Caught in a massive lie, Doug DeVos, current Amway president and son of Dick, stated well over half of Amway’s volume is from customers, i.e., non-IBOs, during a Wall Street Journal interview in early 2012: http://live.wsj.com/video/the-big-interview-questioning-the-amway-way/FE12F29C-D022-42B8-8ACD-16A114E0DA96.html#!FE12F29C-D022-42B8-8ACD-16A114E0DA96 (start viewing at the 16 minute mark, and notice how Van Andel appears to both cringe and nod his head in agreement with this HUGE lie, and the remainder of the interview is also filled with lies and half-truths (a half-truth is a full lie in my book) In fact, at one point, DeVos fully muddies the waters by never really answering the question and claiming over 50% and then 100% of products are consumed by the end user, which wasn’t related to the question….who else besides “end users” would end up using products?
Other indications of the retail sales level have varied, and include
1. 19%, coming from “internal Amway documents” in this Forbes December 1991 issue: http://www.skepdic.com/klebniov.html, and
2. 41%, which is believed to be another lie, from this former Amway executive: http://usatoday30.usatoday.com/money/industries/retail/2011-02-07-multilevelmarketing03_CV_N.htm
This lie is in direct conflict with the reported 3.4% customer/non-IBO sales that TEAM stated in their lawsuit with Quixtar in 2007 (see team-complaint-3-4-percent-retail-page-13, for the entire lawsuit, see team-complaint, which happened to be confidential information that got them in BIG trouble with Quixtar/Amway, but the fact remains 3.4% is the number, which is VERY low. By my experience and the experiences of many others, even the paltry 3.4% is too high, as we were taught how to fake out the computer to make personal sales look like they were customer/non-IBO sales! Not only that, but part of the 3.4% is “sympathy” sales to mom, sister, and best friend – and although these are technically retail sales, they inflate the number because the overall number is so low. Also, many IBOs ship their products to a nearby friend, relative, etc., even using the friend, relative’s credit card, and pay them back with a check, in order to again fake out the computer into thinking an actual retail sale took place. Take into account the very small organizations that DO retail the products, and the actual percentage for the remaining vast majority of IBOs approaches ZERO.
Retail sales are a requirement in order to earn downline volume bonuses. The lawsuit can be viewed here: TEAM Complaint (see paragraph 43 on page 13, although as above, there are MANY other interesting tidbits throughout this lawsuit).
And this is not a recent issue, as Bruce Craig, the former Assistant AG of Wisconsin, has stated the FTC merely took Amway’s word during the 1970s investigation that retail sales were occurring, and neither the court nor the FTC questioned whether this testimony was factually true, a GROSS error: http://seekingalpha.com/article/918831-an-investors-guide-to-identifying-pyramid-schemes
This is particularly troubling, as the FTC recently updated their website addressing MLM: http://business.ftc.gov/documents/inv08-bottom-line-about-multi-level-marketing-plans, which says, in part, “Not all multilevel marketing plans are legitimate. If the money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan. If the money you make is based on the number of people you recruit and your sales to them, it’s not. It’s a pyramid scheme. Pyramid schemes are illegal, and the vast majority of participants lose money.”
In the interest of full disclosure, something you’ll NEVER see from Amway, it should be pointed out the question was directed towards Amway in general, not North America, which was the source of the above 3.4% number. However, the numerous complaints about high prices from foreign countries probably makes the 3.4% about right. Some countries, such as Australia, don’t even require customer sales. Also, China, Amway’s largest country by volume, cannot be counted in the above statistic, as they don’t operate as an MLM. But you’ll never see these facts getting in the way of a good lie when it comes to DeVos and Van Andel.
Here’s another example of lies and distortions, a puff piece from Harvard Business Review, which makes it sound scholarly, but is FULL of lies: http://news.gnom.es/pr/harvard-business-review-article-highlights-how-amway-reinvented-its-china-business. Here’s some of the lies, with the quotation from the article first, and the truth after the arrow (—>):
1. The Idea: After the Chinese government outlawed direct selling, Amway repeatedly revised its business model to build a reputation as an honorable corporate citizen. In 2006 it received a new license, and China is now its largest market. —> China was having corruption problems with all kinds of fly-by-night MLMs, not direct sellers. However, it is difficult to determine the differences as there are nuances among this complex industry, so China shut down all direct sellers AND MLMs. Also, China was not experienced with the free enterprise environment and had to freeze everything first, until they could figure it out.
2. When the Chinese government outlawed direct selling, in 1998, Amway was already well established in China and had built a large-scale factory there. —> The ATS was probably well established as well.
3. The company faced a big decision: Should we pull up stakes, or could we find a new way to sell? —> Could we make the Amway business work by itself, minus the ATS? After all, this had never been done before.
4. We chose the latter course, and in the decade that followed, Amway China revised its sales model five times to meet changing regulations. —> We were determined to make money wherever we could, even in an oppressive, suppressive Communist dictatorship goverment environment, another first. After all, China has over a billion people, and American products are coveted, even with inflated pricing.
5. Today China is our biggest market, accounting for more than a third of Amway’s sales. —> I wonder what would happen if we used the same model in other countries? Could we be even bigger, not have an ATS, and recover the Amway name reputation? The Amway brand name is so damaged that people are still approaching others with the name Quixtar in the U.S., and it’s been over 4 years since Amway stopped using that name. Therefore I don’t think Amway’s reputation can recover, which is why Amway hasn’t used the China business model in other countries.
6. To understand Amway’s business in China and the lessons we’ve learned by operating there, it’s helpful to know some of our history. —> Unlike China, we operate a tool scam in most other countries.
7. My dad, Richard DeVos, and his longtime friend and business partner, Jay Van Andel, founded Amway in 1959. —> [Note: Some of this item only is my conjecture, but it is consistent with the known facts For example, see http://en.wikipedia.org/wiki/Jay_Van_Andel for the factual basis portion.] My dad was friends with a guy by the name of Jay Van Andel, Jay’s dad was rich from being a car dealer, and Jay was spoiled. So dad hung around him as much as possible to pick up Jay’s scraps, and even paid Jay 25 cents every week (remember, this was before WWII) in order to be Jay’s “friend” and give dad a ride to school in Jay’s (daddy’s paid for) car. Some friend, huh? Dad learned how to buy your friends at a very early age, and “perfected” that technique for the rest of his life. Dad and Jay also used Jay’s “daddy money” to start several ventures after returning from WWII that failed, including a drive through restaurant (this was even before McDonalds started!), a flying school (and neither one of us knew anything about flying!), an import business (and was later convicted of breaking export laws to Canada, should have stuck with import!), and Jay bought a sailboat that leaked and we almost drown as it sank off the coast of Cuba. As you can see, Jay and dad were extremely wreckless with other peoples’ money, and they “perfected” that in Amway as well.
8. The company was started with the idea of providing entrepreneurial opportunity for anyone who wanted to own and run a business. —> But when fraudsters like Dexter Yager and Bill Britt took over the business via the ATS, we didn’t care (see #7 for the reasons why, it has to do with being buying your friends and being wreckless with other peoples’ money).
9. Amway doesn’t discriminate. —> We let the IBO/distributors do that. You’ll see over the top political and religious activities at their functions, which is fine with us. All we have to do is fake indignation, and they get all the heat. In the background, we’re cheering them on! How else can you explain what’s going on?
10. We welcome everyone, regardless of age, race, religion, gender, or geography. —> Actually, this is becoming true, now that many English reading/speaking people are aware of the ATS, and we have to go elsewhere to rip off other people. We hate their guts, but we TREAT them nice, just like we did with our Anglo, Christian financial victims.
11. In some parts of the world this has been a breakthrough concept. —> For example, the Muslim world…..oh wait, we’re not in those countries, are we?
12. Dad and Jay were adventurers and liked to travel. —> Except they didn’t want to go to Canada in the early 80s, because there was a warrant out for their arrest, and they instead settled out of court, plead guilty, and paid a $50-60 million penalty for export fraud.
13. Thirty-eight years ago they were visiting places like Hong Kong, mainland China, and the Middle East and asking themselves, “What would it take to bring Amway here? —> Virtually ANY business wants to expand, and Amway was already expanding into numerous countries, why tie it to being “adventurers” or “liked to travel?” Hong Kong is easy, it is a free enterprise zone, even now as a part of China. China doesn’t allow MLM, and the Middle East still hasn’t been added to Amway’s scam territory.
14. What would the business look like? —> The same ATS scam, unless the country shut it down.
15. How would it fit with this culture? —> Are you serious? Which culture wants to fit in a scam?
16. Patience and Cooperation That last question has been especially important. —> I agree, how do you fit the same scam in different cultures?
17. One of the biggest lessons we’ve learned as we’ve grown around the world is that a true understanding of the marketplace, including the culture, the economics, the politics, and the people, is essential. —> A lesson you didn’t learn is when you were ordered to stop the ATS in the UK, you didn’t do the same thing in other countries.
18. Our strongest resource is always our local leadership team. —> They know best how to fool the locals with the ATS lie, right?
19. That’s the first lesson we applied to our business in China. —> The Chinese shut down the ATS in their country. I don’t know if they did it intentionally, but with no MLM model in China, who needs the tools.
20. Amway first entered Asia in 1974, with the opening of our Hong Kong affiliate, and then went into Malaysia in 1976. —> So let’s get this straight: Amway opened in Hong Kong a year BEFORE Rich and Jay visited there for fun?
21. In 1979 we began operations in Japan, which quickly became one of our top markets and remains so today. —> And it used to be much larger, but the ATS has ruined that country as well.
22. By the late 1980s more than half of Amway’s revenues were coming from outside the United States. —> And now it’s over 90%.
23. So when we began operations in the People’s Republic of China, in 1995, we’d already been doing business in that part of the world for more than 20 years. —> But not in Communist countries.
24. I was running Amway’s Asia Pacific business at the time, and by 1998 China was a $200 million operation and growing fast. —> Along with the ATS.
25. Then we heard rumors that the Chinese government was becoming unhappy with the actions of some direct sellers—or, more accurately, scammers disguised as direct sellers. —> Such as the ATS?
26. These unscrupulous companies damaged the reputation of the fledgling industry and of legitimate direct sellers like Amway, Avon, and Mary Kay. —> It doesn’t look like Avon considers Amway legitimate: http://news.google.com/newspapers?id=hK1jAAAAIBAJ&sjid=yeEDAAAAIBAJ&pg=5635,3418268&dq=amway+avon+buyout&hl=en and http://www.nytimes.com/1989/05/18/business/amway-withdraws-avon-offer.html
27. Issues related to product quality, reliability, and trust were rampant. —> Such as trusting Amway’s ability to tell the truth about the ATS.
28. Chinese officials needed to protect consumers and to put a stop to unethical practices. —> Such as the ATS, which isn’t needed without an MLM structure.
29. But the action the government pursued was extreme: outlawing direct selling and punishing legitimate as well as unethical sellers. —> Again, how can Amway considered to be legitimate, given all of the above?
30. The idea that direct selling could be outlawed was incomprehensible to us. —> The UK almost kicked out Amway in 2008, and India severely limits tool prices, which significantly limits ATS profit.
31. This method of marketing was the foundation of Amway’s business—it had been tested and proved over time and across borders. —>It has also been the subject of numerous and embarrassing lawsuits involving Amway.
32. And now it appeared that we could be put out of business, despite our commitment to and investment in our China operation. —> Amway should still be put out of business, because of your commitment to and investment in the ATS.
33. When Eva Cheng, who ran Amway China at that time, called me in the middle of the night to report that the ban was likely, she advised that we not lose sight of an opportunity: We could cooperate with the government to help it understand the problems and find solutions to them. —> How dare she call you in the middle of the night, doesn’t she realize the middle of the day in China is the middle of the night in the U.S., and a multi-billionaire needs his beauty sleep in order to race his yachts? Didn’t it make more sense to just throw away your investment in China right away, without even trying to figure out a way to stay?
34. Working with the Chinese to create good direct-selling legislation would be the right thing to do for consumers, our industry, and our business. —> And getting rid of the ATS, at least in China, was the centerpiece of those changes. How ironic it took a Communist country to get rid of free enterprise run amok.
35. A Chinese proverb, loosely translated, says, “If you are patient in one moment of anger, you will escape a hundred days of sorrow.” —> The FTC rules, Section 5, loosely translated, “Unfair and deceptive business practices are illegal.”
36. Eva was right.
37. We could be patient.
38. We could be cooperative.
39. We could seek solutions to strengthen our industry and protect consumers.
40. And we could partner with the Chinese government and our competitors to create reforms that would set the stage for our industry to grow and flourish in China.
41. A day or two later we had a board meeting.
42. My family and the Van Andel family, who remain Amway’s primary shareholders, were all present.
43. Eva reported on what we were facing.
44. My father stood up after the presentation and said that he approved of her recommendation to work with the government and that he wanted to stay the course. Everyone else agreed.
1965 amway magazine print ad shows soap and pretty woman
1971 Amway: Clean World, Print Ad
Amway Vintage 1986 Amagift Print Ad
1992 Ad Amway Find The Environmental Activist 1959 LOC Liquid Organic Cleaner
Bottom line, like fathers, like sons. Liars to the core.
DeVos complains about how India is “not fair,” but he ignores that Amway is unfair AND deceptive. See this article and my comments: http://businesstoday.intoday.in/story/amway-president-says-india-events-not-fair-to-employees/1/195449.html#comment