David Brown
2 for 1 tickets to Singin' In The Rain, this coming Monday. Book now
The British subsidiary of one of the world’s biggest marketing groups was accused yesterday of breaking company law by “selling a dream” of unachievable wealth.
Amway, which had 39,000 selling agents in Britain during 2005-06, is “inherently objectionable”, operates as a lottery and is trading unlawfully, the Companies Court was told.
Mark Cunningham, QC, on behalf of John Hutton, the Secretary of State for Business, Enterprise and Regulatory Reform, told the court that the Government was seeking to wind up Amway in the public interest following an investigation into its business practices.
The allegations are seriously damaging to the international group, which claims to have a worldwide salesforce of more than three million people and a turnover of $6.4 billion (£3.2 billion).
The Government investigation claims to have revealed that just 10 per cent of Amway’s agents in Britain make any profit, with less than one in ten selling a single item of the group’s products. It claims that Amway’s main activity is encouraging other people to join its salesforce so that they pay the registration fee and buy marketing materials.
Mr Cunningham said that Amway attracted new agents, known as Independent Business Owners (IBOs), by offering “substantial financial rewards or easy money”. He said that promise of wealth was “illusionary” and amounted to “dream selling”.
The group, which has been operating in Britain since 1973, claims that agents can earn a substantial income from selling its range of dietary supplements, cosmetics, jewellery and water purifiers. They are also offered bonuses for recruiting other agents. However, an investigation by the Department for Business, Enterprise and Regulatory Reform showed that only 6 per cent of agents bought Amway products to sell on, the court was told.
Mr Cunningham said that the vast majority of products offered by Amway to its agents were overpriced even before they were expected to add a further 20 to 25 per cent for retail. “The unattractive pricing explains some the graver vices that are at the centre of the winding-up application,” Mr Cunningham said.
Agents were encouraged to buy instructions on how to grow their businesses by attracting new agents. The material contained images of success such as luxury cars, boats and foreign holidays.
Mr Cunningham told the court: “The prospect of substantial rewards and easy money has been at all times, and remains, illusionary.”
The investigation discovered that 71 per cent of agents made no income from Amway in the year 2005-06 and that 90 per cent had made a loss after paying the £18 fee to renew their registration. In fact, just 101 of the agents shared 75 per cent of the bonuses.
“The reality of being an IBO is that a substantial majority make minimal financial returns,” Mr Cunningham said. “Our case is founded on the selling of the dream on one hand and the loss or minimal financial return on the other.”
Mr Cunningham told the court that Amway operates a “pernicious” scheme, which encourages agents to recruit family, friends and colleagues to the group so that they themselves could move up to “that very narrow group that makes any money”.
He said that the Amway scheme involved targeting the “gullible”, “deluded” and “vulnerable” to join the scheme and accused the group of “dream selling.”
“Amway presents itself to be life changing and life enhancing – if you choose to participate,” Mr Cunningham told the court. “The millions of aspirational achievers, the idea that this is a success in global terms – we will show otherwise.”
One marketing presentation authorised by Amway offered the opportunity for a “small secondary income or an income which would rank in the top 2 per cent of money earners.” It added that such money “is being achieved in the same time it takes to study for a degree”.
However, Amway’s own records showed that only Trevor and Jackie Lowe, and Jerry and Mandy Scriven among its agents earned more than the £78,000 required to place them in the top 2 per cent of earners, the court was told. The records showed that it takes at least 14 years to make it into the top 20. The top 12 new joiners since 2001 earned an average of just £164 a week, said Mr Cunningham. The “snapshot” of Amway’s records showed that of the 25,000 agents operating at that time, just 37 made more than £25,000 a year.
Amway has claimed that it has substantially changed it business model since the department lodged its petition to wind up the company in April. Richard De Vos, who founded the group in the United States in 1959, has an estimated personal fortune of $3.6billion.
Countdown
39,000
agents working for Amway
27,000
(71%) had no income
11,410
(30%) earned something
7,492
(of the 11,410) received average of £13.53 per year
101
agents received 75 per cent of bonuses
£116K
paid to top earner Trevor Lowe
26
number of years Mr Lowe was an agent
Source: Evidence at companies court hearing
Enjoy screenings of all the classic films you love, plus take advantage of two-for-one tickets
Have you ever dreamed of owning your own racehorse or a beautiful painting?
Enjoy comfort, safety, space and great design. Plus enter our great competition
Times Online's new TV show helps you make the right decisions for your pet
Are you California dreaming? Explore the wonders of the Golden State. Also enter our fantastic competition
Do you have what it takes to be a Times photographer?
Your brain is capable of more than you might think...
Find out to make the most of your money with our wealth management guides
Need help with your property? We have an entire how to guide - buying, selling, letting, moving, to help you
We are seeking entries for the inaugural Sunday Times Best Green Companies Awards
Enjoy some wonderful inspiring wildlife moments
An interactive preview of the brand new For Your Eyes Only exhibition

Love Sudoku? Play our brand new interactive game: with added functionality and daily prizes

Are you irritable when you return from work? Drained of emotion? You could be suffering from boreout
Prepare for some shock and awe, petrol lovers. Despite the greens trying to wipe it out, the car is about to offer us the most exciting year ever
We've trawled the brochures and websites to find this summer’s best holidays for every taste and budget

Find a course, arrange a game and save money
2007/07
£57,500
South East England
2007/07
£40,995
South East England
2006/06
£41,995
South East England
Great car insurance deals online
Speaking as a housewife having bought See Spray and Shoe Spray many years ago I have yet to find a product on any supermarket shelf that is better. There are also many other products too numerable to mention that are unsurpassed.
Ruth Gill, Bathgate, Scotland
To paraphrase Mr Winston Churchill, "Never in the field of human endevour have so many people who knew so little about Sales & Marketing tried to teach so many other people who knew so little about Sales & Marketing how to build a business which relied so much on Sales & Marketing"
Perhaps I may be in a minority of one here but I happen to agree with both sides of the debate here. I have been in MLM for 7 years, and quite frankly, I think it stinks. Why do I stay in MLM? Because I accept the fact that MLM as a business model, as of itself, is as ethical as many other types of business. The problem lies with the MLM companies and the distributors who carry on in a fashion that has brought Amway to the situation it now finds itself in and given MLM the reputation it now has.
The tragedy is that it does not have to be like this. Visit this web site and read the article/report. It is FREE and you have my permission to share the report with who ever you wish.
www.timbersmoke.com
Phillip Davies, Loughborough, UK
As a direct result of the BERR investigation, 'Amway UK' has announced price cuts on a range of its 'exclusive good value products' in order to bring them into line with comparable products available in traditional retail outlets. The average reduction was approximately 350%. I'll repeat that so readers won't think it's a mistake. 350%.
The person who signs himself 'David from London' would have us believe that he was 'smart' signing up with 'Amway' to buy products he could get for 5 times less in his local supermarket.
The thought-stopping phrase, 'anti-Amway obsessive', is a ritualistic term coined by the instigators of 'Amway' in order to denigrate and dehumanize all free-thinking individuals challenging the authenticity of the 'Amway' myth.
'The most powerful weapon in the hands of the oppressor is the mind of the oppressed'. The quantifiable evidence demonstrates that 'David from London' is denying reality in defence of his ego. His personal comments are libellous.
David Brear, Paris, France
In recent recent years, the most courageous American critic of the 'Amway' myth has been Eric Scheibeler (a former federal auditor).
Eric spent 10 years as a core-adherent of 'Amway', rising to a level where he had 2000 recruits beneath him in the pyramid. When Eric finally confronted external reality, he had lost $100 000 and passed at least $4 millions to his leaders'. The majority of this money came from the sale of books, tapes, tickets to meetings, etc. on the pretext that 'these contained the secrets of success'. Yet Eric was steadfastly portrayed by 'Amway' propaganda as a being 'prosperous, happy and free'. He now accepts that he was a de facto slave who eventually contemplated suicide when he realized he'd been exploited.
Eric's story is contained a book, 'Merchants of Deception'. This can be down-lowded for free from the Net.
Like myself, Eric has been systematically denigrated and dehumanized for daring to challenge the authenticity of the 'Amway myth.
David Brear, Paris,
David Brear - do you think it's smart to pay a few bucks a year to get products you like cheaper, or smart to pay more when you don't have to? Many folk, like myself, have been Amway "distributors" for years with no effort put in to building the business. We haven't expected to make a profit, we haven't been ripped off. We ordered some products, got what we ordered. We've even let our "distributorships" lapse when we moved around, and then renewed them again another time.
Yet here you are claiming we've been ripped off and scammed and that the fact we didn't earn any money is somehow an indictment of Amway??? riiighhhtt.....
PS For those who don't know, David Brear is an anti-Amway obsessive who got upset when his brother, who was working with Amway, stopped speaking to him after his constant criticism of Amway.
David, London,
It is important to understand that the figures reported in the recent 'Amway' case are gross-income, not net-adjusted income (i.e. after the deduction of operating expenses).
When the 'Amway' myth was investigated in Wisconsin back in the 1980s, Assistant State Attorney (Consumer Division), Bruce Craig, examined the tax returns of around 20 000 so-called 'Distributors'. The shocking figures were essentially the same as those uncovered in the UK recently. i.e. Only a small minority of so-called 'Distributors' were receiving a payment and virtually no products were being retailed. However, after the so-called 'Distributors' operating expenses were taken into account, it was discovered that even the top 2% of the 'Amway' pyramid in Wisconsin were actually each making an average annual net-adjusted loss of around $900.
'Amway' was taken to court in Wisconsin and heavily fined for offering unobtainable rewards. The organization promised that 'everything had been changed'.
David Brear, Paris, France
According to the organization's own claimed annual 'Distributor' figures, around 1 million contracts have been signed with 'Amway UK' since 1973.
Amazingly, not one single original contractee remained by December 2007. The last pair were 'terminated' before the winding-up petition was heard.
At the time of the court case, 'Amway UK' was claiming less than 10 000 'Distributors'. This means that around 1 million 'Amway Distributorships' have vanished in the UK alone during 34 years.
On a global scale, the number of 'Amway Distributorships' that have vanished since 1959, runs into the tens of millions.
The overwhelming majority of 'Amway' contractees have not renewed their contracts because they were the victims of a premeditated closed-market swindle without external retail sales and, therefore, no possibilty contributing participants receiving a profit. . Only a deluded minority of 'Distributors' (with independent funds) have remained in 'Amway' for extended periods.
david brear, Paris, france
Its amazing how many people speak badly about Amway after looking at it for 5 minutes and then giving an uneducated opinion as fact. If these people didnt do this, we wouldnt have this problem and the distributors would be making more money. Although the changes made as a result will benifit the business. The prices needed to be more competitive for the UK market. I dont know whats happening in India, but in the UK its now free to join and a starter sample pack costs less than a days pay and its products you would use in the home every day andyway. At leased it will when this case is over. This has become a better business.
Gwyn Ingman, Wrexham, North Wales
I totally agree with the contention that most of the people that make a loss at Amway, were not working or not good anyways. But let me talk about India here, as I am familiar with that, here Amway organizes seminars in swanky hotels where all the members and would be members are invited. These events feature, the creme of Amway, members who are earning heavy commission and they will make it all seem so very easy...fooling people into believing that it is all a piece of cake.
The problem is many seem to fall for it. In fact, I have lost many friends to Amway, poor guys, once they joined the firm and sold to the idea of quick money, they would try and sell the membership to anyone they can, bothering little about anything else. ..Imagine a country where the average per capita income is some $300, a person spending some $150 for dealership and products that he really does not need.
This is the tryanny...and the case other places as well....
Shashwat, Mumbai, India
Well I have also been approached but I did not have enough time so I did not join. But I have closely attended AMWAY associations and build friendship with some of the people.
Why people can not understand this model ? It is so simple.... it is a portal that gives access to about 1/2 million products and services in US and when ever you sell or you create an organisation of people whom you invest time in to grow them and teach the same..... you get paid..... the person who is able to train more people to create product flow earns more..... but if someone joins AMWAY and does not have a time to do even a SQUAT like me ... should not earn anything because it is not a get rich quick scheme.
Hope it helps people. All the people who says negative probably have never build a successful business .... which is fine.... but isn't the model so simple...... To pass an exam in a school dont we buy books.. even if we do not know that we will pass so why question this start up material... !!!
Ridhima, Texas, USA
If you think that what is happening in Europe and India is "not true" just take a look at what is happening right in the USA. I just the past 4 months more than 100,000 American and Canadian "distributors" (also known as IBO's) have QUIT or resigned. Why? For one reason, the absolute minute that the group known as the IBOA board, (which was supposedly instilled to maintain corporate integrity inline with the profitability of the business and it's products for the IBO"S)the absolute minute that the IBOA board dared to object to the practices of the company, the company essentially disbanded that board, dissenfranchised each and every one who opposed the "company point of view" , then almost immediately created a "replacement" board of people who were hand-picked by the company as their own patsies, because they would never dare oppose anything the company wants, regardless of what financial effect it had on the IBO's
CJR, Goffstown, NH, USA
James, New York - I was quoting BERRs own figures, I wasn't "guessing" anything. Frankly I also don't believe your "saw them do it claim" - what did you follow 20,000 people around for the several years it takes to build a successful Amway business?
Sashwat, Mumbai - show me *anywhere* that Amway has *ever* promised "quick" or "easy" money.
David, London,
So long as there are suckers, Amway will flourish. People around the world want to make "quick money". Amway is just using fending that inherent wish in all of us. The sad part is we as a race are getting greedier and greedier with each passing days, there seems to be no ends to our wishes.
Amway poses as a solution, promises us easy and quick money and people all over the world fall for it. I am happy that Amway is being folded up in UK, but shortly there will be another. Amway is not really the disease it is merely a symptom, of our falling value system.
I feel bad for the thousands and thousands of people in hinterlands of India that are falling for the fantasy that Amway is selling. In fact, I have been approached by different agents at least 15 times till now and have vehemently refused to be a part of this con all scheme.
I just hope that governments all across, especially in the developing countries make a note of this and take action before it is too late.
Shashwat D.C., Mumbai, India
My view is that this whole investigation backed by the credibility of the sources in question is objectionable at best.
There is a hidden personal agenda here and critics are always quick to exploit it and even go to such lengths to show themselves as self righteous in the end.
I won't bother with what they say, makes no difference to me, I just watch and laugh. As to building the business, I will keep on doing so regardless.
What BERR and the critics amazingly fail to acknowledge is that this business is an OPPORTUNITY AND NOT A GUARANTEE OF ANY SORTS.
If BERR chooses to blindfully trust and use the critics' stories as evidence to build their case against Amway, I'm sorry to say but not only is BERR in grave error but also in shaken credibility and respect towards every citizen in the United Kingdom.
Cris, Toronto, Canada
During 2005-2006 39.000 selling agents and now only 12.000? Is this real?
matjaz, Ljubljana,
Hopefully the regulators in the USA follow the UK and get rid of Quixtar/Amway and their high prices. I tried for a number of years to retail and the prices were way way to high. Please FTC look into the USA Amway/Quixtar
cody, valley center, ks
Spelling is a "dying / dieing / deading" art along with the Amway distributor!!!! Old has been Direct - lost a fortune.
Old Has Been Direct, Belfast, N.Ireland
I was in Quixtar or what is Amway in the UK. I made some profit from selling the products. But you are correct, it is a total rip-off and scam. The products are so-so. And yes, working, not just being registered, but actually WORKING the "business" for 50 hours a week for a straight 3 years and I was in debt for $12,000. The stats are about the same here in the US.
Oh and David from London, you can't just lump 30,000 people into one category and think that you know for sure that they don't do the work. I know, FOR A FACT, that about 20,000 out of 25,000 people in my upline Diamond's organization worked their tails off because I SAW THEM DO IT! Why would a federal service have any personal gain to lie about Amway? Honestly, some of the stuff they teach is borderline to being a cult.
James Patterson, Brooklyn, New York
I've been involved with a Network Marketing company (not Amway) for over a year now, my background is engineering and IT and I was sceptical. However, I have found this business model to be very ethical, and extremely rewarding in many ways if done correctly - which our company does do. The biggest missleading factor is the number of people who join up and then do nothing. These people however still show up in statistics as numbers of people involved, and consequently seem to indicate that vast numbers of people earn nothing when they come into this business. However, they do nothing - so therefore they shouldn't earn anything! Those who do work hard, do actually earn money, and DO live the dream. If you check it out properly, you will not find a more ethical and caring business model in the world.
Gerard Nath, Stratford upon Avon, Warwickshire
I joined Amway in about 1991 - stayed with them for about 2 or 3 years and it did cost me money. Money for expensive products, money for motivational books and tapes etc.
Interestingly, these books did enable me to realise that there is a better way to earn an income than being on some-one elses payroll and I have been self-employed and working within the Network Marketing industry for many years since.
I have made money from all these other businesses including Kleeneze, Euphony and now Virtual World Direct.
Compulsory purchase of books and tapes should never have been allowed - this is where the money is made by top distributors within Amways various networks.
It was a mixed experience for me - if someone was to tell me they wanted to generate a second income now, I would advise then NOT to get involved with Amway or it's affiliated programmes but to join aother and to make sure they SEE proof of earnings before they join anything.
Kay Morrice, Newcastle upon Tyne, England
Amway is Pyramid Selling. The promoters are also dishonest & use elements of persuasion that remind one of Scientology.
How they got away with it for so long is a serious indictment of the effectiveness of the Serious fraud Office & the Labour Government, which has pledged itself to look after the needs of the underdog.
MYLES STANISTREET, NERAC, FRANCE 47
I think alot of people in the statistics didnt make any money because they didnt do the work. Many would give up after a few week at the first hurdle. I only joined initialy to access the exelent products I also supplied a few people who also liked them. The price reductiuon makes them very competitive. They where before if you use them properly. With the new business model I am making a profit. I am happy for freinds in this business to benifit from my buiseness volume if they help create that volume. Its better than supporting supermarkets who screw down the price of goods from suppliers so they are making a loss for there full time business. Welsh farmers are realy struggling now. The Amway corperation does alot of good charity work and supports its suppliers.
If it wasent for the sceptics the MLM industry would nock the supermarkets off there hi perch. Its a good business now with lower prices. People just need to be responcible and realistic with it.
Gwyn Ingman, Wrexham, North Wales
"A fool and his money are soon parted"
William Smith, Cape Town,
Every sales team in the world is motivated by the lure of bonusses and other incentives. The higher up the sales ladder you climb in any multinational the bigger the rewards. AMWAY is a tiny company in the UK. I am not surprised that the top earner only earned £116K!
Algenon, Dundee, Scotland
If you see the "pure" AMWAY story unaduleterated by the unscrupulous and objectionable Business Support Materials organisations they have great products and, for those who want to, an interesting business model.
AMWAY UK should be strongly ticked off for not following its own rules.
Now that the products are competitively priced people should look again.
Algenon, Poole, Scotland
Are they going to ban the National Lottery too? If there was ever a business selling unobtainable dreams, thats it. I did Amway, never made a penny. Did me no harm though.
Gary, Manila,
Amway, is a total scam, tanatmount to a pyramid scheme. Was asked to join but it was obvious after less than 5 minutes this was a complete no hoper.
Gareth, Swanage, UK
O, o, o, what a surprise. See this page by Dave Touretzky, that gives an in-depth overview of Amway, in his words "Amway/Quixtar is a multi-level marketing scam with interesting cult-like aspects."
http://www.cs.cmu.edu/~dst/Amway/index.html
Robert, Oostende, Belgium
Hangon ... BERR claims only 6% bought stuff to "sell on" - yet 30% earned something and 10% made a profit? Anyone familiar with the Amway model knows that if you like the products then you're way better off registering as an agent so you can get them cheaper. There is absolutely no way 30,000 agents were **working** - they were just registered. Big difference!
It would appear then that while no more than 6% of folk were treating the business as a business, 10% were making a profit! Seems a good deal to me ....
David, London,
Sounds like the tool scam has seen it's last days in the UK, thankfully.
Tex, USA, USA