What is Amway?
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Amway is a business that operates on the basis of pyramid selling. It is described as a multi-level marketing scheme in which there are different levels of sellers. The company originated in Michigan, and sales of its products hit six billion US dollars (USD) in 2005.
Products sold by Amway agents range from jewelry to cosmetics and health care. Amway also has product lines including dietary supplements and home care goods. Amway's sellers are called Independent Business Owners (IBO), and they are a link in a long chain that makes up the company.
Amway works by assigning a Points Value (PV) to each of its products. The PV amount of each product determines how much commission the seller makes from the sale. The PV of a given good is the same regardless of the country it is sold in. The PV can be thought of as a common Amway currency used around the world.
The amount of a product that is sold is known as the Business Volume. This figure is used to determine the value of a product in local currency to the individual country. The commission level for each seller can then be determined and paid monthly.
The multi-level marketing system is very important in Amway's business plan. The company does not market itself as a pyramid scheme, but the multi-platform plan is the same as a pyramid. There are many different levels within Amway. Any person who wishes to join must be sponsored by an existent member. The new member must purchase an introductory pack and pay a yearly fee to stay within the Amway company.
The different levels within the company are known as pin levels. The higher the pin level a person belongs to, the more IBOs he will have working for him. Each pin is named after a precious gem or metal. Among these levels are the Platinum level and the higher Diamond level. A person who has reached the Platinum level should be earning enough money from her sellers or IBOs to have a full time wage. If a person reaches the Diamond level, he will earn a six figure income from the work of his IBOs.
Within Amway, there are levels upon levels. The higher one's level, the higher her income and financial freedom. The higher pin levels distribute the material to be sold to the lower levels and earn large amounts from the sales.
Amway is a huge corporation, and like many corporations, they have been targeted often as a pyramid selling scam. A large amount of Amway's profits come from business tapes, books and compact discs rather than from direct selling. Other controversies surrounding Amway include tax evasion and customs fraud. In 1983, Amway was fined 25 million Canadian dollars (CAD) after being found guilty of both. Amway is also very vocal regarding reports of deception and has tried to shut down Internet sites that have run reports on their practices.
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New: Discuss this ArticlePosted by: anon7727
ibofightback obviously doesn't understand how Amway works.
Yes you don't get a fee for recruiting but that's a technicality. Nearly all active IBO's are constantly recruiting, not to get a fee, but in hopes that their new recruits will move some product and RECRUIT OTHERS! Posted by: anon4320
I had read many articles regarding Ponzi schemes and pyramid schemes long before I encountered "Scamway" and their "interactive distribution" or, as I like to call it, "interruptive distribution." At the first "Scamway" meeting I was invited to I recognized the pyramid scheme and wondered how many idiots there were in the world to not recognize the same. Obviously there are many. I last thwarted an attempt by "Scamway" to bilk my friends and illustrated to them how "Scamway" was a pyramid scheme and they were amazed. They immediately cancelled their follow up meeting with the scammers and saved their hard earned money and, probably, a great deal of grief.
Posted by: ibofightback
A few points -
1. Amway has actually shut down far more sites *in support* of it's business model than against it - basically anything they considered a rule violation. They now admit this was a mistake as it meant all that was left on the internet was "critics" sites.
2. Amway makes virtually NO income from business tapes, books etc, as you claim. Some Amway Independent Business Owners have, on their own, set up independent companies for the purpose of offering these kind of services and materials to Amway IBOs. As you would expect, they do profit from that venture.
3. Amway is in no way a "pyramid scheme". In pyramid schemes you make money through recruiting other people. In Amway you make no money at all through recruiting others. Payments are entirely based on sales volume. Of course, just like if you owned any other business, if you have more sales people then your sales volume is likely to be greater.
Get the Facts - The Truth About Amway and Quixtar
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