Welcome to the Frequently Asked Questions section, just email email@example.com any question you want answered below, and if it is considered an FAQ type question, I’ll address it.
Q1: Aren’t the failure rates for conventional businesses as high as Amway, and therefore Amway must be as good of a business as any traditional business?
A1: No. According to this document from the SBA (Small Business Administration), the survival rates are much higher for traditional businesses: https___www.sba.gov_sites_default_files_FAQ_Sept_2012. See page 3, near the middle of the page, which states, “What is the survival rate for new businesses? About half of all new establishments survive five years or more and about one-third survive 10 years or more.
As one would expect, the probability of survival increases with a firm’s age. Survival rates have changed little over time (figure 5).” In contrast, well over half of Amway IBOs don’t renew after their first year, and only a few percent remain after about 10 years. Even Jay Van Andel testified in the infamous FTC lawsuit that the first year failure rate is 75% and 25% for every year thereafter, or about 50%/year average, search for “50%” here: Amway vs And keep in mind one of the big selling points of an Amway business is the low capital cost to get started, although this is another of Amway’s numerous lies, as thousands of dollars/year are needed to feed the ATS beast.
Q2: If the ATS is so bad, why hasn’t the government shut it down yet?
A2: We’re talking about the same government that didn’t shut down Bernie Madoff, despite his case repeatedly being served on a silver platter for several years. He had to turn himself in after his Ponzi scam collapsed and he told his sons, who turned him in, to be “caught.” I believe the FTC is, in this order, incompetent, bureaucratic, and politically influenced, and these factors are interrelated.
Q3: Do you think tools should be free?
A3: No, I think the tool prices should cover the production costs and provide the upline with a reasonable amount of profit. Rich DeVos indicated 20% of the Amway profit is his limit, I could go as high as 50%. The major point is the amount should be VISIBLE and should include ALL tools, not just some of them.
Q4: I thought pyramid schemes, like Amway, are illegal, especially if a majority of the products are sold to IBO/distributors?
A4: That’s right but the FTC has muddied the waters by having confusing guidance, such as this FTC letter: http://www.marketwaveinc.com/FTC_Letter.pdf, which some pro-MLM sycophants have misinterpreted as retail sales to non-IBO/distributors don’t matter at all. What the FTC does find objectionable is the “$10,000 pencil” scenario, where the new entrants buy a product one time, and depend on new entrants to fund their profit by doing the same thing. Of course, there is an entire continuum between the $10,000 pencil and the Walmart price, and this is the reason for sale of products to non-IBOs requirement. The BurnLounge decision is an update to this situation, and is making a lot of MLM lawyers very nervous, as well as the MLM companies: http://www.ftc.gov/os/caselist/0623201/120314burnloungeorder.pdf
Q5: Why are the tools so profitable?
A5: There are 4 major reasons.
Q6: But don’t the rules explicitly say the tools are optional, and the upline has to help an IBO even if they don’t buy the tools?
Q7: But doesn’t Amway have an arbitration process you can use to settle disputes?