR) that resolves disputes outside the judiciary courts. The dispute will be decided by one or more persons (the 'arbitrators', 'arbiters' or 'arbitral tribunal'), which renders the ' ...
.
Lobbying for deregulation
The DeVoses supported an amendment to the US House of Representatives' omnibus Financial Services and General Government Appropriations bill for fiscal year 2018 by US Representative John Moolenaar that would have limited the ability of the FTC to investigate whether MLMs are pyramid schemes. The amendment would have barred the Treasury Department, the Justice Department, the Small Business Administration, the Securities and Exchange Commission, the FTC, or any other agencies from using any monies to take enforcement actions against pyramid operations for the fiscal year. It also adopted provisions from H.R. 3409, the so-called "Anti-Pyramid Scheme Promotion Act of 2016", which would blur the lines between legitimate MLM activity and pyramid schemes established under the original 1979 FTC case by deeming sales made to people inside the company as sales to an "ultimate user," thus erasing the key distinction made in the ruling between sales to actual consumers of a product and sales made to members of the MLM network as part of recruitment of members or to qualify for commissions. The amendment was opposed by a coalition of consumer interest groups including Consumer Action
Consumer Action is a nonprofit, consumer education and advocacy center, serving consumers in the United States. Founded in 1971, the mission of Consumer Action is to help individual consumers assert their rights in the marketplace and to advance ...
, the Consumer Federation of America
The Consumer Federation of America (CFA) is a non-profit organization founded in 1968 to advance consumer interests through research, education and advocacy.
According to CFA's website, its members are nearly 300 consumer-oriented non-profits, w ...
, Consumers Union
A consumer is a person or a group who intends to order, or uses purchased goods, products, or services primarily for personal, social, family, household and similar needs, who is not directly related to entrepreneurial or business activities. T ...
(the publisher of ''Consumer Reports
Consumer Reports (CR), formerly Consumers Union (CU), is an American nonprofit consumer organization dedicated to independent product testing, investigative journalism, consumer-oriented research, public education, and consumer advocacy.
Founded ...
'' magazine), Consumer Watchdog
Consumer Watchdog (formerly the Foundation for Taxpayer and Consumer Rights) is a non-profit, progressive organization which advocates for taxpayer and consumer interests, with a focus on insurance, health care, political reform, privacy and ener ...
, the National Consumers League
The National Consumers League, founded in 1899, is an American consumer organization. The National Consumers League is a private, nonprofit advocacy group representing consumers on marketplace and workplace issues. The NCL provides government, bu ...
, and the United States Public Interest Research Group (US PIRG), as well as Truth in Advertising (TINA.org) in its original incarnation.
Other legal actions
Canadian tax fraud case
In 1982, Amway co-founders, Richard M. DeVos and Jay Van Andel, along with Amway's executive vice president for corporate services, William J. Discher Jr., were indicted in Canada on several criminal charges, including allegations that they underreported the value of goods brought into the country and had defrauded the Canadian government of more than $28 million from 1965 to 1980. The charges were dropped in 1983 after Amway and its Canadian subsidiary pleaded guilty to criminal customs fraud charges. The companies paid a fine of $25 million CAD, the largest fine ever imposed in Canada at the time. In 1989 the company settled the outstanding customs duties for $45 million CAD. In a 1994 article authored by DeVos, he stated that the guilty plea was entered for technical reasons, despite believing they were innocent of the charges, and that he believed that the case had been motivated by "political reasons".
RIAA lawsuit
The Recording Industry Association of America
The Recording Industry Association of America (RIAA) is a trade organization that represents the music recording industry in the United States. Its members consist of record labels and distributors that the RIAA says "create, manufacture, and/o ...
(RIAA), as part of its anti-piracy efforts, sued Amway and several distributors in 1996, alleging that copyrighted music was used on "highly profitable" training videotapes. Amway denied wrongdoing, blaming the case on a misunderstanding by distributors, and settled the case out of court for $9 million. In a related lawsuit initiated by the distributors involved, the Court established that Mahaleel Lee Luster, who had been contracted to make the videotapes, had violated copyright without the knowledge of three of the five of those distributors.
Amway UK
In 2007, Amway's operations were halted in the United Kingdom and Ireland following a yearlong investigation by the UK Department of Trade and Industry, which moved to have Amway banned on the basis that the company had employed deceptive marketing, presented inflated earnings estimates, and lured distributors into buying bogus "motivation and training" tools. In 2008, a UK judge dismissed government claims against Amway's operations, saying major reforms in the prior year (which included banning non-Amway-approved motivational events and materials) had fixed company faults that favoured selling training materials over products and misrepresented earnings. However, the judge also expressed his belief that Amway allowed "misrepresentations" of its business by independent sellers in years past and failed to act decisively against the misrepresentations.
''Welcome to Life'' (Poland)
In 1997, Amway Poland and Network TwentyOne separately sued the makers of a Polish film, ''Welcome to Life'' ( pl, Witajcie w zyciu), for defamation and copyright violations. Henryk Dederko (the director) and producer were later acquitted on the charge of disseminating false information. The film, banned for 12 years, was one of the highly anticipated movies of 2009's Warsaw Film Festival and was dubbed by the promoters as a "scary movie about brainwashing" It was said to depict hard-sell "pep rallies
A pep rally or pep assembly is a gathering of people, typically students of middle school, high school, and college age, before a sports event. The purpose of such a gathering is to encourage school spirit and to support members of the team. It ...
", and to include statements from distributors that meetings had a similar tone to meetings of the Communist Party
A communist party is a political party that seeks to realize the socio-economic goals of communism. The term ''communist party'' was popularized by the title of ''The Manifesto of the Communist Party'' (1848) by Karl Marx and Friedrich Engels. A ...
before it lost power in Poland. Methods of recruitment that confusingly resembled those of a sect were also described. A bestseller on the local video black market
A black market, underground economy, or shadow economy is a clandestine market or series of transactions that has some aspect of illegality or is characterized by noncompliance with an institutional set of rules. If the rule defines the se ...
, the film was banned while the suit proceeded.
In 2001 a regional court ruled in favor of Network 21; however, in 2004 the Warsaw Regional Court dismissed Amway's civil lawsuit. On appeal Amway won the case and the producers were ordered to pay a fine to a children's charity and publish a public apology. the film was still banned due to an ongoing case brought by "private individuals" ridiculed in the film.
On December 18, 2012, the court ruled that film can be screened, but the makers have to remove "untrue information", as the screen near the end of the movie stated that 30% of company income is generated by sales of training materials and that the vast majority of its profits are shared only by the tiny fraction of top distributors. This is not the only court case, so the film is still banned on other grounds.
Dr. Phil and Shape Up
In March 2004, TV personality Phil McGraw
Phillip Calvin McGraw (born September 1, 1950), better known as Dr. Phil, is an American television personality and author best known for hosting the talk show '' Dr. Phil''. He holds a doctorate in clinical psychology, though he ceased rene ...
(a.k.a. Dr. Phil) pulled his "Shape Up" line of supplements off the market in the face of an investigation by the U.S. Federal Trade Commission
The Federal Trade Commission (FTC) is an independent agency of the United States government whose principal mission is the enforcement of civil (non-criminal) antitrust law and the promotion of consumer protection. The FTC shares jurisdiction o ...
(FTC). The supplements were manufactured by CSA Nutraceuticals, a subsidiary
A subsidiary, subsidiary company or daughter company is a company owned or controlled by another company, which is called the parent company or holding company. Two or more subsidiaries that either belong to the same parent company or having a s ...
of Alticor's Access Business Group. The FTC later dropped the probe, but in October 2005 a class-action lawsuit
A class action, also known as a class-action lawsuit, class suit, or representative action, is a type of lawsuit where one of the parties is a group of people who are represented collectively by a member or members of that group. The class action ...
was filed against McGraw by several people who used the products and claimed that the supplements, which cost $120 per month, did not stimulate weight loss. In September 2006, a $10.5 million settlement was reached, in which Alticor agreed to provide $4.5 million in cash and $6 million in Nutrilite products to disgruntled users of Shape Up.
Procter & Gamble
Some Amway distributors distributed an urban legend
An urban legend (sometimes contemporary legend, modern legend, urban myth, or urban tale) is a genre of folklore comprising stories or fallacious claims circulated as true, especially as having happened to a "friend of a friend" or a family m ...
that the (old) Procter & Gamble service mark was in fact a Satanic symbol or that the CEO of P&G is himself a practicing Satanist. (In some variants of the story, it is also claimed that the CEO of Procter & Gamble donated "satanic tithes" to the Church of Satan
The Church of Satan is a religious organization dedicated to the religion of LaVeyan Satanism as codified in ''The Satanic Bible''. The Church of Satan was established at the Black House (Church of Satan), Black House in San Francisco, Cali ...
.) Procter & Gamble alleged that several Amway distributors were behind a resurgence of the story in the 1990s and sued several independent Amway distributors and the company for defamation
Defamation is the act of communicating to a third party false statements about a person, place or thing that results in damage to its reputation. It can be spoken (slander) or written (libel). It constitutes a tort or a crime. The legal defini ...
and slander. The distributors had used Amway's Amvox voice messaging service to send the rumor to their downline distributors in April 1995. By 2003, after more than a decade of lawsuits in multiple states, all allegations against Amway and Amway distributors had been dismissed. In October 2005, a Utah appeals court reversed part of the decision dismissing the case against the four Amway distributors, and remanded it to the lower court for further proceedings. In the lawsuit against the four former Amway distributors, Procter & Gamble was awarded $19.25 million by a U.S. District Court jury in Salt Lake City on March 20, 2007. On November 24, 2008, the case was officially settled. "It's hard to imagine they'd pursue it this long, especially after all the retractions we put out," said distributor Randy Haugen, a 53-year-old Ogden, Utah, businessman who maintained P&G was never able to show how it was harmed by the rumors. "We are stunned. All of us."
Regulatory violations in Vietnam
In January 2017, the Vietnam Ministry of Industry and Trade determined that Amway Vietnam had violated federal regulations by engaging in unauthorized multi-level marketing.
Other issues
Cultism
Some Amway distributor groups have been accused of using "cult
In modern English, ''cult'' is usually a pejorative term for a social group that is defined by its unusual religious, spiritual, or philosophical beliefs and rituals, or its common interest in a particular personality, object, or goal. This ...
-like" tactics to attract new distributors and keep them involved and committed.["Hidden persuaders", by Tony Thompson. '' Time Out'', June 22–29, 1994][''The power of positive inspiration'' by ]Paul Klebnikov
Paul Klebnikov (russian: Павел Юрьевич Хлебников, translit=Pavel Yurievich Khlebnikov; June 3, 1963 – July 9, 2004) was an American journalist and historian of Russia. He worked for ''Forbes'' magazine for more than ...
. Forbes
''Forbes'' () is an American business magazine owned by Integrated Whale Media Investments and the Forbes family. Published eight times a year, it features articles on finance, industry, investing, and marketing topics. ''Forbes'' also re ...
, December 9, 1991 Allegations include resemblance to a Big Brother organization with a paranoid attitude toward insiders critical of the organization, seminars and rallies resembling religious revival meeting
A revival meeting is a series of Christian religious services held to inspire active members of a church body to gain new converts and to call sinners to repent. Nineteenth-century Baptist preacher Charles Spurgeon said, "Many blessings may come ...
s, and enormous involvement of distributors despite minimal incomes. An examination of the 1979–1980 tax records in the state of Wisconsin
Wisconsin () is a state in the upper Midwestern United States. Wisconsin is the 25th-largest state by total area and the 20th-most populous. It is bordered by Minnesota to the west, Iowa to the southwest, Illinois to the south, Lake M ...
showed that the Direct Distributors reported a net loss of $918 on average.[''Quasi religious corporations: A new integration of religion and capitalism?'' by ]David G. Bromley
David G. Bromley (born 1941) is a professor of sociology at Virginia Commonwealth University, Richmond, VA and the University of Virginia, Charlottesville, VA, specialized in sociology of religion and the academic study of new religious movements ...
. In ''Religion and the Transformations of Capitalism: Comparative Approaches'', edited by Richard H. Roberts, pages 135–160. Routledge, 1995
''Dateline NBC''
In 2004, ''Dateline NBC
''Dateline NBC'' is a weekly American television news magazine/reality legal show that is broadcast on NBC. It was previously the network's flagship general interest news magazine, but now focuses mainly on true crime stories with only occasion ...
'' featured a critical report based on a yearlong undercover investigation of business practices of Quixtar. The report noted that the average distributor makes only about $1,400 per year and that many of the "high level distributors singing the praises of Quixtar" are actually "making most of their money by selling motivational books, tapes and seminars; not Quixtar's cosmetics, soaps, and electronics".
"In fact, about twenty high level distributors are part of an exclusive club; one that those hundreds of thousands of other distributors don't get to join. For years only a privileged few, including Bill Britt, have run hugely profitable businesses selling all those books, tapes and seminars; things the rank and file distributors can't sell themselves but, are told over and over again, they need to buy in order to succeed."
The program said that a Quixtar recruiter featured in the report made misleading and inconsistent statements about Quixtar earnings during a recruitment meeting and had an outstanding arrest warrant
An arrest warrant is a warrant issued by a judge or magistrate on behalf of the state, which authorizes the arrest and detention of an individual, or the search and seizure of an individual's property.
Canada
Arrest warrants are issued by a j ...
for cocaine possession from the mid-90s.[
In a response to the ''Dateline'' report, Quixtar published a "Dateline Quixtar Response" on its official website. In its response,] Quixtar stated:
"We learned that two Dateline producers had registered as IBOs and for months had been conducting undercover research for the story, which included using a hidden camera to videotape meetings and conversations with IBOs. The producers did not identify themselves as working for Dateline, instead feigning interest in building a business powered by Quixtar."
The site also stated that:
"Dateline's story on Quixtar boiled down to the complaints of three former Independent Business Owners (IBOs) – one of whom is a competitor – and ignored the hundreds of thousands of IBOs powered by Quixtar who are achieving their goals."
See also
* List of multi-level marketing companies
This is a list of companies which use multi-level marketing (also known as network marketing, direct selling, referral marketing, and pyramid selling) for most of their sales.
Active
* 5Linx
* ACN Inc.
* AdvoCare
* Ambit Energy
* America ...
* ''Morrison v. Amway Corp.
''Morrison v. Amway Corp.'' 49 F. Supp. 2d 529 was a lawsuit concerning the enforcement of a contractual arbitration provision between the defendant Amway Corp. and the plaintiff their distributors.
Background
Amway distributors earn their incom ...
''
References
Books
* ''American Victory: The Real Story of Today's Amway'' published April 1997 by Chapel & Croft Publishing;
* ''Amway: The Cult of Free Enterprise'' published December 1, 1985, by South End Press
South End Press was a non-profit book publisher run on a model of participatory economics. It was founded in 1977 by Michael Albert, Lydia Sargent, Juliet Schor, among others, in Boston's South End. It published books written by political activi ...
;
*
Amway Forever: The Amazing Story of a Global Business Phenomenon
'' published August 2011 by John Wiley & Sons;
* ''Amway: The True Story of the Company That Transformed the Lives of Millions'' published September 1, 1999, by Berkley Publishing Group;
* ''An Enterprising Life'' published 1998 by HarperCollins;
* ''An Uncommon Freedom, the Amway Experience and Why It Grows'' published 1982 by Revell;
* ''Commitment to excellence: The remarkable Amway story'' published 1986 by Benjamin;
* ''Compassionate Capitalism: People Helping People Help Themselves'' published September 1994 by Penguin Books;
* ''Empire of Freedom: The Amway Story and What It Means to You'' published September 3, 1997, by Prima Lifestyles;
* ''How to Be Like Rich DeVos. Succeeding with Integrity in Business and Life'' published 2004 by Health Communications, Inc;
* ''Merchants of Deception: An insider's chilling look at the worldwide, multi-billion dollar conspiracy of lies that is Amway and its motivational organizations'' published 2009 by BookSurge Publishing;
* ''The First Eleven—The growth of Amway in Britain through the lives of its local heroes'' published 1984 by AM Publishing;
* ''Promises to Keep: The Amway Phenomenon and How It Works'' published 1986 by Berkley Books;
* ''The Direct Selling Revolution: Understanding the Growth of the Amway Corporation'' published 1993 by WileyBlackwell;
* ''The Possible Dream: A Candid Look At Amway'' published 1977 by Revell;
* ''Profiles of the American Dream: Rich DeVos and Jay Van Andel and the Remarkable Beginnings of Amway'' 1997 by Premiere Films
External links
*
{{Authority control
Retail companies established in 1959
Privately held companies of the United States
Multi-level marketing companies
Personal selling
Companies based in Kent County, Michigan
Privately held companies based in Michigan
1959 establishments in Michigan