Amway Review – Is It A Scam or Pyramid Scheme?

By | 2018-09-06T20:50:22+00:00 April 16th, 2018|Categories: Amway, MLM Reviews|

Have you been approached about joining Amway as a distributor? Have you heard people say it’s a scam or pyramid scheme? If you are considering joining, read on to learn everything you need to about the company, its products, and its opportunity.

amway logo

Founded

  • 1959

Amway Leadership Team

  • Founder – Jay van Andel and Richard DeVos
  • CEO – William S. Pinckney

Related Companies/Brands

  • Alticor
  • Nutrilite
  • Artistry
  • Quixtar (now defunct, but originally its online branch)
  • XS
  • Legacy of Clean
  • Ribbon Store

Website

  • www.amway.com

Revenue

  • $8.8 billion (2017)

Industry

  • Home Care
  • Multi-Level Marketing

Products

  • Weight Loss
  • Nutrition
  • Beauty/Cosmetics
  • Energy Supplements

Employees

  • 3,000,000 distributors
  • 17,000 corporate employees

Product Names

  • Artistry
  • Body Works
  • Glister
  • LOC
  • Nutrilite
  • Satinique
  • XS

Sports Endorsements

  • Orlando Magic (DeVos owns the franchise)
  • San Jose Earthquakes
  • Los Angeles Sol
  • Detroit Red Wings

Amway’s History

The idea of Amway was started in 1949 by two friends, Jay Van Andel and Richard DeVos. Originally called the Ja-Ri Corporation, the pair began by selling Nutrilite and a few imported products. In ten years, they had over 5,000 distributors below them. By 1959, together with some of their top distributors, DeVos and Van Andel broke off to form Amway. They began selling their now famous Liquid Organic Cleaner (L.O.C.) and quickly expanded to more home products before launching into the health and beauty industry that defines their business today.

What made Amway different at the time was their combination of direct selling and multi-level marketing. Distributors could make money in both arenas. Distributors can buy Amway products at “wholesale” prices for themselves or to independently sell. This can generate a modest income, but the larger payouts come from recruiting new distributors. Any recruits result in residual pay to the recruiter, hypothetically leading to a lucrative “downline” (income that comes from recruits’ sales). This allows Amway to market to future distributors by offering an easy way to start your own successful business or store. With an average yearly income for active distributors at less than $3,000, Amway has redefined what constitutes a successful business.

Amway’s founders also created a cult-like environment within the company and among its distributors. Combining evangelical undertones and self-help motivation, they have managed to sell their idea as much as their actual products. Distributors are strongly encouraged to attend seminars and events that can cost thousands of dollars. Both DeVos and Van Andel are best-selling authors and have inspired copycats across the country.

Amway today produces and distributes over 450 products produced in manufacturing facilities acros the U.S., China and India. It has a network of millions of “Independent Business Owners” (IBOs) in over 100 countries. For better or for worse, they have set the benchmark for all other MLMs, and are consistently one of the top MLM companies in the United States based on revenue.

Income Disclosure Statement

The average gross monthly income is just over $200 for active users. To be considered “active,” a distributor must have made a sale that year. Such users account for less than half of Amway’s distributors. Including the non-active users would bring this average monthly income down even lower.

amway income disclosure statement

Amway breaks down its commission by PV and BV. The PV is your total point value for monthly sales, while your BV is percentage cash value based on the PV. There are possible bonuses at certain PV levels. The actual cash value of your downline is predictably complicated and, like credit card points, cleverly encourage more spending on Amway’s products.

Like most other MLMs, Amway has various pin levels for various levels of production. In fact, there are 22. Amway makes their income disclosures and average distributor income statistics hard to come by, but for some perspective, the average Platinum member makes about $55,000 per year. They comprise 0.26% of Amway’s distributors.

Amway Reviews

Amway has historically gotten much more criticism for its business practices than its products. As middle men, distributors often falsely claim that they cut out that very middle man. This supposedly results in more competitive, “wholesale” prices. On the contrary, Amway’s prices are typically higher than their closest competitors. The prices only become more appealing when employees have a significant downline beneath them.

Employee Reviews

Amway has a 3.7 on Glassdoor. With over 17,000 direct employees, they seem to offer legitimate, competitive business opportunities. For their 3 million distributors, the opportunities are unfairly represented and rarely attainable.

Legal Issues

  1. After four years of litigation Amway won a landmark case in 1979 concerning the legality of MLMs. Because distributors can make an income on direct selling in addition to their downline, the Federal Trade Commission (FTC) ruled that Amway was a legitimate business and could continue to operate. This decision has only led to other MLMs adopting similar loopholes and has done little to protect the millions of people scammed into giving their time and money to Amway and other MLMs.
  2. In 1982, Amway quietly settled a case with the Canadian government, paying $25 million in fines for alleged tax fraud. Amway reportedly created a system of false product lists and prices. DeVos claims that the suit was unfair and any fraud was simply the result of miscommunications.
  3. Amway’s subsidiary, Quixtar, setted a class action lawsuit in 2010 for $150 million, the largest ever of its kind for a MLM.
  4. Amway and its founders have long had deep ties to the Washington D.C., and particularly the Republican Party. The current House basically has a minor Amway caucus with five former distributors and Amway has been one of the largest donors to the Republican Party since the early 1990s. DeVos’s son, Dick, ran for governor of Michigan in 2006 and his wife, Betsy, is currently the Secretary of Education in the first Trump administration. She has speculated that the DeVos family has donated around $200 million to Republican candidates.

Amway

2.8

Product

2.0/10

Stability

5.0/10

Profit Opportunity

1.0/10

Management

3.0/10

One Comment

  1. shaz October 7, 2018 at 6:56 am - Reply

    Amway is unethical way of making money. Their representative lure you to this smartly designed plan. Amway’s representatives misguide and misinform like any other business or a product’s sale representatives. which is attractive to listen for the first time with the ‘Entrepreneur” motto. But it is another way of making money leaving you frustrated in the end. I advise every one not to join this unethical product promotion. I appreciate Jeremy’s article for giving information to people.
    Parent company is becoming richer,leaving you as ”partner” (as it’s trained representatives claim) in total despair in the end. It is your hard earned money,think smartly before lending it to someone’s hand.

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