F. What Is The Basis Of The Real Amway Tool Scam Size?

Amway tries to wiggle out of the issue, but the legalese in their documentation: http://www.amway.com/en/ResourceCenterDocuments/Visitor/opp-amw-cat-v-en–AmwayGlobalBusinessOpportunityBrochure.pdf states (the below content has been removed, but there is no indication Amway’s position has changed),
As you build your business, you will likely have some questions. Your sponsor has a vested interest in helping you succeed, so don’t be shy about reaching out for help. You can also turn to the IBOAI (iboai.com), your trade association, dedicated to serving the common interests of all IBOs.
Some successful IBOs share their knowledge of success through the creation and sale of Business Support Materials (BSM), under the guidance of the AMWAY™ ACCREDITATION PLUS™ Program. The intent of these optional materials is to help IBOs succeed in reaching their goals. BSM may include DVDs, CDs, books, websites, seminars, and business conventions. The additional income some IBOs may earn from the sale of BSM is separate from their earnings under the Amway IBO Compensation Plan.* IBOs are not required to purchase BSM. However, many IBOs have found BSM helpful in building their businesses. As an Independent Business Owner, where you turn for business insight is completely up to you.
*Amway does not compensate IBOs for BSM sales, nor does Amway receive compensation for BSM sales.”
Although there may not be any DIRECT payments as Amway describes above, there is no doubt Amway and the LCKs have a mafia-like (hence the “K” for “Kingpin” in LCK) wink-wink “understanding” that as long as Amway allows the LCKs to make most of their profit from the tools and not Amway, Amway is free to inflate product prices and minimize PV/BV levels. Also, the good natured and friendly words “likely, dedicated, optional, help, may, some, helpful, etc.”, are a total lie. The reality is you use the tools or you’re on your own, with very few and negligible exceptions. Here’s the statement with how it is implemented in reality:
As you build your business, you will definitely have a lot of questions, just don’t expect straight answers. Your sponsor has a vested interest in helping you succeed, but there is a good chance they are so low in the organization that they aren’t even aware of the Amway Tool Scam, so don’t think your best interests will be served when you reach out for help. If your sponsor is an LCK, or your upline gets feedback to your question from and LCK, they will lie to your face and not bat an eye. You can also turn to the IBOAI (iboai.com), your trade association, which is filled with dedicated LCKs, who serve their own financial ATS interests rather than serving the common interests of all IBOs. Virtually all of the LCK IBOs share a portion of their knowledge, specifically the Amway profit side but not the Amway Tool Scam loss side,  of their “success” and then display their lifestyle as if it came from Amway, whereas most of it came via the ATS, through the creation and sale of Business Support Materials (BSM), under the guidance of the AMWAY™ ACCREDITATION PLUS™ secretive sham program, which is supposedly designed to legitimize the BSM program, but instead covers up the illegal, unethical, and immoral ATS.
There is some VERY high level information from Amway here: http://blogs.amway.com/amwayinsider/2011/02/15/a/ and this LCK website: http://www.n21corp.com/PressRel.aspx?PRName=PR_2011_01_20, which says,
Network TwentyOne North America kicks of 2011 as a Founding Member of Amway’s Accreditation Plus (A+) Program
Release date: January 20, 2011
After an extensive collaboration with Amway North America, Network TwentyOne is proud to announce they have become one of the very first organizations to be accredited as a licensed partner with Amway North America under the Accreditation Plus (A+) program. The Accreditation Plus (A+) program is designed to ensure that the products, programs and services developed by Network TwentyOne meet exacting standards for value, quality and professionalism in helping Amway IBOs to build strong and profitable businesses.
Network TwentyOne is committed to focus on helping IBOs to build strong and successful Amway businesses and “treat others as you would like to be treated”. Some Accreditation Plus (A+) program criteria are as follows:

  • Provide a professional development curriculum that includes business-building, product training, and personal development components.
  • Engage in communications that reflect compliance with Quality Assurance Standards (QAS).
  • Demonstrate a commitment to best practices and ongoing education.
  • Be in good standing and compliance with Amway Rules of Conduct.
While adhering to these basic criteria required little to no changes in Network TwentyOne North America’s day to day businesses practices, there were a host of minor modifications required to both products and services to ensure full compliance with the A+ standards which required nearly 12 months of internal development needed to reach full A+ certification.

Of course, there is very little new information from the existing and unenforced rules, so don’t think all of these glowing words actually mean anything useful or beneficial for the IBOs.

The public intent of these optional materials is to help IBOs succeed in reaching their goals, and the private intent is to enable the LCKs to make several more TIMES from the ATS than they do from Amway, which also results in Amway charging more for their products and paying less PV/BV than they otherwise would absent the ATS. BSM (Business Support Materials) includes, but is not limited to, DVDs, CDs, books, websites, seminars, voice mail, and business conventions. The additional income, which is several times more than the Amway business that virtually all LCK IBOs earn from the sale of BSM is separate but intricately connected to their earnings under the Amway IBO Compensation Plan.* IBOs are not required to purchase BSM, but the downline IBOs success is almost totally dependent on buying tools, because:

1. The upline ignores those who do not buy the tools,

2. The rules are extremely complex and any BSM shown to prospects is required by Amway rules to be approved by Amway, and hardly any new IBO would know where to start with this task, especially given the rules are extremely complex. In fact, it took me several months to get a prospect presentation reviewed and approved by Amway, and I modeled the presentation after another approved presentation and was an experienced IBO for several years.

However, many IBOs have found BSM helpful in depleting their bank accounts and running up credit card and other debt. As an Independent Business Owner, where you turn for business insight is completely up to you (snicker-snicker).

*Amway does not directly compensate IBOs for BSM sales, nor does Amway directly receive compensation for BSM sales. However, as described in the above paragraphs, the preceding statement is meaningless, as massive defacto payments are made via the ATS profit.

It has been well established the upline make several TIMES more from the tools than from Amway. First, “tools” and a couple of other terms should be defined. Tools refer to anything besides money used to buy Amway products that create profit for the upline. This includes money used to buy tickets for the Open meetings, monthly Seminars, and Major Functions, the CD/DVD’s and other audio/visual content, whether hard copy or online, books, voice mail, web sites, etc.

There are numerous sources of the above statement besides the input from Phil, including but not limited to:
1a. Former Executive Diamond, on his very own blog (link no longer works): http://orrinwoodward.blogharbor.com/blog/_archives/2008/7/2/3773065.html#comments see post Thu 03 Jul 2008 12:51 AM EDT, which was about one year AFTER Orrin got booted from Amway (Update: Orrin’s late 2010 settlement with Amway over a $25 million arbitration penalty apparently included him removing lots of content, including anything that put Amway in a bad light, no matter how accurate it may be. Therefore, the above link no longer works. However, yours truly made a copy of the statement before it was taken down), the bold red emphasis below is mine:
Re: Re: Re: Re: Re: Amway Australia Letter to IBOs

by Orrin Woodward on Thu 03 Jul 2008 12:51 AM EDT | Profile | Permanent Link

Anonymous, Not at all. If you read my Quixtar history link off to the side, it will give a fairly detailed history of my involvement with Amway and Quixtar and my upline. I qualified diamond in 2000. Missed qualification in 2001 – the year Chris and Terri qualified. Qualified founder diamond in 2002, EDC in 2003 and 2004. 2005 qualified founders diamond and 2006 and would of been 2007 EDC again. I made between 300k and 600k every year after 2001. My income in MonaVie in a couple of months has been higher than any single year in Amway/Quixtar. Another example of why Amway is not competitive. I received 400k in bonuses after 2 months in MonaVie and that does not include the free Mercedes, free trips to Zermatt ski resort, Disney World, 14 day Meditteranean cruise, and 12 person Penthouse Suite in Atlantis. Laurie and I also qualified for over 60 hours of jet credit hours on the MonaVie jet credits program. I won’t have to fly commerical again for quite a while!! Oh and yes the tool incomes were 4 to 5 times higher than the Amway bonuses for all emeralds and above, but in MonaVie the tool side is 50% or less of our MonaVie bonus. If the bonuses go higher then we lower the tool prices even further than the 33% drop we already have reduced them. Now you know why I worked on the board for 3 years to fix this and get Amway to pay their leaders a reasonable amount for the incredible work involved! Now let’s see if David fightback will be truthful and accurate. thanks, Orrin

1b. Here’s someone formerly from Orrin’s group that backs up the above:  http://amthrax.wordpress.com/2012/01/29/reader-report-letter-from-former-round-table-members-mark-and-raquel-peters/#comments by stating, “Our income was presently 8000 to 12000 a month from the Team and 2000-3000 a month, from Amway/Quixtar. In spring of 2007, at Go Diamond Weekend, all the silvers and above were shown a document, on overhead, on how the Team paid us based on numbers of people using Team information. It was very inticing. It was removed quickly when some people took pictures of it, angering some policy council members.” There’s lots of other juicy information at the above link as well.

2. Former Diamond Don Lorencz, a statement archived from his very own blog: http://web.archive.org/web/20051124194000/http://donjlorencz.texerta.com/

3. A group, commonly known for one of the Emeralds involved, Joe Morrison, tried to split from their upline tool system, and got put out of business by the upline threatening anyone who speaks for the Morrison group to be “uninvited” to any speaking opportunities with Yager. Why would all of these former IBO’s give up their entire business if the tools were not THE major source of profits? The lawsuits themselves indicate most of the profit for the higher pins is from tools. If incorrect, I believe the plaintiffs could be charged with a variety of legal violations: http://www.cs.cmu.edu/~dst/Amway/AUS/morrison.htm

4. Here’s another one, from a former Direct Distributor (currently referred to as Platinum): http://www.cs.cmu.edu/~dst/Amway/AUS/hayden.htm

5. And another, from former Double Diamond Brig Hart, who is currently scamming his Mona Vie downline: http://www.sltrib.com/sltrib/money/51831930-79/amway-brig-company-distributors.html.csp which states, in part,

“Despite his success, Hart is bitter about Amway. He left in 2000 after he battled the company and high-level distributors in court over what he alleged were efforts to deny him profits from an ancillary business, the sales to distributors of “tools,” such as recordings of inspirational talks, business-building materials and pay-to-attend meetings.

In March 2008, Amway sued Hart and other distributors who had left for MonaVie, alleging they violated contracts or lured away distributors with false claims about MonaVie’s products. The suit was settled late last year; terms were not disclosed.

“Amway was jealous,” Hart said of the lawsuit. “They’re embarrassed that I left. I left because they’re an illegitimate company. They don’t pay their distributors. It’s a falsehood. It’s the worse compensation plan on planet Earth.”

He said that his generation of $350 million sales a year netted him less than $1 million in annual commissions.

“But I made $8 million to $10 million a year selling books and tapes and running functions,” Hart said.

Jenie Altruda, head of public relations for Amway in North America, said: “Our response is Amway’s differences with Brig Hart are gladly behind us.””

and http://www.cs.cmu.edu/~dst/Amway/AUS/hart.htm UPDATE: Brig has now quit MonaVie, where he plied his Amway Tool Scam trade for the past few years. You can view the reason he quit, because MonaVie took away his tool scam, by reading my comments here: http://www.businessforhome.org/2013/06/brig-hart-leaves-monavie/, my comments are repeated below: Brig left for the same reason Orrin Woodward did – MonaVie clamped down on their tools scams that made them so much money, first in Amway, later in MonaVie. Want proof? See this video starting at the 7:13 mark: https://www.youtube.com/watch?feature=player_embedded&v=nUIhvqSNkms#at=579 [Also, at the 6:50 mark, Brig says he’s made hundreds of millions of dollars from Network Marketing (Amway and MonaVie). People don’t make hundreds of millions of dollars from MLM, they make millions to 10s of millions of dollars, the hundreds of millions comes from the tool scam. Guaranteed.], although this and other interesting videos with Brig can be found here: http://amthrax.wordpress.com/2013/06/27/brig-hart-leaves-monavie/#comment-26959 For the details of the Amway Tool Scam, see www.stoptheamwaytoolscam.wordpress.com. LOL Perhaps Brig is REALLY interested in THIS: http://www.youtube.com/watch?v=GgveqbJI05E And this: http://www.usaassoc.com/public/About-USA-Association.cfm LOL

6. And another, from former Crown Ken Stewart: http://www.mlmsurvivor.com/stewart_v_gooch_comm.htm

7. Here’s the youtube video from Andy Andrews at a major function, while he was still an active IBO, and shortly before he was terminated: http://www.amquix.info/video/Andy_Andrews_quixtar_part1.wmv and http://www.amquix.info/video/Andy_Andrews_quixtar_part2.wmv. There are 2 key parts, both on part 2. At the 2 minute mark, Andy admits several times more is made from tools than from Amway, and a couple minutes later states Amway mandates only 2% of IBOs should make money from tools, and the other 98% shouldn’t even know there is an opportunity to make money from tools. Can YOU say RICO FRAUD??!?

8. One more, from former Diamond Bo Short (the transcript and video links from the 2004 Dateline show are below):

9. Read every link on this page for a full understanding of the size and scope of the Amway Tool Scam:
http://www.amquix.info/shs_v_alticor-complaint.html, which says in part, “41. On knowledge and belief, the Amway kingpins’ tool and function income grew to vastly exceed their income from the Amway business by a ratio of nine-to-one or more. And the profits they derived from tools and functions amounted to many, many millions.”

10. The developments in the UK, where the judge ruled the “voluntary” (the quotations are used because Amway knew they were in very deep doo-doo with the UK regulators) action taken by Amway in May 2007 to shut down all tool sales should be lifted, but ONLY if there is ZERO tool profit. I am not in favor of zero tool profit, as I believe in free enterprise, capitalism, and the profit motive. However, these terms have NOTHING to do with the upline referring to their IBO’s as “teammates”, “business partners”, and other similar terms, then lying (by omission) about making most of their money via the tools. See the ruling here, particularly paragraph 57c: http://www.amwaywiki.com/images/6/60/BERR_vs_Amway_UK_-_Judgement.pdf

11. India has also taken strong action, severely limiting tool prices, as seen on pages 64 – 66 of this document: http://www.amway.in/Docs/roc_eng.zip

12. And another story, where one LCK tried to sue another, and got slammed for a $5 MILLION judgment against him: http://www.amquix.info/amway_gala_britt.html

13. Amway complained about the Amway Tool Scam issue in the Postma memo and DeVos “Directly Speaking” recordings, then did NOTHING about it, found here: http://www.amquix.info/amway_postma_memo.html and here: http://www.amquix.info/amway_directly_speaking.html

I can probably come up with other examples, but these are more than adequate to prove the FACT the ATS exists.