The Problem With Amway?

 One of the reasons I started blogging was to share my personal experiences in Amway and WWDB, and to allow information seekers and prospects to get an insight into what I see as potential problems with the Amway opportunity. In many of my blog articles, you will notice that many of the problems I have identified with the Amway opportunity are more closely ties to a motivational group such as WWDB, BWW, or Network 21. But Amway apparently has allowed many bad practices to go unchecked, thus they are not completely guiltless in the abuse of downline over the years.

Too often, the Amway opportunity is misrepresented by IBOs. For example, I have heard so many times, that Amway is a franchise opportunity, which is not true. I have also heard so many times that an average Joe can work for 2-5 years and create a willable and residual income that will allow you to not have a job, and possibly to allow you to enjoy untold wealth and luxury. I don't believe this is true for the vast majority of people who were sold on the Amway opportunity. Very few people make any money from Amway and out of those who do, the profits are also from tools and functions and not exclusively from Amway.

The bigger problem is the promotion of motivational tools as being the key to success in Amway. Although technically "optional", most uplines will promote the tools as necessary and that an IBO would be insane to build a business without tools. Thus many IBOs spend money on tools and sadly, most IBOs never make enough money in Amway to cover the cost of their tools. In fact, over a number of years, I have heard of people losing tens of thousands of dollars (or more) to the tools systems. And once you start participating in the system, the decision to quit can be difficult because of the time and money that an IBO may have already invested. Also, the thought that maybe upline is right and that persistence will pay off. Well, there is no unbiased documentation that persistence and hard work (and applying the system) actually works.

Amway defenders like to point out that all the new platinums and diamonds used the system, but FAIL to point out that the rest of the IBO force who may have worked just as hard simply ended up with business losses. Amway defenders also fail to point out that perhaps a larger number of platinums and diamonds may have failed to re-qualify at that level. So much for willable and residual income. By the way, of residual income is a benefit of the Amway business, why can't I find anything from the Amway corporation to confirm this?

I could go on and on, but lastly for now, I think it's a bit shady for diamonds to show off fancy cars or mansions as a way to flaunt their alleged success in Amway. I would prefer the traditional manner of reviewing business tax returns. Showing a copy of a check means nothing because business expenses may have exceeded the amount of the check, leaving an IBO with a net loss. But in the Amway opportunity, it is commong practice for IBOs to hide their income or to show a diamond's Mercedes as proof of income. It doesn't add up for me and I would urge information seekers and prospects to scrutinize someone who tries to impress you in this manner.

Those are some of the problems I see with Amway.

The Real Scam?

 A lot of people come and go in Amway, but many of those who come and go don't even notice the scam. They get sold on what they believe is a business opportunity that they can maksome money at, or at the very least save some money on products that they would normally buy anyway. If they do it right, they can possibly make some "real" money and with some had work, you can build it right and have the option one day of walking away from Amway and living off ongoing residual income from Amway. It sounds reasonable and therein lies the scam.

For years, I have challenged people to name 2-3 people, aside from the Amway owners, who joined, built the business "right" and was able to walk away and retire with ongoing residual income, enough to be financially free forever. Not a single person has been able to name and confirm that even a single person has done this. I believe it's all a lie and part of the scam. Amway's distributor force turns over about 50% each year. How can you build a residual income empire when half of your downline quits each year? I believe Amway diamonds trade their 9-5 jobs for the night shift. They work at night and into the morning hours because they are working to replace people who quit and to support downline platinums who might struggle or fail to re-qualify for that level. If upline says they are working for the love of their downline, I call BS on that. If walking away and enjoying life was an option, why hasn't anyone chosen it?

Now you could argue that a diamond's "work" isn't that bad and they aren't reporting to a boss. And that would be true, but I imagine the pressure of churning peope in and out to keep qualifying can be stressful in itself. If you live on an island like me, you can eventually have trouble finding new people to work with. In 1997 or so, there were a bunch of diamonds in Hawaii and they all moved to the ainland. Now I"m not sure why but my upline diamond was Harimoto, who loved the ocean and the beaches. Yet he moved to Washington state. I believe they needed new grounds to mine, just like gold miners.

The next part of the scam is how IBOs will tell you about Amway's generous money back guarantee. 100% they'll tell you. What they don't tell you is that the guarantee is only on some of the products and the sign up fee. The cds, books, voicemail and functions are not sold or run by Amway. And these expenses can be very significnt over a period of time. IBOs and prospects need to know this. You can lose thousands and get back pennies on the dollar asking for a refund on the sign up fee and perhaps a few products. Another piece of the scam.

Also, IBOs and prospects are often shown only the very best case scenario (such as going diamond) but not told that your chance of being struck by lightning is much higher than your chance of going diamond, even though going diamond is not a random event. A real life and likely scenario is getting in and trying hard for a while, and then quitting with some business losses. At least if you know this and still try anyway, you will have done so with full disclosure.

Lastly, it's insidious in my opinion, for upline to tell you to trust them and to do as they say, and then turn around and tell IBOs that failure is their responsibility. That they didn't work hard enough or do thing just right. That sure isn't what they are preaching when recruiting you into the business. They are saying how sharp you are and how you're likely to tear up the business. But it's just another facet of the scam. I've outlined the parts of the opportunity that I believe are scams, but I'm sure it's not limited to my point of view.

Good luck if you read this and join anyway.

Trading Hours For Dollars?

 One of the things I heard as an Amway IBO, and I believe still taught today is that a job is a disaster, or "just over broke". Uplines apparently use this tactic as a means to get prospects and IBOs to buy into the concept that a job limits your earning potential and that a business mentality doesn't look at an hourly wage. While it may be true that many business owners do not earn a wage, you can bet that they are aware of how much time they put into their business against how much they take in. A true business owner, if he determines that he isn't earning enough for his return on his investment of time and money, will often make adjustments to what is done to become more efficient, or fold up the business and start another one, or may even get a job. Amway IBOs conversely, are told to spend more on training and functions when they are succeeding, which is a powerfully bad business practice.

It appears to me, that the context in which IBOs are told not to look at their business as a job is because many/most IBOs don't earn a net profit, and the few that do, probably earn less than a minimum wage equivalent when factoring in the hours spent building the business and costs associated with doing so. But hey, it's ok because you think like a "business owner", right? This appears to be just another distraction given to IBOs so they overlook monthly losses, just as how IBOs think the business is about being a nicer person, or that running the business actually makes you a better spouse or parent, when in fact, the opposite may be true.

In this day and age, there is nothing wrong with having a job. There is nothing wrong with earning an honest living trading hours for dollars. Many people live comfortable lives and have even amassed wealth with a job. The problem for many, as I see it is that they do not currently earn enough to fulfill the dreams that they see displayed on the stage at a function. For example, a job that pays $10 an hour will gross you about $1600 or $1700 a month. Certainly not enough to retire at the age of 30. But what if you earned $1000 an hour. That would bring you $160,000 to $170,000 a month. Would that make a job enticing? Of course! So the problem is not that you trade hours for dollars, the important factor is how much you earn per hour. The same goes for a business.

Real business owners look at the bottom line. For example, if you earned $6,000 a month in a business, but you spent 80 hours a week to earn that, then your hourly pay is less than $20 an hour. But if you spent 10 hours a week to earn that, you are now getting about $150 an hour equivalent. Many Amway promoters will tell you that the business will take up 10 to 15 hours per week, but the average IBO, according to Amway, earns just about $115 a month (and most earn less than that), which averages out to less than $3.00 per hour on average. This is why your upline might be saying don't look at an hourly wage as a way to rate your business, because the income is embarrassing.

IBOs and information seekers, do the math. Ask tough questions and demand answers. Don't be discouraged if you have a job. Most IBOs have jobs, don't worry about trading hours for dollars. It is very likely that trading hours for dollars is a more efficient way of earning money than what you are being presented with. 

Who Is Responsible?

 One of the disturbing things I have noticed about Amway IBOs and IBO leaders is how they will tell downline to trust them. To trust them as they have already blazed a trail. No need to re-invent the wheel. Just ride the coattails of your upline to success. The system is proven. Many IBOs take this to heart and put forth tremendous effort. Then when they fail, upline will shun them and tell them that the failure is their own. That they are personally responsible for failure.  I believe the recent FTC ruling barring the sale of tools and functions to new IBOs will prevent this if it is properly enforced.

Now I am not talking about Amway IBOs who sign up and do nothing, or never place an order. I do believe that the fact that many IBOs sign up and do nothing brings concerns about how these IBOs were recruited, but I do not recall ever seeing an IBO do nothing and then complain that Amway was a scam or anything like that. 

I have found, however, that many people who are critical of Amway and the systems, put forth much effort, did everything they were told, and did not find the success that upline promoted, or in some cases, guaranteed. My former sponsor was still active, last I heard and has been in Amway for over 20+ years. I do not believe he has ever gone beyond platinum, and I know that he was never a Q12 platinum. Some Amway apologists might see being a platinum as a bonus, but when you are hard core sold out to the systems, platinum is a break even or make a small profit business. Factor in that time spent by husband and wife and these folks are breaking even or making a fraction of minumum wage. Is this the dream that will allow you to buy mansions with a cash payment? 

What is also disturbing is how people will tout the system as responsible for any success, but hide the vast majority that the system doesn't help. Sure, some will succeed in Amway, but for every success, there are hundreds if not thousands who fail. And if you consider diamond as the benchmark of success, the failures could be in the millions. As I said, some succeed, but very very few in relation to the number who try. Going diamond is probably less common in the US than winning the lottery. 

Succeed and the systems and upline take credit but fail or quit and it is your own responsibility. Are these the kinds of leaders or mentors you want advice from?   Not to mention if you've read the FTC ruling from last month (posted on this blog), you'll see that the "mentors" were making a lot of profits from selling tools and functions to unsuspecting newbie IBOs.

Get Rich Quick?

 One of the things my 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 will-able, residual income for life while walking the beaches of the world? That's not get rich quick? Or is it 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". Sadly, they are wrong.

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 have been unable to supply this information either. It's like some kind of myth or urban legend that people have actually retired from Amway on residual income. We also know that due to attrition, it is virtually impossible to maintain a profitable Amway business. People quit the business daily, thus even what looks like a solid business can be gone in a very short amount of time. I compare retired Amway diamonds with residual income walking the beaches is like legend of bigfoot/sasquatch. Everyone has heard about them, but nobody has ever produced tangible evidence that they exist.

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 for some reason, people are misled 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.

Residual Income?

 Do the work once and reap the rewards for life. Lifelong willable passive/residual income. These are some of the things that attracted me to the Amway opportunity. That I could do the work, and have the option of sitting back, enjoying a fabulous lifestyle of riches and never have to work again. I could wake up at noon if I chose to, and/or I could stay out late hanging out with my "free" Amway buddies.

It sounds great on the surface, however, when you analyze an Amway diamond's income and look at things carefully, you can see where this lifestyle is just not possible. Even if a diamond earned $250,000 a year from Amway and the tools income, after considering taxes, business expenses and other necessities such as medical insurance and retirement savings, you don't have enough left to live what is often portrayed as a "diamond" lifestyle. Also, keep in mind that a lot of a diamond's income is received in the form of an annual bonus so a diamond's monthly income might be relatively small.

One could also wonder why there aren't any diamonds (that I know of) who have actually walked away from their businesses and continue to collect any significant income from Amway. With more than half of all IBOs not staying in business for a year and about 95% of the rest of the IBOs being gone several years later, it would be an insurmountable task to keep your income rolling in with that poor retention rate. As far as I know, an IBO also need to have a minimal amount of side volume in order to qualify for certain significant payments/bonuses. That is a lot of volume to move when IBOs are quitting the business daily, and these days, it seems as though there are fewer IBOs getting involved, at least in the US and Canada.

It is for that reason, I believe these crown ambassadors and higher level pins are still working. Once you stop, it is very likely that there is no tool income, and once your downline starts to suffer attrition, then you Amway income and bonuses will eventually dry up as well. I believe there is no true residual income in Amway. Sure, build a big business and walk away. You may continue to receive some income for a while, but eventually, it will disappear. It is like building a sandcastle on the beach. The bigger you build it, the longer it will last, but it is for certain that the tide will eventually wash the sand away, just as time and attrition will eat away your Amway business. If you are popular and charismatic enough to attract a large downline, once you leave, so will your downline.

As far as I am concerned, I believe the residual income claims from Amway is just a long running myth used to attract recruits. I don't know of anyone who built a large Amway business and then walked away, and is still collecting a significant income. Do you?

Joecool's Challenge?

 I often hear stories and testimonies about how some people (usually Amway newbies) have this incredible belief in Amway, their sponsors and their LOS, such as WWDB or Network 21. Being that many, possibly most IBOs are sponsored by a friend or family member, means that there is an inherent trust in the sponsor or upline. If that were not true, then we would likely see many more complaints about Amway and/or the uplines and lines of sponsorship.

But an important facet of being an IBO (as taught my upline "mentors") is to have a dream. Don't let "naysayers" steal your dream, is what many IBOs are told. But what is that dream?  Is a dream (a long-term attainable goal) or a wish such as winning the Powerball lottery? Many prospects and IBOs want to succeed. They are willing to work hard, and are very dedicated, I would say that these folks usually will end up failing, not for lack of effort, but for a flawed MLM/Amway system that cannot possibly reward more than a few. The famed 6-4-2, 6-4-3 or some other variation of the plan will illustrate that only 1 in 100 or so can be "platinum". And that's with nobody quitting. Factor in attrition and "do nothings" and it might be 1 in 200 who can reach platinum. Even if the whole world signed up for Amway, that fact doesn't change.

Do you really believe in Amway and your line of sponsorship such as WWDB or Network 21? If you truly believe in Amway and your mentors, I challenge you to do one of these things. If you can't or won't, then I question your level of commitment. I question your belief. I'm not here to steal your dream. I am just challenging you.

Take your 6-4-2 or 9-4-2 or 6-4-3 plan to a loan officer at a bank and show them the plan. (Hey, it will help you be CORE and show the plan)  Ask the loan officer for their opinion of the plan and see if you can get a business loan based on the Amway plan. If not that, try seeking the advice of a real millionaire (Someone who has a net worth of a million bucks) and see if they think the 6-4-2 or other Amway (version) plans can work and whether they think Amway is a good idea. Heck, try asking your church Pastor. My church Pastor said Amway had too many false hopes and promises to be considered a viable business option.

How strong is your belief in Amway? Strong enough to take my challenge? Or will you ignore this and go on fooling yourself?