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===Religion===
===Religion===
Several sources have commented on the promotion of [[Christian conservative]] ideology within Amway organizations.<ref name=zibrowski/><ref name= butterfield>{{cite web| title = Amway: The Cult of Free Enterprise | author = Stephen Butterfield| publisher = [[South End Press]]| date = 1985 | url = X| accessdate = 2011-05-11}}</ref><ref name= henein>{{cite web| title = The Revenge of the Amdroids | author = Maryam Henein | publisher = [[Philadelphia City Paper]]| date = November 28–December 5, 1997 | url = http://archives.citypaper.net/articles/112896/article009.shtml | accessdate = 2011-05-11}}</ref><ref name= >{{cite web| title = Do You know these godfathers? You should. | author = Zina Klapper | publisher = [[Mother Jones]]| date = Feb-Mar 1981 | url = X| accessdate = 2011-05-11}}</ref> [[Mother Jones]] magazine described the Amway distributor force as "heavily influenced by the company's dual themes of Christian morality and free enterprise" and operating "like a private political army."<ref name=zibrowski/> In The Cult of Free Enterprise, author Stephen Butterfield wrote “[Amway] sells a marketing and motivational system, a cause, a way of life, in a fervid emotional atmosphere of rallies and political religious revivalism.”<ref name=butterfield/> [[Philadelphia City Paper]] correspondent Maryam Henein stated that “The language used in motivational tools for Amway frequently echoes or directly quotes the Bible, with the unstated assumption of a shared Christian perspective.”<ref name=henein/> Dexter Yager, interviewed on 60 minutes in 1982, admitted that he promotes Christianity through his Amway group, but stated that this was not the case in other Amway groups.<ref name="60 minutes">{{cite episode|title=Soap and Hope|series=[[60 Minutes]]|Credits=Presenter:[[Mike Wallace (journalist)|Mike Wallace]]|network=[[CBS]]Year=1982}}</ref>
Several sources have commented on the promotion of [[Christian conservative]] ideology within Amway organizations.<ref name=zibrowski/><ref name= butterfield>{{cite web| title = Amway: The Cult of Free Enterprise | author = Stephen Butterfield| publisher = [[South End Press]]| date = 1985 | url = X| accessdate = 2011-05-11}}</ref><ref name= henein>{{cite web| title = The Revenge of the Amdroids | author = Maryam Henein | publisher = [[Philadelphia City Paper]]| date = November 28–December 5, 1997 | url = http://archives.citypaper.net/articles/112896/article009.shtml | accessdate = 2011-05-11}}</ref><ref name= >{{cite web| title = Do You know these godfathers? You should. | author = Zina Klapper | publisher = [[Mother Jones]]| date = Feb-Mar 1981 | url = X| accessdate = 2011-05-11}}</ref> [[Mother Jones]] magazine described the Amway distributor force as "heavily influenced by the company's dual themes of Christian morality and free enterprise" and operating "like a private political army."<ref name=zibrowski/> In The Cult of Free Enterprise, author Stephen Butterfield book about his experiences in the Yager group within Amway, wrote “[Amway] sells a marketing and motivational system, a cause, a way of life, in a fervid emotional atmosphere of rallies and political religious revivalism.”<ref name=butterfield/> [[Philadelphia City Paper]] correspondent Maryam Henein stated that “The language used in motivational tools for Amway frequently echoes or directly quotes the Bible, with the unstated assumption of a shared Christian perspective.”<ref name=henein/> The motivational tools are produced by some top distributors independent of Amway.<ref name=henein/> Dexter Yager, interviewed on 60 minutes in 1982, admitted that he promotes Christianity through his Amway group, but stated that this was not the case in other Amway groups.<ref name="60 minutes">{{cite episode|title=Soap and Hope|series=[[60 Minutes]]|Credits=Presenter:[[Mike Wallace (journalist)|Mike Wallace]]|network=[[CBS]]Year=1982}}</ref> In his book, Butterfield states that he did not become aware that the tapes he was purchasing from Yager were not Amway Corporation tapes until months after he left the business and notes it's questionable how much Amway can be held culpable for "the cultist hoopla of the Yager rallies".<ref name=butterfield/>


Businessweek correspondents Bill Vlasic and Beth Regan characterized the founding families of Amway as “fervently conservative, fervently Christian, and hugely influential in the Republican Party”, noting that at the beginning of Amway “Rich DeVos charged up the troops with a message of Christian beliefs and rock-ribbed conservatism.” <ref name=vlasic/>
Businessweek correspondents Bill Vlasic and Beth Regan characterized the founding families of Amway as “fervently conservative, fervently Christian, and hugely influential in the Republican Party”, noting that at the beginning of Amway “Rich DeVos charged up the troops with a message of Christian beliefs and rock-ribbed conservatism.” <ref name=vlasic/>

Revision as of 21:45, 16 May 2011

Amway
Company typePrivate
IndustryDirect selling
Founded1959
FounderRich DeVos
Jay Van Andel
HeadquartersAda, Michigan, United States
Area served
Worldwide
Key people
Steve Van Andel (Chairman)
Doug DeVos (President)
Al Koop (Chief Operating Officer)
Russ Evans (Executive Vice President and Chief Financial Officer)
RevenueUSD 9.2 billion (2010)[1]
Number of employees
13,000[2]
ParentAlticor
WebsiteAmway.com
Headquarters in Ada, Michigan

Amway is a direct selling company and manufacturer that uses network marketing to sell a variety of products, primarily in the health, beauty, and home care markets.[3][4][5] Amway was founded in 1959 by Jay Van Andel and Richard DeVos. Based in Ada, Michigan, the company and family of companies under Alticor reported sales growth of 9.5%, reaching US$9.2 billion for the year ending December 31, 2010.[1] Its product lines include home care products, personal care products, jewelry, electronics, Nutrilite dietary supplements, water purifiers, air purifiers, insurance and cosmetics. In 2004, Health & Beauty products accounted for nearly 60% of worldwide sales.[6] Amway conducts business through a number of affiliated companies in more than hundred countries and territories around the world.[7] It is ranked by Forbes as one of the largest private companies in the United States[8] and by Deloitte as one of the largest retailers in the world.[9] Amway has been the subject of controversy and has been the subject of several court cases in the United States, Canada, and elsewhere.

History

Founding

Amway Japan Head Office.
Amway Vietnam (Hồ Chí Minh since 2008).

Jay Van Andel and Richard DeVos, friends since school days, had been business partners in various endeavors including a hamburger stand, air charter service, and a sailing business. In 1949 they were introduced by Neil Maaskant (Van Andel's second cousin) to the Nutrilite Products Corporation. Nutrilite was a California-based direct sales company founded by Dr. Carl Rhenborg, developer of the first multivitamin marketed in the United States. In August 1949, after a night-long talk, DeVos and Van Andel signed up to become distributors for Nutrilite food supplements.[10][page needed] They sold their first box the next day for $19.50, but lost interest for the next two weeks. Shortly thereafter, at the urging of Maaskant, who had become their sponsor, they traveled to Chicago to attend a Nutrilite seminar. The meeting was at a downtown hotel, with over a hundred people in attendance. After seeing promotional filmstrips and listening to talks by company representatives and successful distributors, they decided to pursue the Nutrilite business opportunity with enthusiasm. They sold their second box of supplements on their return trip to Michigan, and rapidly proceeded to develop their new business further.[10][page needed]

In 1949, DeVos and Van Andel had formed Ja-Ri Corporation (abbreviated from their respective first names) for importing wooden goods from South American countries; after their trip to the Nutrilite seminar, they dropped[clarification needed] this business and Ja-Ri became their Nutrilite distributorship.[11] In addition to profits on each product sold, Nutrilite also offered commission on the sales of products by new distributors introduced to the company by existing distributors—a system today known as multi-level marketing or network marketing. By 1958, DeVos and Van Andel had built an organization of over 5,000 distributors. However, following concerns about the stability of Nutrilite, in April 1959 they and some of their top distributors formed The American Way Association to represent the distributors and look for additional products to market.[12]

Their first product was called Frisk, a concentrated organic cleaner developed by a scientist in Ohio. DeVos and Van Andel bought the rights to manufacture and distribute Frisk, and later changed the name to LOC (Liquid Organic Concentrate).[13] They subsequently formed Amway Sales Corporation to procure and inventory products and to handle the sales and marketing plan, and Amway Services Corporation to handle insurance and other benefits for distributors (Amway being an abbreviation of American Way).[14] In 1960 they purchased a 50% share in Atco Manufacturing Company in Detroit, the original manufacturers of LOC, and changed its name to Amway Manufacturing Corporation.[15] In 1964 the Amway Sales Corporation, Amway Services Corporation, and Amway Manufacturing Corporation merged to form a single entity, Amway Corporation[16] Amway bought control of Nutrilite in 1972 and full ownership in 1994.[17]

International expansion

Amway expanded overseas to Australia in 1971, to Europe in 1973, to parts of Asia in 1974, to Japan in 1979, to Latin America in 1985, to China in 1995, to Africa in 1997, to India and Scandinavia in 1998, to Russia in 2005, and to Vietnam in 2008.

Quixtar

In 1999 the founders of the Amway corporation established a new holding company, named Alticor, and launched three new companies: a sister (and separate) Internet-focused company named Quixtar, Access Business Group, and Pyxis Innovations. Pyxis, later replaced by Fulton Innovation, pursued research and development and Access Business Group handled manufacturing and logistics, for Amway, Quixtar, and third party clients.[18]

After virtually all Amway distributors in North America switched to Quixtar, Alticor elected to close Amway North America after 2001. The main difference was that all distributors, now called Independent Business Owners (IBO) could order directly from Amway on the internet, rather than from their upline "direct distributor", and have products shipped directly to their home. The Amway name continued being used in the rest of the world, and the home of the Orlando Magic was named the Amway Arena in 2005. The Orlando Magic is owned by Amway founder Richard DeVos.[19] In 2006, Quixtar published The Quixtar Independent Business Owner Compensation Plan, in which the company reported that the average monthly gross income for "Active" IBOs was $115.[20] In June 2007 it was announced that the Quixtar brand would be phased out over an 18 to 24 month period in favor of a unified Amway brand worldwide. That name is Amway Global.[citation needed]

Global markets

In 2008 two thirds of Amway's 58 markets reported sales increases, including strong growth in the China, Russia and India markets.[21] Amway India sales grew 40% to 1128 crore (US$230million).[22]

Amway China

Amway grew quickly in China from its market launch in 1995. In 1998, after abuses of illegal pyramid schemes led to riots, the Chinese Government enacted a ban on all direct selling companies, including Amway.[23] After negotiations, some companies like Amway, Avon, and Mary Kay continued to operate through a network of retail stores promoted by an independent sales force.[24] China introduced new direct selling laws in December 2005, and in December 2006 Amway was one of the first companies to receive a license to resume direct sales. At the time they had a reported 180,000 sales representatives, 140 stores, and $2 billion in annual sales.[25] In 2007 Amway Greater China and South-east Asia Chief Executive Eva Cheng was ranked #88 by Forbes magazine in its list of the World's Most Powerful Women.[26] In 2008 Amway Greater China was Amway's largest market, reporting 28% growth and sales of ¥17 billion (US$2.5billion).[27]

Brands

Amway's product line grew from LOC, with the laundry detergent SA8 added in 1960, and later the hair care product Satinique (1965) and the cosmetics line Artistry (1968). Today Amway manufactures over 450 products, with manufacturing facilities in China, India & the US , as well as Nutrilite organic farms in Brazil, Mexico and The United States (California & Washington State). In addition, Amway affiliates market products from hundreds of other manufacturers offering everything from books (e.g. Barnes & Noble, North America) to wine (World of Wine, Europe).[28]

Household cleaners

Amway is best known in North America for its original multi-purpose cleaning product LOC, SA8 laundry detergent, and Dish Drops dishwashing liquid. In the January 2007 issue of Consumer Reports, SA8 with Bioquest was rated the best-performing laundry detergent, scoring 99 out of a possible 100 points.[29] Consumer Reports did, however, criticise SA8's pricing, a situation which was disputed by Amway.[30] In 2008, Amway's cleaning products were named "Favourite of Experts" by an independent consumer survey in Ukraine.[31]

Health and beauty

The majority of Amway's sales today come from the Health & Beauty sector and in North America the Amway Global/Quixtar website is ranked the #1 Health & Beauty website by Internet Retailer.[32] In South Korea Amway is ranked one of the top two companies in toiletries and cosmetics.[citation needed] Amway's health & beauty brands include Artistry, Beautycycle, Time Defiance, Artistry Essentials, Pure White, Satinique, Tolsom, Body Series, Glister, Moiskin (South America),[33] Nutrilite, Nutriway (Scandinavia and Australia/New Zealand), eSpring, Atmosphere and iCook as well as XL and XS Energy drinks.

Artistry

Main article: Artistry (cosmetics)

Amway's Artistry products include skin care, cosmetics, and anti-aging creams and serums. Euromonitor International, an independent researcher and publisher of market reports, business reference books and online information databases, ranks Artistry as one of the world's top 5 best selling brands in the prestige brand category, alongside Clinique, Estee Lauder, Lancome, and Shiseido.[34][35] Artistry is the only direct sales brand classifed in the "prestige" category.[34][36]

Amway is the 5th largest manufacturer of skincare and cosmetics products in the world, holding over 200 patented and patent-pending ingredients and technology.

Amway is ranked number 1 in the on-line health and beauty market in North America from 2004-2010. Artistry sponsored the 2010 Miss America contest, and they are planning to do the same for 2011. The current Miss America is an official spokeswoman for Artistry.

Nutrilite

Main article: Nutrilite

Amway's Largest selling brand is the Nutrilite range of health supplements (marketed as Nutriway in some countries), and in 2008 Nutrilite sales exceeded US$3billion globally[37] Nutrilite products incorporate organically grown whole-plant concentrates. Euromonitor has for several years ranked Nutrilite the world's best-selling nutritional brand in tablet or capsule form.[38] In 2001, five Nutrilite products were the first dietary supplements to be certified by NSF International.[39] Surveys by independent group Consumerlab.com since 2002 have rated Nutrilite as having the highest customer satisfaction rating (96% in 2006) in the direct selling/MLM brand category.[40][41] In 2006, 2007, 2008, and 2009 in the nutrient and health food category, Nutrilite won "Platinum" and "Gold" awards in Malaysia, China, Taiwan, Thailand, and Asia overall in the Reader's Digest "Trusted Brands of Asia" survey.[42] In 2008 Nutrilite scientists, in partnership with Alticor subsidiary Interleukin Genetics won the 12th John M. Kinney Award for Nutrition and Metabolism for their research into the interaction between nutrition and genetics.[43]

eSpring

Amway's "eSpring" water filter, introduced in 2000, was the first home water treatment system to incorporate a carbon block filter and ultraviolet disinfection unit, becoming the first home system to achieve certification for ANSI/NSF Standards 42, 53 and 55.[44] The unit was also the first commercial product to include sister company Fulton Innovations' eCoupled wireless power induction technology. Fulton Innovation introduced the technology in other consumer electronic products at the 2007 International Consumer Electronics Show. Companies licensing this technology include General Motors, Motorola and Visteon.[45][46] In 2006 eSpring was named Product of the Year by the Poland-based non-profit World Foundation of Health, Heart and Mind.[47] eSpring has won numerous Gold and Platinum awards in the Reader's Digest Most Trusted Brand Asia surveys.[48]

Atmosphere

In 2008 Amway's HEPA air filtration system became the first air cleaner certified Asthma and Allergy Friendly by the Asthma and Allergy Foundation of America.[49]

Ditto Delivery

Amway owns a patent on the online shopping method of Ditto Delivery, which allows consumers to specify an automatic monthly delivery of each product.[50] In May 2001, Ditto Delivery accounted for 30% of Quixtar's North American sales.[28]

Business model

Amway combines direct selling with a network marketing strategy. IBOs may market products directly to potential customers and may also recruit (sponsor) and train other people to become IBOs themselves. Each IBO may earn income both from the retail markup on any products they sell personally, plus a performance bonus based on the sales volume they and their downline (IBOs they have sponsored) have generated.[3] People may also register as IBOs to buy products at discounted prices.[51]

Definitions

  • IBO/ABO/AIE  — Independent Business Owner/Amway Business Owner/Amway Independent Entrepreneur is a business partner of Amway who is authorized to market and distribute products and services available from Amway. Different names are used in different markets.
  • Distributor - an older term for IBO
  • PV — Point Value is a value assigned to each product or service sold by Amway. An IBOs monthly performance bonus bracket depends on total PV in a month.
  • BV — Business Volume is typically the wholesale cost of the product or service sold by Amway. Performance bonuses are multiplied by the groups total BV.
  • Performance bonus is the monthly bonus paid by Amway to IBO's. The higher the PV, the greater the percentage earned. In North America the Performance bonus ranges from 3% to 25%. In other markets it ranges from 3% to 21%. In India it ranges from 6%-21%.
  • Retail Profit is the markup earned by an IBO when they sell a product to a consumer, either personally or through an Amway website. Recommended retail markup ranges from 20%-35%.
  • Sponsor is an IBO who refers (sponsors) a new IBO to Amway, although IBO's do not get paid to sponsor.
  • Upline is the term used to refer all the IBOs up in the line of sponsorship of an IBO.
  • Downline is the term used to refer all the IBOs down in the line of sponsorship of an IBO. They are collectively also known as group
  • Leg refers to a personally sponsored IBO and all of their downline.
  • Silver Producer is an IBO who has reached the maximum bonus level for one month.
  • Gold Producer is an IBO who has reached the maximum bonus level for three months.
  • Platinum or Direct is an IBO who has reached the maximum bonus level for six months.In North America a Platinum is generating a minimum of approximately $30,000 in sales volume per month.
  • Emerald a distributor with at least three legs generating Silver Producer volume for at least 6 months of a year.
  • Diamond a distributor with at least six legs generating Silver Producer volume for at least 6 months of a year.
  • Q-12 is a Platinum or higher IBO that qualifies every month for 12 months of a year.

Commercial Sponsorships

Orlando Arena naming rights

In December 2006, Alticor secured the naming rights for the 17,000-seat basketball arena in Orlando, Florida – home of the Orlando Magic, which are owned by the family of Rich DeVos. The arena, formerly known as the TD Waterhouse Centre, is now called Amway Arena. It is scheduled for demolition in late 2011, following the 2010 opening of its successor, Amway Center.[citation needed]

San Jose Earthquakes

Prior to the 2009 Major League Soccer season, Amway Global signed a three-year deal with the San Jose Earthquakes to become the team's official jersey sponsor.

A major part of the partnership is focused on community initiatives in the Bay Area. As a result, Amway Global is now also the official sponsor of the team's Kicks for Kids program that focuses on fitness and healthy lifestyles, as well as bringing underprivileged children to Earthquakes games.

The partnership also saw the creation of the Amway Global Street Team, which appears at all Earthquakes home games and at a number of soccer and non-soccer events throughout the Bay Area. The members of the Amway Global Street Team give away Earthquakes-branded merchandise and provide soccer skills demonstrations at each event.[52]

Los Angeles Sol

In March 2009, Amway Global signed a multi-year deal to become the official presenting partner of the Los Angeles Sol of Women's Professional Soccer.[53] The deal, however, would last only one year, as the Sol folded after the 2009 season.

Politics and culture

Political Causes

In the 1990s, the Amway organization was a major contributor to the Republican Party (GOP) and to the election campaigns of various GOP candidates. Amway and its sales force contributed a substantial amount (up to half) of the total funds ($669,525) for the 1994 political campaign of Republican congresswoman and Amway distributor Sue Myrick (N.C.).[54] According to two reports by Mother Jones magazine, Amway distributor Dexter Yager “used the company’s extensive voice-mail system to rally hundreds of Amway distributors into giving a total of $295,871” to Myrick’s campaign. Amway pointed out that the voice-mail system is a product offered by Amway and rented by distributors like Yager, with which they are free to do as they wish.[55][54] According to a campaign staffer quoted by the magazine, Myrick had appeared regularly on the Amway circuit, speaking at hundreds of rallies and selling $5 and $10 audiotapes. [54] Following the 1994 election, Myrick maintained “close ties to Amway and Yager”, and raised $100,000 from Amway sources, “most notably through fundraisers at the homes of big distributors”, in the 1997-98 election cycle.[55]

In October 1994, Amway gave the biggest corporate contribution recorded to that date to a political party for a single election--$2.5 million to the RNC—and was the number one corporate political donor in the U.S.[54] In the 2004 election cycle, the organization contributed a total of $4,000,000 to a conservative 527 group, Progress for America.[56]

In July 1996, Amway co-founder Richard DeVos was honored at a $3 million fundraiser for the Republican Party, and a week later, it was reported that Amway had tried to donate $1.3 million to pay for Republican "infomercials" and televising of the GOP convention on Pat Robertson's Family Channel, but backed off backed off when Democrats criticized the donation as a ploy to avoid campaign-finance restrictions. [54][57]

In April 1997 Rich DeVos and his wife, Helen, gave $1 million to the Republican National Committee, [57][55] which at the time was the second-largest soft-money donation ever, behind Amway's 1994 gift of $2.5 million to the RNC. [55] In July 1997, Senate Majority leader Trent Lott and House Speaker Newt Gingrich slipped a last-minute provision into a hotly contested compromise tax bill that granted the DeVos family’s company, Amway, a tax break on its Asian branches, saving it $19 million. [55]

A 1998 analysis of campaign contributions conducted by Businessweek found that Amway, along with the founding families and some top distributors, has donated at least $7 million to GOP causes in the preceding decade. [57] Political candidates who received campaign funding from Amway in 1998 included Representatives Bill Redmond (R-N.M.), Heather Wilson (R-N.M.), and Jon Christensen (R-Neb).[55]

In May 2005, former Amway President Dick DeVos ran against Governor Jennifer Granholm in Michigan's 2006 gubernatorial election. DeVos, running as a Republican, won 42% of the popular vote, while Granholm won 56%.[58]

Religion

Several sources have commented on the promotion of Christian conservative ideology within Amway organizations.[55][59][60][61] Mother Jones magazine described the Amway distributor force as "heavily influenced by the company's dual themes of Christian morality and free enterprise" and operating "like a private political army."[55] In The Cult of Free Enterprise, author Stephen Butterfield book about his experiences in the Yager group within Amway, wrote “[Amway] sells a marketing and motivational system, a cause, a way of life, in a fervid emotional atmosphere of rallies and political religious revivalism.”[59] Philadelphia City Paper correspondent Maryam Henein stated that “The language used in motivational tools for Amway frequently echoes or directly quotes the Bible, with the unstated assumption of a shared Christian perspective.”[60] The motivational tools are produced by some top distributors independent of Amway.[60] Dexter Yager, interviewed on 60 minutes in 1982, admitted that he promotes Christianity through his Amway group, but stated that this was not the case in other Amway groups.[62] In his book, Butterfield states that he did not become aware that the tapes he was purchasing from Yager were not Amway Corporation tapes until months after he left the business and notes it's questionable how much Amway can be held culpable for "the cultist hoopla of the Yager rallies".[59]

Businessweek correspondents Bill Vlasic and Beth Regan characterized the founding families of Amway as “fervently conservative, fervently Christian, and hugely influential in the Republican Party”, noting that at the beginning of Amway “Rich DeVos charged up the troops with a message of Christian beliefs and rock-ribbed conservatism.” [57]

Multiple[who?] high-ranking Amway leaders such as Richard DeVos and Dexter Yager were owners and members of the board of Gospel Films, a producer of movies and books geared towards conservative Christians, as well as co-owners (along with Salem Communications) of a right-wing, Christian non-profit entity called Gospel Communications International.[55][60][63][64][65]

Sociologist David G. Bromley calls Amway a quasi-religious corporation having sectarian characteristics.[66][67] Bromley and Anson Shupe view Amway as preaching the Gospel of Prosperity.[68] Economists Bhattacharya and Mehta propose an alternative economic explanation to negative claims, concluding that distributors' continued involvement despite minimal economic return results from social satisfaction compensating for less economic satisfaction.[69]

Chamber of Commerce

Amway co-founder, Jay Van Andel (in 1980), and later his son Steve Van Andel (in 2001) were elected by the board of directors of the United States Chamber of Commerce as chairman of that organization.[70]

Environmental initiatives

Amway emphasizes the environmental benefits of many of its products, and in June 1989 the United Nations Environmental Program's Regional Office for North America recognized it for its contributions to the cause of the environment.[71]

Controversy

Pyramid scheme accusations

Amway has several times been accused of being a pyramid scheme. A 1979 FTC investigation in the United States (see below), a 1997 Belgian court[72] and a 2008 court judgement in the United Kingdom all dismissed these claims.[73]

FTC investigation

Main article: In re Amway Corp.

In a 1979 ruling,[16][74] the Federal Trade Commission found that Amway does not qualify as a pyramid scheme since Amway compensation system is based on retail sales to consumers, not payments for recruiting.

It did, however, order Amway to stop retail price fixing and allocating customers among distributors and prohibited the company from misrepresenting the amount of profit, earnings or sales its distributors are likely to achieve with the business. Amway was ordered to accompany any such statements with the actual averages per distributor, pointing out that more than half of the distributors do not make any money, with the average distributor making less than $100 per month. The order was violated with a 1986 ad campaign, resulting in a $100,000 fine.[75]

Amway Andhra Pradesh (India)

In September 2006, following a public complaint, Andhra Pradesh state police (CID) initiated raids and seizures against Amway distributors in the state, and submitted a petition against them, claiming the company violated the Prize Chits and Money Circulation Schemes (banning) Act.[76] They shut down all offices of firm Amway, and Arijit Saha writes that "with it the fate of 80,000 distributors of the company has been indefinitely sealed". The enforcement said that the business model of the company is illegal.[77][78] The Reserve Bank of India (RBI) had notified the police that Amway in India may be violating certain laws regarding a "money circulation scheme" and the IB Times article writes that "some say ... Amway is really more about making money from recruiting people to become distributors, as opposed to selling products."[78] The complaint was initiated following a dowry dispute between a local man and his wife, an Amway distributor.[79] Following a petition by Amway, the state High Court issued an injunction against the CID and stated the Act did not prima facie apply,[80] however after Amway requested the CID petition be dismissed the High Court declared that if police allegations were true, Amway's Indian subsidiary would be in violation of the act and the investigation should continue. On August 14, 2007, the Supreme Court of India ordered the state police to complete the investigation against Amway in 6 months.[81] In 2008, citing the High Court decision, the Andhra Pradesh state government enacted a ban on Amway media advertisements.[76] Amway challenged the ban and in July 2009 the AP High Court refused a petition the ban should be enforced.[82] As of June, 2009 the original 2006 CID case was still pending at the Chief Metropolitan Magistrate Court in Hyderabad.[83]

Class Action Settlement

On November 3, 2010, Amway announced that it had agreed to pay $56 million - $34 million in cash and $22 million in products - to settle a class action that had been filed in Federal District Court in California in 2007. The class action, which had been brought against Quixtar and several of its top-level distributors, alleged fraud, racketeering, and that the defendants operated as an illegal pyramid scheme. While noting that the settlement is not an admission of wrongdoing or liability, Amway acknowledged that it had made changes to its business operations as a result of the lawsuit. The settlement is subject to approval by the court, which is expected in early 2011.[84] The economic value of the settlement, including the changes Amway made to its business model, totals $100 million.[85]

Canadian tax case

In 1983, Amway pleaded guilty to criminal tax evasion and customs fraud in Canada, resulting in a fine of $25 million CAD, the largest fine ever imposed in Canada at the time. In 1989 the company settled the outstanding customs duties for $45 million CAD.[86] [87] In a 1994 interview, Amway co-founder Rich DeVos stated that this incident had been his greatest "moral or spiritual challenge", first in "soul searching as to whether they had done anything wrong" and then for pleading guilty for technical reasons, despite believing they were innocent of the charges. DeVos stated he believed that the case had been motivated by "political reasons".[88]

RIAA lawsuit

The Recording Industry Association of America (RIAA), as part of its anti-piracy efforts, sued Amway and several distributors in 1996, alleging that copyrighted music was used on "highly profitable" training videotapes.[89] Amway denied wrongdoing, blaming the case on a misunderstanding by distributors, and settled the case out of court for $9 million.[90] In a related lawsuit initiated by the distributors involved, the Court established that Mahaleel Lee Luster, who had been contracted to make the videotapes, had violated copyright without the knowledge of three of the five of those distributors.[91]

Procter & Gamble

Some Amway distributors were involved with an urban legend that the (old) Procter & Gamble service mark was in fact a Satanic symbol or that the CEO of P&G is himself a practicing Satanist. (In some variants of the urban legend, it is also claimed that the CEO of Procter & Gamble donated "satanic tithes" to the Church of Satan.)[92] Procter & Gamble alleged that several Amway distributors were behind a resurgence of the urban legend in the 1990s and sued several independent Amway distributors and the company for defamation and slander.[93] The distributors had used Amway's Amvox voice messaging service to send the rumor[citation needed] to their downline distributors in April 1995. After more than a decade of lawsuits in multiple states, by 2003 all allegations against Amway and Amway distributors had been dismissed. In October 2005 a Utah appeals court reversed part of the decision dismissing the case against the four Amway distributors, and remanded it to the lower court for further proceedings.[94] On March 20, 2007, Procter & Gamble was awarded $19.25M by a U.S. District Court jury in Salt Lake City, in the lawsuit against the four former Amway distributors.[95][96] On November 24, 2008, the case was officially settled.[97]

Amway UK

In May 2007, the UK Department of Trade and Industry (DTI) accused Amway and distributor organizations Britt WorldWide and Network TwentyOne UK of "objectionable practices" and petitioned to wind up the companies.[98] The case against Amway was dismissed in 2008[99] on the condition that a full earnings disclosure is published publicly, no registration or renewal fees are charged and that the sale of business support materials are prohibited. The case against Network 21 was dismissed in 2009.[100]

Welcome to Life (Poland)

In 1997, Amway Poland and Network TwentyOne separately sued the makers of a Polish film Welcome to Life for defamation and copyright violations. The director and producer were later acquitted on the charge of disseminating false information."[101][102]. The film, banned for 12 years, was one of the highly anticipated movies of 2009's Warsaw Film Festival and was dubbed in the press as a "scary movie about brainwashing"[103] that depicts hard-sell "pep rallies" and distributors stating meetings were operated similar to the Communist Party and methods of recruitment that confusingly resembled those of a sect[104]. A best-seller on the local video black market.[105], the film was banned while the suit proceeded. In 2001 a regional court ruled in favor of Network 21; however, in 2004 the Warsaw Regional Court dismissed Amway's civil lawsuit. On appeal Amway won the case and the producers were ordered to pay a fine to a children's charity and publish a public apology. [106][107] As of 2009 the film was still banned due to an ongoing case brought by "private individuals" ridiculed in the film. [108]

Other issues

A Dateline NBC report from 2004 picked up the criticism against some Amway distributor groups, in addition to exposing one IBO's outstanding arrest warrant for drug dealing.[109] Amway subsequently published a website with a response to the Dateline report.[110]

Some Amway distributor groups have been accused of using cult-like tactics to attract new distributors and keep them involved and committed.[59][111][112][113] Allegations include resemblance to a Big Brother organization with paranoid attitude to insiders critical of the organization,[113] seminars and rallies resembling religious revival meetings[59][113] and enormous involvement of distributors despite minimal incomes.[59][112][113] An examination of the 1979–1980 tax records in the state of Wisconsin showed that the Direct Distributors, comprising less than 1% of all distributors, reported a net loss of $918 on average.[112][66]

See also

References

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  2. ^ Amway GC Lives the Dream
  3. ^ a b Xardel, Dominique (1993). The Direct Selling Revolution. Understanding the Growth of the Amway Corporation. Blackwell Publishing. pp. 1–4. ISBN 978-0631192299.
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  8. ^ Forbes.com - America's largest Private Companies
  9. ^ Deloitte 2008 Global Powers of Retailing
  10. ^ a b Conn, Charles Paul (1977). The Possible Dream: A Candid Look At Amway. Revell. ISBN 0800708571.
  11. ^ Van Andel, Jay (1998). An Enterprising Life. HarperCollins. pp. 37–39. ISBN 0-88730-997-6.
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  45. ^ In-Vehicle Wireless Power Transfer Unveiled
  46. ^ Startup Jump-Starts Wireless Power
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  48. ^ Reader's Digest Trusted Brands Asia
  49. ^ Helping to Clear the Air for Consumers - New Certification Standard for HEPA Filters Will Help Millions of People Make More Educated Choices
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Books

  • American Victory: The Real Story of Today's Amway published April, 1997 by Chapel & Croft Publishing; ISBN 0-96451716-7
  • Amway: The Cult of Free Enterprise published December 1, 1985 by South End Press; ISBN 0-96487951-4
  • Amway: The True Story of the Company That Transformed the Lives of Millions published September 1, 1999 by Berkley Publishing Group; ISBN 0-42517040-3
  • An Enterpising Life published 1998 by HarperCollins; ISBN 0-88730-997-6
  • An Uncommon Freedom, the Amway Experience and Why It Grows published 1982 by Revell; ASIN B000HFJE1Y
  • Commitment to excellence: The remarkable Amway story published 1986 by Benjamin; ISBN 0-875021360
  • Compassionate Capitalism: People Helping People Help Themselves published September, 1994 by Penguin Books; ISBN 0-452-27051-0
  • Empire of Freedom: The Amway Story and What It Means to You published September 3, 1997 by Prima Lifestyles; ISBN 0761510885
  • How to Be Like Rich Devos. Succeeding with Integrity in Business and Life published 2004 by Health Communications, Inc; ISBN 0-7573-0158-4
  • Merchants of Deception: An Insider's Chilling Look at the Worldwide, Multi Billion dollar Conspiracy of lies that is Amway and its Motivational Organizations published 2009 by BookSurge Publishing; ISBN 978-1439247150
  • The First Eleven — The growth of Amway in Britain through the lives of its local heroes published 1984 by AM Publishing; ISBN 0-9509593-0-8
  • Promises to Keep: The Amway Phenomenon and How It Works published 1986 by Berkley Books; ISBN 0425098567
  • The Direct Selling Revolution: Understanding the Growth of the Amway Corporation published 1993 by WileyBlackwell; ISBN 978-0631192299
  • The Possible Dream: A Candid Look At Amway published 1977 by Revell; ISBN 0800708571

Documentaries

  • Profiles of the American Dream: Rich DeVos and Jay Van Andel and the Remarkable Beginnings of Amway 1997 by Premiere Films; ASIN: B000OK0YRA

External links

Government documents

Profiles

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