Negative Cashflow?

 One of the things I am hearing from some Amway supporters is the concept that Amway pays you to shop there. The problem with this statement is that many IBOs see this rebate but do not calculate the fact that you can still have a better bottom line simply by purchasing a product elsewhere. For example, if Walmart started some kind of cash rebate program, would you quit Amway and shop at Walmart?

Then when an Amway supporter is cornered with this information, they will switch gears and start to defend quality versus price. It's all very predictable.  Honest question for IBOs. Why do you use KATE instead of the Amway voicemail system? Amway pays you to shop there, your upline profits from and does not pay you to use KATE. (It's because upline diamonds created their own voicemail system because it's more profitable than the Amway system.  So much for product loyalty and shopping at your own store?)

One of the biggest problems with especially new IBOs is they ignore negative cashflow. And I cannot really blame them. They are usually sponsored by someone they trust, and they are often taught to ignore facts or taught that they are investing in their business, just like a real business, even though when recruited, they are told little or ZERO risk. Thus, an IBO who intends to make a profit will generally get set up with a website and some other materials. While the cost may not be exorbitant, these few materials already exceed a new IBO's income unless they actually go out and sell some goods or are able to sponsor downline who sell and buy products. And the more dedicated an IBO is, the greater the chance is that the IBO's negative cashflow will be larger. When you start to add in standing order and functions, the cashflow gets more and more negative and there are many testimonies of massive debts built up by IBOs in a few years or less.

What's ironic is that many IBOs incur these debts at the advice of their upline, or if you will, "mentors". Many uplines will teach IBOs to "never quit". It is my guess that uplines will make blanket statements like never quit without knowing an IBOs circumstance. Just as a statement like you "need" to attend a certain function, or you need standing order. No assessment of an IBO's business or personal circumstances. It appears that uplines are simply interested in making a sale for their BSM business. You may ask why a diamond should assess a downline's business before issuing these statements. I ask why downline should call them "mentors". In the meantime, these downlines suffer negative cashflow from their Amway business. Ironically, some upline teaches that "insanity is doing the same thing over and over and expecting different results". Attending functions and listening to standing orders while losing money each month is that same insanity.

Upline Teaching?

 Below is an excerpt from an apparently newbie IBO in Britt Worldwide (BWW). Note how they are taught that they must ask upline before doing their work. This IBO also talks about not having to use his brain, just follow your upline’s advice. Submit to the leaders. Follow the system and success is guaranteed. Right, and Amway apologists have the nerve to deny that this stuff still goes on? I suspect it is more common than Amway defenders will admit.

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http://greatdealmway.blogspot.com/2009/08/bww-system-and-get-success.html

*3 Cardinal rules

A. never pass negative advises or rumors to your down lines.

B. you must ask to your up lines before going on your first work.

C. never ever go bad with anyone’s self motive, money and family members.

*4 powers

1. Unity: unity is most powerful aspect. Do work in unity.

2. Power of submission to your work, up lines and customers: you must understand that you do not need to use your brain in this business. Just follow your leaders and submit yourself to them.

3. Power of spoken words: try out this simple but effective formula to gain success in your life. Speak out regularly about what you want in your life. It should be for this business, for family, for country or anything you want. This will reduce the negative energy and will create positive energy around you.

Do best and follow this system. Success is guaranteed!

CORE - The Upline Teaching?

I'm reposting this article about CORE because if you see the steps of CORE, the alleged recipe for Amway success taught by many groups, you'll see that many of the steps taught by upline are now going to be prohibited by the very recent FTC ruling against Amway, WWDB and LTD.  No more CDs/audios, books, functions, communikate (voicemail) and possible the buy 100% of your own products, depending on what they are.  Amway will be monitoring sales, and I believe the FTC ruling says sales with be audited by an independent monitor.   This will be very interesting times.  

Amway leaders often refer to CORE as their steps to ensure that an IBO will succeed. But in my informed opinion, CORE will guarantee failure. Here's a breakdown of CORE and why it doesn’t work. Here are the CORE steps. Some groups may have variations of CORE, but this is generally what many groups use:

1 - Show the Plan (10-15 per month)
2 - Retail the Products (10 customers @10 PV each)
3 – Tapes/cds
4 - Books
5 - Functions (attend all)
6 - Accountability
7 - Counsel with Upline (Be teachable!)
8 - Buy 100% of your own products
9 – Communikate

Many upline will tell you that your success is nearly 100% guaranteed if you follow these steps for 2-5 years. Some Amway enthusiasts will tell you that 6 months of this activity will nearly assure you of a platinum level business. Certain steps are within the IBO’s control, such as reading every day and listening to cds, and attending functions. It is also easy enough to be accountable, counsel with upline, buy your own products, and use KATE (voicemail).

Here’s where an IBO’s efforts will break down. Showing the plan and retailing products. And remember, if you cannot do these steps then you are not considered “CORE” and your upline will likely tell you that it is your own fault and that you simply haven’t been CORE, therefore you did not achieve success. There is some truth in this but let me expose the system in a different angle.

Amway has a spotty reputation in the US. I don’t think anyone can dispute this fact. Therefore, for the vast majority of people, being able to show the plan 10-15 times per month is a nearly impossible task. If you are able to do this, you are a really good salesman or a good liar. In this scenario, the IBO is already successful, but not because of CORE, but simply because the IBO has the gift of being able to convince people into seeing the plan. But for many IBOs, they may contact hundreds of people and not be able to get anyone to see the plan. Even IBOs who follow upline advice on how to contact will probably not be able to show 10-15 plans per month. Thus, this IBO, who is doing the work, will not be able to succeed. The system will blame the IBO, but the reality is that the IBO has too big of a disadvantage to overcome.

Secondly, with high prices (on average) and with a spotty reputation, most IBOs are unable to retail products. Thus, most IBOs are unable to sell products, therefore they are not CORE, therefore upline will blame the IBO for failure.

What if an IBO contacts 1000 people and cannot get 10 people to see the plan? Upline will claim that IBO is not CORE and therefore it is personal failure of the IBO. IMO, the only reason why upline can claim that CORE works is because in order to do the CORE steps consistently, you have to already be at a certain level of success. The vast majority of IBOs cannot and will never be able to reach that level.

That is the myth and the deception that many uplines will use to attract recruits. That each IBO can do the CORE steps. When only a fraction of 1% ever reach the level of platinum or higher, the numbers strongly support what is written here. Apologists are welcome to try and prove me wrong, but they can't.

The Fallout From The 2026 FTC Action Against Amway And WWDB/LTD?

 In case anyone's been sleeping the last few days and missed the FTC announcement, it's posted on this very blog a few days ago.  Basically, Amway, WWG (WWDB) and LTD were fined $225 million dollars for deceptive and misleading business practices.  More guidance will be forthcoming from the FTC, according to their announcement.  I'm curious but will be trying to follow up on the FTC guidance.  But IMO, some of the details from the FTC ruling will be devastating to the AMOs.   I say this because the FTC ruling restricts the diamonds/AMOs from selling tools and functions to new IBOs for the first year.

Not being able to sell tools to newbie IBOs is likely to choke out the diamond's tool business.  I say this because Amway's own disclosures suggest that a significant number of IBOs don't last a full year before they quit.  And in my own experience, the diamond's and platinums are always rushing to get new IBOs on standing orders and functions.  More than likely because the diamonds livelihoods depend on new IBOs signing up, regardless of whether they stay in the business or not.  It seems as if new IBOs are expendable, so there's a push upfront to sell standing orders and function tickets to new IBOs and prospects while they might still be excited about Amway.

By restricting sales of tools and functions for the first year, the diamond's income from tools and functions will be almost non-existent.  It's possible that there will be no more functions at sports arenas or convention centers.  I had heard that Amway venues were already shrinking over the years since I left Amway, and I can only imagine things will get worse.  So how will the diamonds cope with a significant decline in the tools business?  In a previous post, I theorized that the diamonds could try to get IBOs who have been in business for more than a year to foot the bill for their groups.  But if say a 1000 PV IBO or 2500 PV IBO isn't even making a net profit, having them pay for their downline to attend functions would just put these folks out of business as well, especially if they were already starting to doubt the foolproof business.  

I suppose the diamonds could try to move their groups entirely to another MLM, but that could be risky because the diamonds have already sold Amway as the financial savior for their downlines, and a new MLM could easily collapse if not enough sales are generated.  Some diamonds had done this in the past.  I recall some groups moving to an MLM called "Xango" at one time in the 1990's or so but Xango didn't last.   So what to do?   While the diamonds might still be assuring downline that everything is ok, I'm pretty sure that they are hitting the panic button behind closed doors.  

There will be more fallout and other things I haven't thought of, but I believe the FTC ruling could spell the end for at least some of the diamonds, especially the ones who have a diamond pin but aren't actually qualified anymore.   

The Golden Ticket?

 In light of the very recent FTC action against Amway and WWG (WWDB) and LTD, a $225 million dollar fine was levied apparently for deceptive and misleading business practices.   IMO, that action vindicates this blog and many others.  It confirms what has been said for decades now.  And this action by the FTC is sort of like the kid in Willie Wonka having the golden ticket taken away from him.

The diamonds used to say, "Tools are optional but so is success".  "We only make pennies when you make dollars".  "A carpenter needs tools".  "Nobody has ever succeeded without tools, but you can try to be the first".  "Nobody makes any profit on tools".  This what I heard as an IBO.  I also recall that as a prospect, my sponsor kept pushing the tools hard.  At first, I didn't think much of it, but later when I started to figure out the deal, I realized that the tools were the diamond's real business.   Just like musicians make a fortune by selling out arenas for concerts, etc.  And the diamonds don't even pay for ushers and other menial tasks because the platinums are like the slaves of the system.  I even read that some venues give nice discount on the arena or convention center if the event will fill up the local hotels and restaurants so diamonds likely make possibly more than a million dollars gross from large major functions that the diamonds split up amongst themselves.

But the diamond's golden ticket will be torn up, provided the FTC actually enforces their order.  It will be meaningless if the diamonds work around this somehow.  Prior to this ruling, I believe Amway's own rules said a sponsor is supposed to provide training to their downline free of charge but that wasn't happening.  Instead, prospects and newbies were funneled to functions and other tools s if it was vital to their success.  I can also see a way for diamonds to usurp the ruling.  That would be to simply have their downline who have been around for a year or more, foot the bill for newer IBOs who are not supposed to pay for their own training.   But that could backfire as well, because say a 1000 PV IBO who's making nothing or losing money, is going to be expected to shell out cash so his/her downline can attend functions and listen to standing orders?  I don't see that as sustainable long term.  Conversely, if a function really made everyone successful, why would diamonds not want all IBOs to get that information?   (That's a rhetorical question) Now the FTC is supposed to issue more guidance about these issues before the end of this year, so we'll see how that pans out.  If you find any news about this before you see it posted, leave a link in the comments and I'll go check it out and write a summary, if possible.  

If anyone has done research or knows how the diamond's bonuses work out, you can see the math and realize that diamond income might not be all that it's promoted to be. For example, someone can have a diamond pin but not actually be a qualified diamond.  In that case, this person receives no diamond bonus and tools and functions are likely their livelihood.  Or the person might be a non Q12 diamond (A Q12 diamond = qualifying diamond all 12 months in Amway's fiscal year, I believe, unless that has changed.  And a Q12 diamond is the rare exception).    The vast majority of diamonds are non Q12 and these folks have an average income of perhaps $150K or so, gross income.  And if I may add, much of a diamond's income comes in the form of an annual bonus, thus, a diamond's monthly income might be quite small.  Small meaning less than $10K per month.  

So the Amway business going forward, will be interesting.  I'm almost interested in infiltrating a recruitment meeting to see what they pitch going forward.    I am of the opinion that this ruling will also be damaging to Amway's revenues because indoctrinated IBOs who are new and "gung ho" at the time, likely makes up a lot of the Amway sales.   I can't say for sure how the FTC ruling will play out, but it will be interesting to observe.  

FTC Fines Amway, WWDB and LTD?

 See Joecool's blogpost dated 9/25/26.  The link to the FTC website is there.  I also summarized the important points.  But today, I want to set up some of Joecool's commentary about what I believe is going to hurt Amway and the Diamonds where it hurt the most:  In their pickets.  When you think about it, Amway critics have been right all along about the deceptive practices of WWDB and other AMOs and diamonds.  The defenders always used sleight of hand to defend or justify the actions of the diamonds.

But the FTC finally took decisive action that I believe is long overdue.   Think about this.  The AMOs like WWDB and LTD use deceptive practices to get IBOs to sign up.  They diamonds teach product loyalty (100 PV minimum) which is beneficial to Amway.  Then the diamonds teach IBOs and prospects that their tools and functions are vital to their success and that they "need" to sign up for standing orders, book of the month, functions and other support materials.  The diamonds make a nice income from the sale of these materials as they are cheap to produce and have higher profit margins that Amway products.  IMO, Amway then "looks the other way" at IBO abuse and you have a symbiotic relationship.  The diamonds get to use deceptive practices to drain the resources from their downline and Amway benefits from the product loyalty teaching, plus the defacto PV "quotas".   Of course, the diamonds are smart enough to avoid saying anything is "required".  I was told that so and so diamond who is a multi-millionaire believes that tools are vital, but you can try to succeed without them.  A new IBO is stuck when confronted with that statement.  

But IMO, the most damaging part of the FTC settlement, is that new IBOs cannot be sold tools and functions in their first year in the business.  The diamonds used to practically salivate at the thought that a roomful of new IBOs would be on standing order and attending functions.  I am not sure now, but Amway rules used to state that IBOs are supposed to receive "free" training from their sponsor.  Instead, the diamonds were exploiting new IBOs from the get go.  I was one of them.  And if I understood Amway's numbers previously, roughly 90% or more of new IBOs never lasted a full year before quitting.

Thus, not being able to sell tools and functions to new IBOs will destroy the diamond's "tool" business.  And if I may, some or possibly many diamonds are not currently qualified as diamonds.  That means they have a diamond pin on their suit, but they are not qualified, therefore, they aren't receiving diamond bonuses and free trips, etc.   That means the tools and functions is their real business.  Amway's rule is once a diamond, always a diamond.  But that's only the diamond pin.  You don't get diamond bonuses if you're no longer qualified.  

So the rule that bans the sale of tools and functions effectively kills the lucrative "tools" business for the diamonds, unless they cheat and try to usurp the rule somehow.  Now I'm not suggesting that they do this or are going to do this, but it's certainly possible they may try it since the tools business is likely a significant portion of a diamond's livelihood.  I hope that FTC has safeguards in place or plans to follow up to make sure that their settlement is honored.  I have reached out to other bloggers who are still active and sent them the link to the FTC settlement.  I am hoping the word gets out so it will be hard for the diamonds to pretend this FTC order didn't exist and go back to exploiting IBOs.  

I feel somewhat vindicated by the new FTC ruling and I hope that the terms of the new rules are adhered to.   IMO, in the past, that's been the issue.  A lack of enforcement of the rules.  But let's see how this goes.  :)

FTC Fines Amway And WWDB (WWG) + LTD $225,000,000?

 FTC Takes Historic Action Against Multilevel Marketing Operator Amway for Unfair and Deceptive Business Practices | Federal Trade Commission

Breaking News 9/25/26!

Amway and two (2) of their affiliates, WWDB and LTD, will fork over what appears to be a historic $225 million dollars.  The fine is for deceptive and unfair recruitment practices.  Where are the Amway defenders to try and spin this?   I wonder if IBOFB peed in his pants after seeing this, or is he pretending to be an AI expert now on that discussion?   :)

The complaint also addressed deceptive and unfair practices about potential earnings, to incentivize and pressure IBOs into buying products they don't want/need and often end up being difficult to sell.  The allegations also include IBOs falsely reporting sales of products to apparently create the air of legitimacy about the actual sale of products rather than recruiting IBOs who purchase Amway products.  

Apparently, WWG (WWDB) and LTD recruit IBOs and encourage them to buy a set amount of products whether or not the IBO needs them and may have difficulty selling them.  "As a result, according to the complaint, Amway, together with WWG and LTD, set up an unfair and unlawful system to pressure IBOs to purchase Amway products for reasons other than a genuine demand for them".

***Looks like Joecool's blog was correct and justified all along???  Vindication baby!

Other highlights: 

IBOs and prospects falsely told they are likely to earn substantial income that can replace their job ($40K and up).  and lead to early retirement.

Falsely telling IBOs they are likely to be able to recruit other IBOs into the system when most in fact are unable to successfully recruit potential downline.  

Falsely telling IBOs they are joining an exclusive opportunity in which they will be able to get access to special mentoring from highly successful leaders when in fact, anyone can be sponsored.  And, those who work with mentors are typically not highly successful.

 The FTC will be releasing details of their redress program later this year.  

This is an important new note:  Amway MUST require approved providers such as WWG (WWDB) and LTD, to not charge new IBOs for any training or services in their first year.   (Joe's commentary:  I can only imagine that the diamonds will not be showing off sports cars and trappings because without the ability to sell tools and functions, especially to new IBOs, where will they make their "real" income?  A triple diamond chapter 7 bankruptcy from 2009 revealed that this diamond made at least half of his income from tools and functions).   In other words, the cash cow is being put out to pasture.  

:)    :)    :)

More to come as information is available.