Thursday, June 30, 2011

Humorous Site Visitor Comment?

A comment left on the blog yesterday. My commentary is below:

Anonymous wrote:
So let me ask you this, all the time you people spend bashing amway/quixtar or whatever you want to call it what has it accomplished for you?? Yes I am in Amway. Yes I am an IBO. Do I consider my self an ambot or some other term you people like to call it? nope. If you people got into amway became IBO's were lazy and didn't build your business your own way than I pity you all. You are suckers. You chose to go an spend your money on motivational CD's and Tapes. You chose to follow the poor advise of you got form your upline or you were just plain lazy and couldn't sell, so you quit and decided to place the blame elsewhere besides yourself. I don't see how people think the products are over priced. I find the Vitamins to be less expensive and of better quality then stuff I'd find in GNC, Vitamin Shoppe and other such stores. The Cleaning products work great and are much less expensive than the likes of Lysol, 409, Tide, Gain, Pine sol etc etc. The Energy drinks are also pretty damn good vs the likes of sugar loaded crap like Red bull, Monster and other such drinks. So again I say too you what is there to bash? You suck selling easy to market items that is your fault not the business model fault. I don't go to meetings, I don't listen to CD's. When my upline says I should go to a convention or do something I don't want to do I simply say "NO, I'm doing fine with out it" I get my checks every month and I am doing just fine. My business is growing and I couldn't be happier. This whole planet has a problem at placing blame on others instead of living up to your own inequities. Most people can't hack it as IBO's cause they get sucked into the "GET RICH QUICK" idea and forget it's a BUSINESS that you need to invest TIME and ENERGY for it to grow!! Go open a brick and mortar store tomorrow and tell me how you do your first week, month, year. It is just really sad how all I hear is "amway is a scam!" well so is corporate America and 90% of business in general nobody seems to have a problem with Wall Street or the Financial institutions that scamed ohh what 150+ BILLION from the tax payers? wake up people! stop being sheep! think for yourself and stop blaming everyone else for your own stupid mistakes!

Joe's Commentary: Where am I "bashing" AmwayQuixtar"? For the record, I do this as a public service. Since most people lose money chasing the dream as promoted by Amway diamonds, not doing antyhing is usually financially beneficial to most people.

The cleaning products are not necessarily better or cheaper than others. See my article dated 06/29/11 about the consumer reports. The energy drinks such as red bull and monstar come in sugar free varieties so they're not all full of sugar. And they are cheaper than XS drinks.

Notice how the commentator says his business is growing but does not mention a profit. LOL The comment then calls corporate America a scam. So what if it is? It doesn't tale Amway off the hook does it? I got a few good laughs so thanks for the comment.

Wednesday, June 29, 2011

Amway Products Are Concentrated And Superior?

Not according to consumer reports!

Check out this excerpt from the USA Today! Look at what Consumer reports says about some Amway products! Consumer reports is very credible!

"The problem so many have is their prices aren't competitive in the real world," says Lou Abbott, who works in multilevel marketing and owns the industry site

When it comes to detergent, Consumer Reports program manager Pat Slaven agrees. She did blind testing of detergents last year and ranked versions of Amway's Legacy of Clean detergents ninth and 18th of 20 detergents tested. She recommends against buying them because consumers can "go to the grocery store and get something that performs a whole lot better for a whole lot less money." The highly concentrated Amway brands cost 23 cents and 28 cents a load, respectively. Five of the eight recommended brands cost less.

A 31-day supply of Amway's Nutrilite Double X multivitamins is $75. Supplement retailer GNC's most comparable product, Ultra Mega Green multivitamins, cost $40 for a 60-day supply.

Amway North American managing director Steve Lieberman says, "The quality of our products (is) reflected in our pricing."

Roland Whitsell, a former business professor who spent 40 years researching and teaching the pitfalls of multilevel marketing, says it's little surprise Amway's big growth is now outside of the U.S. He says the "direct selling" in multilevel marketing is needed in countries with "primitive distribution systems and limited choices in retail stores," but its potential is "seriously limited" here.

Tuesday, June 28, 2011

You Won't Get Rich At All?

One of the things upline used to say was that Amway is not "get rich quick". I suppose they say this because most people would more likely think scam if they promoted it that way. But when you stop and think about it, 2-5 years, build it right and you have willable, residual income for like while walking the beaches of the world? That's not get rich quick? Or is ot more of a disclaimer so that the opportunity doesn't sound "too good to be true"? One thing is for sure, even if uplines tell you that it's not get rich quick, it's obvious that IBOs think they will eventually get rich, even if it's not quick.

What most IBOs don't figure out quickly enough, is that they are unlikely to even make a profit, let alone getting rich in Amway. How many of these people exist? Where are all of these retired Amway IBOs who built a business in 2-5 years and then walked away from their business and will be collecting a significant residual income for many years to come afterwards? I don't know of a single person who has done this and none of the Amway defenders and zealots I have encountered over the years has been able to supply this information either.

I can acknowledge that Amway is a business opportunity and will definitely take some work to be able to achieve something. But thinking realistically, what business could you actually be able to walk away in 5 years and not work again? More than likely that business doesn't exist, whether it's Amway or not. Say you opened a conventional business. There wouldn't be many scenarios where you could walk away after a number of years. The business would still require work and maintenance. But form some reason, people are mislead to believe that you can do this in Amway where there is a high attrition rate and where your business can only expand by person to person.

Sadly, many of the people who are attracted to the Amway opportunity are often young people looking to get more out of life. They are often ambitious but may lack a means to gain wealth, thus the appeal of the opportunity is there. Unfortunately, these nice young people are more likely to end up channeling their hard earned dollars into standing orders and functions which will almost guarantee that they end up with a net loss. The bottom line is that not only is Amway not get rich quick. The more likely scenario is that your involvement with Amway will very likely be not getting rich at all. A net loss is the most likely result. I challenge anyone to try and prove me wrong on this point

Monday, June 27, 2011

Amway Makes No Sense?

As an IBO, I was often told how my upline truly wanted my success. That they would always give the best advice possible so that I could succeed. On the surface, there is no other conclusion, especially for new IBOs. By having people succeed with new IBOs moving up, surely the diamond would be happy with more downline success to prove that the system and upline advice works. But I honestly believe that's not the case.

Here is where it can be difficult for prospects and new IBOs to process this train of thought. Because many upline emeralds and diamonds possibly earn more from selling premiere club, standing orders, voicemail. and functions, there is no incentive to ensure that you as a downline, succeeds. Since for many "pins", the real money is in selling the training, the bottom line for these pins is to keep having cutomers, whether they are repeat customers or not is irrelevant. If you can understand this concept, then you can understand that your upline mentors care more about their profits than your success. Toss in the possibility that new emerealds and diamonds could mean less tool money for upline, and you'll see that the best case scenario for an upline is you have you form a group and then quit before you can qualify for a share of the tools income.

This is why there are so many people who are critical of Amway and the Amway "systems". I was outright lied to about the Amway tools. I would guess that hundreds of thousands or more were told the same lies that no pforit was made from tools. Many of the perpetrators are still around, probably telling different versions of lies that they told in the past. While Amway is not a part of the tools system, they were aware of the scheme going on and sat by and watched it happen. While they have made some attempts to reign in the tools kingpins, the attempts, in my opinion, have no teeth and the tools kinpins simply skirt the rules to their advantage.

While a legal explanation might make Amway seem logical and clean, the reality is that the Amway opportunity, when combined with the tools, or teaching (success) systems, the result is a nearly guranteed path to failure and business losses. The math and the real life results prove it. Whether you want to believe it or not is up to you.

Thursday, June 23, 2011

Joecool Irks Anonymous Canadian Amway Zealot


Over the last year or so, there's someone, possibly an IBO (but I'm not sure) who has been occasionally leaving idle threats on Joecool's blog. He claims to know my true identity outside of my Joecool Persona and also mistakenly thinks I am also the person who goes by the handle of "Tex" and he is again sorely mistaken. Tex is a known liar and racist and has made numerous racist statements on other blogs. Also, Joecool is from Hawaii and not from Plano Texas.

This anonymous claims to have additional information about me that he is sending to Amway and some other authorities. Here's what the anonymous coward from Canada posted a few months back. I have been documenting these "idle threats" in case the anonymous coward tries to make good on any of these idle threats. Here's the post:

Anonymous said...
"Just go and hang yourself or shoot a bullet through your empty skull. You speak like someone who quit and is bitter in life. Your posts are misleading and you want to do nothing less than kill people's dreams and hopes for a better life. You're an irresponsible man in all of your life dealings and quick at throwing the dead cat from your garden to your neighboor's. Oh, it's not me, it's you, it's him, it's them whatever. Lack of discipline and not accepting responsibility. That's why you didn't make it in Amway and for that matter in any other past or future businesses."

Anonymous said...
"How about I punch you in the face to make you stop"

There are more statements like this one but I will not publish all of them. I have reason to believe that this may be the same anonymous person who left me a threat just about two years ago. IBOFightback aka David Steadson lied when he claimed that I said Amway IBOs threatened me. I clearly said a "zealot". I never once said an IBO or anyone affiliated with Amway sent me anything threatening. IBOFightback also thinks I lied about the threats previously because he wasn't forwarded copies of what was said. IBOFightback also lied about completing an investigation that revealed all of the truth because he never contacted me about all of this. His investigation apprently consisted of reading comments on his own forum/blog. I wasn't previously able to verify the person's ID as I had just installed a site tracker and was not adept at identifying an IP address to the post. Well, this is it:

Rogers Cable ( IP address
Scarborough, Ontario, Canada

P.S. I am still waiting for the authorities to shut down my blog.

The Amway Reality?

One of the things that attracts many IBOs to the Amway opportunity is the idea that they can work part time, 2-5 years and gain a "shortcut" to ongoing and voluminous wealth. Many of the prospects don't have the kind of income or resources that they would like, so the possibility of a shortcut to these trappings sounds like a good idea. They sign up and get started, and then the realities of the business sets in.

100 PV, is the defacto minimum quota for business building IBOs. It costs about $300 to purchase 100 PV worth of products. How many young and single people or couples for that matter, use and/or need $300 worth of household products each month? How many of these same people can actually afford to expend that much cash on household products? The pitch is to change where you shop but how many people were buying these kinds of good prior to Amway? My guess is none. I know I purchased many items, including vitamins, and I didn't need or use before Amway. But my desire to be teachable and to be an example to my downline kept me buying the goods, and trying to pawn off some stuff on friends and relatives to lessen my PV burden.

I also found that getting people to see the plan was no easy task. While my business was growing, it took more and more effort to recruit downline and I can see where many IBOs would reach the saturation point where there simply aren't anymore viable recruits and they might need to resort to cold contacting in order to generate potential prospects. This is probably why there are stories of IBOs stalking people in bookstores, malls and supermarkets. Even when people saw the plan, there wasn't a high percentage of new people signing up. It is why building and maintaining a business is a nearly impossible task, and it is why I believe there aren't people who retire, walk away from their Amway businesses and enjoy six figure residual incomes for life.

The more likely scenario is an IBO signing up, buy and using the products and tools and slowly but surely build up debt. There are countless stories of ex IBOs who got fired up, started building the business and fouond that in a relatively short period of time, found themselves in thousands or tens of thousands of dollars in debt. All the while upline was encouraging them to buy more tools and attend more function, even when they were not profitable. In my opinion, this is confirmation that uplines care more about their tools profits that they do about downline success. I sat in functions where upline would teach about reducing debt, but in the same breath, say it was okay to go deeper in debt if it was to purchase more tools. Self serving advice.

It is why I believe this opportunity, along with the tools system, will nearly guarantee IBO failure. It is sad, but it is also a reality.

Wednesday, June 22, 2011

Why People Quit Amway?

I often see commentary about people quitting Amway and Amway loyalists are quick to call them broke, losers, lazy, lacking guts. Ironically, these same lazy and loser types of people were "sharp" and motivated prospects before they signed up for the Amway opportunity. Someone recently left a comment on my blog about how AMOs should conduct exit interviews with departing IBOs to get to the root of the problems.

However, based on my years of blogging and Amway experiences, I can honestly say I believe that people quit Amway primarily for one reason. The money isn't there. Amway's own numbers show that the averahe IBO earns just over $100 a month and that is before taxes and expenses. Business building IBOs earn most of the bonuses, but business building IBOs generally have the most expenses, often participating in the system of standing orders and functions.

When I was an IBO, I did as upline advised and I achieved a fairly significant level (4000 PV), but due to the expenses associated with tools and helping downline, I didn't earn net profit. This is confirmed by a study done by the Wisconsin attroney general who examined the tax returns of platinume and found that they averaged a net loss of about $1000 a year. While the study was a bit dated, I would suggest it is still very valid as platinums today, have more tools (business building materials) that they are expected to buy from upline. If I made nothing at 4000 PV, anyone with half a brain can conclude that IBOs below 4000 PV and fully participating on the system would end up with a net loss because their expenses would be similar to mine, but with less bonus money.

The bottom line is that people are very likely quitting because they aren't profitable. If people made a few hundred a month with 8-15 hours of work per week, they would continue to run their businesses. But those who work and make nothing or lose money have no reason or motivation to continue. Thus they simply make a wise business decision and quit. What seemed like a good idea during the presentation simply did not pan out when reality set in. It's also reasonable to conclude that the products are that great either because if they were, those who quit would become loyal customers, thus even if the sales force turned over, sales would consistently rise as former IBOs would become customers. It's apparent that most former IBOs do not become loyal Amway customers. In fact, for those who later discover they were lied to or deceived about the Amway opportunity, become critical of Amway instead.

Why do people quit Amway? I think the answer is crystal clear.

Monday, June 20, 2011

Sasquatch, UFOs, and Retired Amway Diamonds?

I was watching a show on Discovery channel the other night about Sasquatch. It was followed by a show about evidence of UFOs. It made me start to think about these phenomena. It seems like everyone has heard about or knows something about Sasquatch (Big foot) and/or UFOs. There are many documentaries showing pictures and evidence of both, but to date, there is no bonafide evidence that these things exist. You'd think that a body or bones of a Sasquatch would turn up somewhere, sooner or later, or we would find compelling evidence of a spaceship from another galaxy.

It sounds just like stories of people who built a diamondship, then "walked away" from their businesses, retired in the lap of luxury and did nothing while the money kept rolling in. I heard numerous scenarios about this happening, but looking back, all the diamonds kept working and since Joecool left the business, the diamond either kept working, or quit or got terminated. But I never heard anyone name some higher up Amway pin who built a business, and then walked away from it to travel the beaches of the world while hundreds of thousands of dollars kept rolling in. Many have heard about it but nobody seems to be able to name any of these folks. I mean after over 50 years in existence, you'd think some of these folks would exist, especially when it seems to be a selling point of the business for many AMOs.

It is my opinion that Sasquatch, UFOs and retired Amways diamonds (with significant Amway income) are non existent. If these folks existed, there should be at least some shred of evidence of it. The lack of evidence indicates to me that it is either non existent or so rare that nobody can display bonafide proof. I mean there aren't any T-Rexs roaming the earth anymore but fossil evidence proves that they existed at one time.

Keeping in mind that the Amway business has a high attrition rate, coupled with low sales to non IBOs and you can easily conclude that residual and significant income is nearly impossible. An Amway business that is left alone will deteriorate like a sandcastle does as the waves wash it away. You (in theory) could possible walk away from an Amway business for a while and collect some income, but you won't be collecting enough income to live the "diamond lifestyle" as portrayed by diamonds in their functions and open meetings. I'm not even sure that active diamonds can comfortably afford that lifestyle even when building their businesses. There is ample evidence to support my claim. Diamonds losing homes to foreclosure, former diamonds revealing secrets about their income. If you really believe you can walk away from your Amway business and collect untold wealth, I have a bridge in Brooklyn to sell you. :-)

Saturday, June 18, 2011

Amway - Climbing The Pyramid?

One of the popular defenses that Amwayers seem to use when defending the business is to claim that the military, the church, or your job is a pyramid. Even though Amway was found not to be illegal in 1979, that ruling, as far as I know, was based on the idea that IBOs sold goods and products to non IBO customers. I wonder what a review of some AMO's current teachings would turn up? I believe the buy from yourself model is an illegal product based pyramid, but that's another debate. As for the military, the church or my job, there's a difference between an organizational hierarchy and a pyramid.

In the Amway business, it's possible (but apparently very rare) to make money my primarily selling products. However, to achieve various levels, especially the coveted levels such as emerald or diamond, you have to sposnor downline. Thus you will need hoards of downline moving volume for you in order to attain and maintain these higher levels. A typical diamond-ship is likely to have a minimum of about 600 IBOs and more likely a thousand or more downline IBOs. While many IBOs may have a casual approach to the business and not move much volume, a higher pin would need a core group of committed and dedicated IBOs who "do the work" and move the volume.

Unfortunately, it is ususally the hardest working and dedicated IBOs that suffer the most losses because they are generally the ones who get caught up in the system, consisting of standing orders, voicemail, books and functions. Hard work doesn't necessarily result in results in this business. And because people often quit the business, you are constantly having to work to replace them in order to keep the volume moving. Sadly, what many do not see is that there will always need to be about a thousand or so IBOs to support a diamond. Add in attrition and it would take thousands of downline over a number of years to support a diamond.

In order for someone to achieve diamond, they would need to build a group that stays ahead of attrition to keep growing. Unfortunately, after a number of years, there would have to be thousands of IBOs making nothing or suffering losses to support a diamond. I have never heard of a win-win situation where the diamond made money along with all of the downline. This is why Amway has drawm comparisons to a pyramid. There are some guys making money, but usually at the expense of their downline in the form of volume and tool sales. This is how it is and this is how the compensation plan works. You cannot "choose" to succeed as meny believe because you need the infrastructure of downline to support you. In the end, and the bottom line is that most business building IBOs suffer losses, even when working hard and doing what upline advises. There are more stories of this on the internet than I can count. Even the fiercest of Amway defenders have no bonafide proof that they have accomplished anything signifcant in Amway.

When you are building a pyramid, you will always need thousands of blocks to make your lower levels, but in the end, only one block can be the very top of the pyramid. What makes you think you will be that top block?

Thursday, June 16, 2011

Amway IBOs Flounder In Tax Court?

A recent sight visitor posted this link which I found interesting and humorous. I did not post the entire link, so there is more material. Check it out.

Selling Soap as a Hobby - Amway IBO's in Tax Court
Roger S. Campbell, et ux. v. Commissioner, TC Memo 2011-42

The Amway distributorship system is well known to respondent and this Court
Friscia Construction, Inc., et al. v. Commissioner, TC Memo 2000-192

I included the Campbell case in one of my group posts. It concerned someone whose Amway activities were considered a hobby by the Tax Court denying them deductions for losses. That portion of the post was picked up by someone who calls himself Joecool and posted on his blog under the title "Do IBO's have a clue about business?". I found that there are quite a few blogs dedicated to pointing out the downside of the Amway experience including Married To An Ambot by Anna Banana :

The other attraction of Amway to some people is that it might allow them to deduct as business expenses things like cars, part of their home or entertainment that they would have spent anyway. That's probably the aspect of Amway that the IRS finds most interesting. Joecool did a post on how some IBO's think of their income tax refunds (generated by Amway losses sheltering other income) as profit.

To me the most interesting thing that I found in my search is this excerpt from the Internal Revenue Manual for examiners who are doing information requests:

. — Amway Corporation
[Last Revised: 12-10-2007]
(1) Amway Corporation has waived the hand delivery requirements of 26 USC §7603 and will accept summonses by personal service, mail, or overnight service at Amway Corporation, 7575 E. Fulton, Ada, MI 49355, Attn.: Director, Legal Division. Direct distributors who further qualify for profit sharing bonuses receive the non-cash part of that bonus through a mutual fund account administered by Amway Mutual Fund, Inc., 7575 E. Fulton, Ada, MI 49355, which requires a separate summons

Now I am subject to the AICPA Statements of Standards on Tax Practice, which among other things forbids me from giving clients advice based on what I believe the audit selection process of a taxing authority is. I wouldn't do it anyway, because I think most people who give that type of advice are guessing. Even if you happen to be one of my clients, I'm speaking to you purely as a reader here when I give you this advice:

You don't tug on Superman's cape
You don't spit into the wind
You don't pull the mask off that old Lone Ranger

And you don't take no Schedule C losses from an arrangement with a company that IRS examiners have on speed-dial.

I found 23 cases of IBO's who fought the IRS in Court. (A couple appealed, but I only counted them once)They pretty much all lost. In these type of cases there are really three ways you are denied deductions. The first is substantiation. You didn't prove it. Next is that the expenses are not really ordinary and necessary expenses of the business. When you are talking about cars and business use of the home, those two issues can get blurred together. The third is that there really isn't any business there. Taxpayers fight the IRS and win on that issue frequently even a Vietnamese couple whose "business" was playing slot machines using the principles of Feng Shui. Amway IBO's who take on the IRS on the Section 183 "hobby loss" issue almost always lose.

One of the most common themes is that IBO's seek advice generally only from their "uplines", who of course are not disinterested. They also do not seem to put any energy into trying to control their expenses. I'm going to give you a little snippet from each of the cases and comment a bit on some of them.

LOPEZ v. COMM., Cite as 94 AFTR 2d 2004-7075
Jorge N. Lopez, et ux. v. Commissioner , TC Memo 2003-142

Tax Court properly determined that engineer and wife weren't entitled to business deduction for expenses incurred in connection with their Amway products distribution activity because they didn't engage in activity for profit: although taxpayers showed proof of profit motive, such wasn't sufficient to override govt.'s evidence that included their failure to keep businesslike records, their failure to alter unprofitable methods, their non-dependence on activity income, and their use of activity to socialize with friends and family.

In their own Amway activities, which began in 1996, the Lopezes sold products at cost to both their downline distributors and their customers, which practice eliminated retail sales as a source of gross income. They chose instead to focus their efforts on developing a network of downline distributors to generate performance bonuses. Relying on Amway brochures, the Lopezes concluded that they would need to achieve and maintain a monthly point value of 4,000 for their Amway activities to be profitable. In 1998 and 1999, the Lopezes' point value did not exceed 372 points in any month.

The only advice they sought for their Amway activities was from upline distributors, and when they received unsolicited advice from their accountant, they disregarded it. During the years in question, Mr. Lopez was employed full-time as a petroleum engineer, and Mrs. Lopez was a homemaker.

The tax court ultimately was not persuaded that the Lopezes' primary motive for conducting their Amway activities was for income or profit. It found that the conduct of their Amway activity “virtually precluded any possibility of realizing a profit.” The Lopezes' lack of a business plan for recouping losses and achieving profitable levels of activity indicated the absence of a profit motive. In the face of four consecutive years of losses, the Lopezes still did not change their approach to increase the likelihood of earning a profit. The tax court further found that the Lopezes did not conduct market research to help them assess the potential profitability of their activities. It also noted that, although the Lopezes had no prior business experience, they accepted the advice of upline distributors rather than seeking advice from unbiased, independent business sources.

Since the Mr and Mrs Lopez appealed, they got to lose twice.

OGDEN v. COMM., Cite as 87 AFTR 2d 2001-1299
Michael A. Ogden, et ux. v. Commissioner, TC Memo 1999-397
Contrary to the Ogdens' contention, evidence of profit is not determinative of whether a profit motive exists. See id. at 876 (no single tax regulation factor, nor the existence of a majority of factors, is determinative of whether a profit motive exists). There is overwhelming evidence in the record that, if believed, supports a conclusion that the Ogdens maintained their Amway activity for deductions, personal pleasure and to offset wages. The tax court did not abuse its discretion in denying the motion for reconsideration.

Amway does not have a quota for sales, its products do not have to be sold above cost, and its distributors are not required to sponsor downline distributors. An Amway brochure, The Amway Business Review, states that the potential for earning income increases as the number of distributors in a sponsor's group grows and as sales increase. Distributors devote as little or as much of their time to Amway activities as they desire. The eight page Amway Business Review in large blocks on four of its pages highlights the fact that “The Average Monthly Gross Income for “Active” Distributors was $88.”

We believe Amway distributors may be biased when discussing Amway because they have a natural desire to advance the organization and/or obtain income from a downliner.


Deductions denied for business expenses and depreciation connected with Amway distributorship. Activities were conducted in unbusinesslike manner, taxpayers maintained full-time jobs, and little distinction was made between Amway activities and personal social activities. Also, IRS properly imposed penalties for failure to timely file and negligent or intentional disregard of rules.

A further indication of the unbusinesslike fashion in which petitioners conducted their Amway activity was the thin line dividing business activities from personal and [pg. 973]recreational activities. Petitioners offered scant evidence that their Amway activity required them to do anything other than to maintain an active social life. Although they occasionally attended seminars, most of their activity involved giving parties and taking people out to restaurants. While there is no requirement that profit-oriented work be onerous and unpleasant, the evidence presented by petitioners does not indicate activity motivated by a profit objective. On the contrary, the evidence shows that petitioners made some small modifications in their routine social life, kept cursory notes about their activities, and claimed deductions for the cost of nearly everything they owned or did. On this record, we find as a fact that petitioners' activities were motivated by a desire to avoid tax rather than a desire to generate income.

Roger S. Campbell, et ux. v. Commissioner, TC Memo 2011-42

Activities not for profit—profit objective—distributorship and direct marketing activities. Code Sec. 183 deduction limits applied to expenses pro se married real estate and construction business operators claimed in connection with Amway distributorship activity that they engaged in without requisite profit objective. Lack of profit objective was shown by facts that taxpayers commingled expenses, had no idea if they were making profit for any given year until they filed that year's return, didn't keep complete records, and otherwise didn't conduct activity in businesslike manner. It was also telling that taxpayers didn't have experience in this type of activity, didn't seek out independent advice, used activity losses to offset their real estate and construction business income, and stated that they would continue with activity regardless of whether it ever turned profit. Countervailing facts that they spent significant time on activity and increased gross receipts during years at issue weren't dispositive considering overall record

Tuesday, June 14, 2011

Money Buys You Options?

One of the things I heard as an IBO was how money may not make you happy but it buys you options. I agree with that, but what is not said is that for 99% (or more) of IBOs, they are likely to have less money because of their involvement in Amway. More specifically, the tools end up being a drain on IBO resources and income, thus the result is a net loss. Factor in the time spent doing the business related activities and the collateral damage can begin to get significant.

I find it somewhat ironic that the reason why many IBOs get involved in Amway is to attain the dream of having more time and money. The time to do anything you want, and the money to be able to do anything you want. This dream however, is like chasing the end of a rainbow. You can see it but it is always out of your reach. Your effort makes no difference, you can never find the end of a rainbow. Just as IBOs are out chasing the dream, hoping to find like minded people to sponsor.

No matter how many people you can find, it will never be enough. Just look at the triple ripple mega crown ambassadors and quadruple diamonds. How many of them are doing what they want, whenever they want? Sure, you see slide shows of them on trips or at Disneyland, but stop and think. Why are they constantly at functions and meetings? Do they really and truly want to be playing Amway when they can do anything they want whenever they want? Or is it more likely that they profit from selling you standing orders and functions so they continue to work? Do you honestly believe that the diamonds are philanthropic and work out of love for their downline? If so, then ask why they are compensated for doing so. If they loved what they are doing, they would do it for free right? That's how they related to my job, that if I loved it, why would I need compensation?

Money is an important aspect of life. Everyone needs to earn some money to pay for their homes and to put food on the table. Having more money can obviously give you more options. But do diamonds really have all that money? I suspect not. Diamonds seemingly speak about being "job optional", and being able to walk away from the business, but it makes me wonder why nobody can name even a handful of people who built an sizable Amway business, and walked away to enjoy the beaches of the world while the money keeps pouring in. Amway's been around more than 50 years. Surely there must be many people who are retired and living large on (primarily) Amway income. But these Amway retirees are about as common as the sasquatch or UFOs. Everyone seems to know about them and have heard about them but noone has bonafide proof that they actually exist.

Money buys you more options. But the question is whether or not you can actually attain that money from Amway. My conclusion is that it is highly unlikely.

Monday, June 13, 2011

Pyramids Are Supposed To Be in Egypt?

Let me start out by saying that Amway is a perfectly legal company as far as I know, and therefore I am not saying or implying that Amway is illegal. But I believe that the way Amway businesses are run with AMO guidance, are like pyramids. In most groups, you will have the lowest level IBOs efforts and tool purchases being responsible for the upline bonuses and tools income. Many many IBOs are fooled into thinking that the ability to surpass your upline or that you don't get paid to recruit downline makes this a good deal.

Unless you have a very very rare group where actual product sales to non IBOs in sufficient to cover the costs of running you business, functions and all, then it is true that the lower level IBO's jobs are likely the source of income for the uplines. How many groups are like that? None that I have ever seen or know of. In fact, how often do IBOs even sell enough products to cover their expenses for even one month out of the year? The groups that teach "buy from yourself" end up doing the most financial damage to their groups because the downline's expenses are then covered exclusively from the downlines jobs, bank accounts, or drive the downline into debt.

I've seen and discussed group structures in forums many times and I can only conclude that tool sales wipe out what little profits/bonuses some of the downlines might receive. Only when an IBO is able to sponsor enough downline to absorb the losses for them will they finally breal even or make a little profit. I would guess that the 4000 PV level or platinum is where a dedicated CORE IBO would breal even and possibly start to make a real profit. But we also know that most platinum groups have 100 or more IBOs in order to generate 7500 PV. Thus we can also conclude that less than 1% of IBOs make a net profit. The only way IBOs can earn a net profit at a lower level is to avoid purchasing tools and to avoid paying for functions. Those who get involved in a system such as WWDB or N21 almost guarantee that they will have a net loss.

Sure, my job may have a pyramid structure with the CEO making the most money. But the difference is that in a company, even the lowest paid employee still receives a paycheck and has money at the end of the month. The same claim cannot be made by IBOs. For these reasons, I believe Amway to be a legal pyramid. IBOs and information seekers are free to participate, but I challenge them to sit down and really analyze their ability to make a net profit. In most cases, the analysis won't be favorable. If you are in the US in particular, you may have great difficulty in even being able to discuss "Amway" without getting strange looks your way from others. Good luck in whatever you decide

Friday, June 10, 2011

In The End, Facts Are Facts

So many people get duped into thinking that they will somehow get wealthy by becoming an Amway IBO. Many recruiters will tell stories about how they were once broke, but signed up, endured challenges and now they are diamonds enjoying untold wealth and luxuries. They even "show" you pictures of mansions and cars as *proof* that they are wealthy. People get caught up in "dreams" and are often encouraged to ignore the facts. People running businesses should pay close attention to the facts because it tells you much about your business and your likelihood of success. But what are some facts about the Amway business that many people don't know about? I have outlined a few important ones for those who harbor dreams of going diamond.

1. The average diamond, according to Amway, earns less than $150,000 a year. Yes, some of this may be supplemented with money from the sale of tools, but after taxes and business expenses such as travel to and from the many functions that a diamond attends would leave a diamond living an ordinary middle class lifestyle, not one with mansions and sports cars as portrayed in many functions or meetings. Yes, a Q12 diamond would have more earnings, but a Q12 diamond is the exception, and not the rule.

2. Most IBOs are NEVER able to sponsor a single downline. Pretty hard to develop six (6) downline platinums when most people cannot sponsor anyone. Even those who can sponsor a few people, will find that attrition will make it impossible to keep these IBOs involved and active.

3. Most Amway products are purchased by IBOs and not sold to customers. Name a real business that sustains itself by having it's own workers or salesforce purchase most of the goods. MLM is probably the only business where this occurs. Understandably, it explains why 99%+ Amwayers lose money when factoring in tool puchases.

4. For most IBOs, the cost of functions, standing orders and other support materials represent the reason why most business building IBOs lose money and it also represents a significant profit for some of the diamonds who sell the materials. A serious conflict of interest in my opinion.

5. Not working hard is not necessarily the reason for someone's failure. But conversely, working hard does not equate success in Amway. I would guess that out of those who work hard, it is still a fraction of 1% of hard working IBOs that even attain a significant profit. Doing nothing won't get you anywhere, but in this business, working hard often gets you nowhere as well. It is my informed opinion that the cost of the support materials is the direct reason why so many IBOs lose money, even out of those who work very hard.

I could go on and on, but these are a handful of facts that IBOs and information seekers should be aware of. I welcome differing thoughts and opinions.

Thursday, June 9, 2011

Diamonds Have "Millionaire" Mentality?

A recent comment left by an anonymous site visitor:

"I love Amway. I just don't understand why people have to be negative about it. I don't hurt or steal from anyone yet I make money. I'm not a millionaire as of yet but working towards that goal. It's called "millionaire mentality". Joecool you will never succeed with penny mentality."

Joecool's commenttary:

Most diamonds do not have a millionaire mentality. If you see how they spend money and how they flaunt excessive wealth, I see people who could win the powerball lottery and wind up broke. They might earn a nice income (even if it may come by lying and deceiving), but they spend it all, and possibly more by portraying the diamond lifestyle. In my opinion, the diamond lifestyle as portrayed in functions such as "dreamnight" are not sustainable For this reason, we are now seeing evidence of this such as a triple diamond in bankruptcy proceedings, diamonds losing homes to foreclosures. We are seeing diamonds selling their mansions. Sure, they might be downsizing or liquidating their assests, but if these homes have been paid in cash as they claim, why sell them in a bad real estate market? Why not wait a few years?

In the past, I have posted some articles showing the traits and characteristics of millionaires. Many of these articles cite saving, investing, and living below your means. Many wealthy people drive regular everyday cars and live in the suburbs. They don't commonly have porsches, and jaguars. And for the record, the average diamond income, as reported by Amway, isn't all that much when you factor in business expenses and taxes. So why do diamonds try to show off wealth?

I believe diamonds show off wealth because it is a way to attract recruits. Because the Amway opportunity has a high turnover rate, nobody can reasonably "walk away" from their business and have cash rolling in for long. Attrition would eat away your business in a matter of days or weeks. It is why I believe diamonds do not walk away from their businesses, because they can't afford to. The business requires constant attention or it will crumble faster than stake cookies.

Most IBOs are simply fooled into thinking they are developing into having a millionaire mentality. An honest question for IBOs. How do you even know if your upline diamond is a millionaire? Anyone, even a broke guy can wear a nice suit and show off pictures of mansions and sports cars. For that matter, how do you know if your upline diamond is currently qualified as a diamond? Amway doesn't release that information except for new pins.

In my opinion, diamond's displays of excessive wealth and luxury portrays something, but it's not the millionaire mentality.

Wednesday, June 8, 2011

Traits Of Millionaires?

In looking at the article I have linked, it would certainly appear that system diamonds do not have the traits of typical millionaires. In fact, with the "diamond lifestyle", I suspect there are more diamonds in financial difficulty than there are millionaires.

Every year, The Phoenix Companies Inc., surveys wealthy people to see how they feel about the economy, their financial goals and the like. The survey ultimately is aimed at selling them financial products, but when the Phoenix folks toss all the data in the hopper, it spits out some interesting information on demographics, attitude and tendencies -- a wealth personality of sorts.

For the survey, wealth is defined as having $1 million or more of net worth, not including the primary residence.

"Most millionaires today don't have inherited wealth. They're not driving a Jag and they're not flamboyant or flashy. They work hard, they're frugal and they save and invest well," says Walt Zultowski, senior vice-president of business and market development at The Phoenix Companies.

"It's not enough to stick your money under your mattress. You have to invest, but you have to do it wisely. Few hit it big hitting a stock. It's a discipline. The message is one of steady habits as it relates to savings and investing. Living below your means is a key point, whether we're talking about someone with $1.2 million or $80,000. There's clearly also a work ethic; you hear a lot of these people say work is a joy."

The survey came up with six wealth personalities: Satisfied Savers, Status Chasers, Altruistic Achievers, Secret Succeeders, Disengaged Inheritors and Deal Masters. Most of the personalities share some positive characteristics: They work hard, live below their means and they know how to make their money work for them. On the other hand, some of them are so worried about losing money that it's a source of daily concern.

Want to see what traits you have in common with millionaires?

Satisfied Savers
Status Chasers
Altruistic Achievers
Secret Succeeders
Disengaged Inheritors
Deal Masters

Tuesday, June 7, 2011

Family Reunion Function?

Very soon, many IBOs, particularly in WWDB, will be gearing up for a major function called "family reunion". I still recall attending this function as an IBO. It was held in the Rose Garden in Portland Oregon. The Rose garden seats between 15 to 20 thousand people. Although the area behind the stage is closed off, the court area is full of seats so it could possibly hold up to 20,000 IBOs or more. Amway apologists like to denounce the experience of critics but they conveniently overlook the fact that many critics sat in crowds in tens of thousands of IBOs. My sponsor, in the years before I joined, spoke of an FED function at the (then) Seattle Kingdome where there were about 50,000 IBOs in attendance.

For me, family reunion was the most expensive function I had attended. The ticket itself was $250 and being in Hawaii, a round trip airfare ticket was quite expensive as July is peak travel. We also had to dish out for hotels, rental cars and meals. I believe my total expenditure for this function was more than $1200 when it was said and done. Now I know that not all IBOs live in Hawaii but even if you live in California, you likely had to fly or drive some serious miles to get to this function. I'm not sure where the function is held now as my understanding is that there aren't nearly as many IBOs attending anymore.

The function was about hype and excitement. The speakers told tales of struggles that was overcome by perserverence and the never quit attitude. That you will make it one day if only you will sitck it out and never quit. Of course what goes on unnoticed by many is that in a crowd of 15 to 20 thousand IBOs, only a handful of diamonds can be supported by a group of that size. At the time, I didn't stop to do the math myself or I would have seen through the line that anyone can go diamond.

The Saturday evening portion of the function was about some diamonds flaunting their alleged wealth. We saw displays of jewelry, fabulous vacaations, mansions and sports cars. Of course, the diamonds never said they actually owned these goodies. Makes me wonder if some of them rented fancy cars to bring to the function as some of the diamonds probably could not afford it. After the function ended for the night, our upline expected the group to go without sleep trying to "associate" with the diamonds and other pins. We were told that their success would somehow transfer to us if we spent enough time with them.

Of course everyone went home all fired up but within a week or two, it was business as usual with no noticeable growth in anyone's group.

My question to IBOs or information seekers. Did you get what was sold with these functions? Did your PV go up in a sustainable manner? Did you start getting a flow of new downline? Was the money spent on this function ever made up by increased business? If you cannot answer yes to these questions, then what was the purpose of attending? Looking back, I'd have to say that in a business sense, the function was a waste of time and money, which is ironically what most people join the business for, but end up with less of when they get involved.

Monday, June 6, 2011

Is Amway A J-O-B?

I find it ironic that many diamonds will put down jobs as if you should be embarrassed to have one. They talk about employees being slaves who have to worship an alarm clock and a boss. That your life is so miserable in a job and you will end up broke at the end of your career. They get people to despise their jobs and their boss and offer the Amway opportunity as a solution. Join Amway, 2-5 years of effort and then your job becomes optional, or so they say.

Ironically, the Amway opportunity is basically a job. You sell products and you sell the opportunity to others. That is the key to success according to many LOS's. The flaw is that too many IBOs get fooled into thinking they need to be their own best customer. As an IBO, you are Amway's customer. Anything you purchase results in a profit for Amway, but not necessarily for your business. Have you ever heard of a car salesman buying a new car each month to earn a commission? Or a vacuum cleaner salesman buy a new vaccum each month to increase volume? These concepts sound ridiculous, yet most IBOs run most of their own volume. Some IBOs don't have any customers and end up buying their PV bonus.

While some will argue that they are independent business owners, these nice folks are more like commissioned sales people with no fringe benefits from Amway. Amway has minimal advertising for their products, thus volume moves person to person, and mainly word of mouth. In my opinion, the least efficient means of getting goods to the consumer. When you factor in that the Amway goods are not really cheaper than a retailer like WalMart, you can see why some groups focus on self consumption, because there is no market demand for many of these goods and services, The demand is artificial because the IBOs themselves consume most of the Amway goods and services.

The really damaging aspect of all this is the upline leaders who tout their system of cds, functions, books and voicemail as the key to success. While these materials may have some value, it doesn't equate to success in Amway, and in most cases, the cost of these materials are the reason why so many IBOs end up with a net loss, instead of the extra cash they are seeking. Part of th reason why these materials do not work is because you are dealing with a very inefficient delvery system, coupled with uncompetitive prices (in many cases) and a bad reputation. If the opportunity were "all that", people would be seeking IBOs to sign up instead of IBOs having to lie or trick people into attending recruitment meetings.

Unsuspecting people think the Amway opportunity is a business, but it is more like a job than you think. It is my hope that this article will get you to think about it.

Friday, June 3, 2011

IBOs Think Tax Refunds Are Profit?

One of the things that I have observed is how IBOs are so misguided by their upline, that they think that their business losses, which result in a tax refund is somewhat like a profit, or that they are getting a free pass with the government footing the bill for their standing orders and functions. In the past, IBOs have been audited and had many business deductions disallowed because the tax department ruled that they were not truly running a business, but participating in a hobby called Amway.

I know that most IBOs are deducting the cost of their training materials on their taxes, but the issue at hand is whether the training materials are resulting in increased sales for your business. If you are running a "buy from yourself" business, then there is a strong possibility that your expenses may not be valid deductions come tax time. If you are not selling products to customers for a profit, then there is a chance that your expenses are not valid deductions. It would be sad indeed to be audited at tax time a few years after you have been an Amway business owner, only to find out that your expenses are not valid and that you may owe tens of thousands of dollars in back taxes.

Another apparently common mistake of IBOs is to think that their business expenses are basically free from the government because they may end up with a tax return. Your expenses are deductible from your taxable income. Thus if you had $10,000 in business expenses, your return would depend on your tax bracket. If you are in the 15% tax bracket, then $10,000 in expenses would get your about a $1,500 tax return, depending on other deductions you may have. But IBOs get duped into thinking they made a score and now get back $1,500 when they may not have had a refund in the past. Obviously in this case, the IBO would have been better off saving the $10,000 and never getting involved in Amway. Some IBOs proudly proclaim their refunds as basically a windfall, almost like it is a profit. That is truly scary.

Folks, there is no free ride. If you are spending money on legitimate business expenses with an intent to make a profit, then there is nothing wrong with that. But if you are traveling to conventions hoping to learn the secret of sponsoring more downline, you could be walking on thin ice should the IRS ever decide to audit your business. There have been many cases in the past where not only did IBOs lose their shirts due to the business support materials they purchaed, but they got double whammied later when the IRS disallowed tax deductions, leaving them in financial ruin. I truly hope you aren't on that path.

Check out this link:

"TRAVEL AND ENTERTAINMENT have always been areas of abuse. Sections 162, 262, and 274 are always applicable and sometimes Section 183. Since most of the travel is primarily to attend social gatherings for entertainment and motivational purposes, any real business purpose is suspect. Unless the taxpayer can show that attending seminars, meetings, etc., meets the requirement of Section 162, the travel should be disallowed. Amway people have been unable to show that attending these meetinqs increased their sales. The agendas of these meetings appear to be primarily for entertainment, socializing, and listening to motivational speeches. The meetings have nothing to do with promoting the sale of Amway products to the general public. In fact, Amway distributors are specifically warned aqainst mentioning either Amway or selling when recruitinq potential downline people. Since it is not likely that the taxpayer will increase his sales by attending these functions, then there is not a reasonable business purpose for the trips"

Thursday, June 2, 2011

Justification And Making Excuses?

One thing I heard when seeing the plan was how people justify their place in life. Or as the diamond said, "making excuses". I would guess that this is still tossed in when people are showing the plan to potential recruits. What the speaker said was that people justify their place in life so that they feel better that they are doing okay or doing better than others. One such statement was how public school was okay for me so it's perfectly okay for my kids. Whereas diamonds can send their kids to exclusive private schools perhaps?

Or how a man would tell his wife to look in the freezer if she wanted to go on an Alaskan cruise. This is called justification. Another point made was that a man might say he's doing better than so and so, or that they are "doing okay". Afterall, why just settle for okay when you can work for 2-5 years and then retire? Why not put in that effort? Why continue to justify yourself (make excuses) when you can just get it done? On the surface, this may sound sensible, but keep in mind that most people, even those who put in an extensive effort, will never get the promised financial rewards shown in the 2-5 year plan. Most of these people, even those who work hard, will end up with losses, some will end up with life damaging financial losses.

The really sickening part of the whole thing is that the upline will credit the insignificant amount of success in the business while placing failure upon the IBOs, even if they put in an earnest effort. While this may go unnoticed to most, what uplines are doing is justifying their own shortcomings and the crystal clear failure of the system to deliver what they promote. My understanding is that maybe 1 in 20,000 ever get to the level of diamond in the US/Canada. With such an incredible reward (retirement, lifelog residual income), why do so many quit before attaining their goal? Most IBOs who put in effort are hard working and persistent. Certainly not all those folks were lazy. The only reasonable conclusion is that the diamonds deceive people about the system's success rate and that the system doesn't work. Even an occasional diamond is not evidence of system success. The overwhelming failure rate paints a more accurate picture. Add in the high prices in the Amway catalogs and you have an additional impediment to success.

It certainly seems to me that it is the upline and system promoters who must justify and makke excuses for their systems that have no bonafide unbiased evidence of success. All they have to offer is justifications and excuses, something they accuse others of doing. If you are new or thinking of joining, are you making money or are you making excuses that your upline taught you?

Wednesday, June 1, 2011

Live Better, Save Money

Live better, save money. It's the slogan of WalMart. Save money. It's what many people look to do, whether there's a good or bad economy. WalMart is wildy successful and because of their volume, they are able to squeeze the best prices from the manufacturers anbd pass on the savings to consumers.

It's kind of ironic that Amway's slogan is "So now you know". They've been around for over 50 years and their commercials say "so now you know". What are we supposed to know? I don't know why they went from Amway to Quixtar, then to Amway Global and now back to Amway. The name changes didn't seem to fool anyone and because of some nutty IBOs, the corporate reputation may have gone through the mud again. But in stark contrast to WalMart, Amway manufactures some of their own products. But oddly enough, even these products are not priced to compete with WalMart. I suppose there could be merit to the argument that Amway doesn't truly
care about the best prices for their IBOs and customers because the IBOs are apparently the primary if not the only customers (in some cases) of Amway products.

Walmart says they will match any advertised price. Thus if you wanted to buy say, a bottle of shampoo and you bring in a current printed ad showing a WalMart competitor with a better price, Walmart will sell it to you at that price. Try doing that with an IBO. LOL Seriously, when you compare sales volume and the delivery system of the two companies, Walmart is the present and Amway is in the horse and buggy days. Advertising person to person is one of if not the least efficient means of moving products. I wonder if the Amway executives have evaluated the effectiveness of their "now you know" campaign. I suspect the ads have not made a difference in Amway North America sales. Of course, if there is bonafide evidence to the contrary, I will be glad to post it.

Live better, save money. WalMart rocks!