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.

Debating Amway?

 I once had a debate with an Amway supporter, and I sometimes wonder how some Amway supporters can continue to defend some of the claims they make even when they have no facts to back them up. For example, the supporter insists that Amway has created more millionaires than any other company. So I asked where he found that information because as far as I know, Amway has never made that claim and if it were true, there would be no reason for Amway to hide it.  The most valuable company in the world right now is NVDA.   I'd say most of their employees and a lot of their investors have become millionaires since NVDA was founded.  The company valuation exceeds 5 trillion dollars.  Meanwhile Amway has less than 10 billion in revenue, last I heard.  Do the math.

The Amway supporter also insisted that he is proof that Amway works because he is successful. He never spoke about the financial condition of his downline, nor revealed anything about his level or structure. Instead, challenged Joecool to talk about my former business and why I wasn't profitable. As I explained in a previous post, my Amway business didn't prosper because I followed upline advice to reinvest my profits into tools. And I am certain that I am not alone in having been given this advice. I do not claim they don't exist, but it is my guess that a group where even half of the IBOs make a net profit would be very rare, especially when some groups teach their downlines to primarily "buy from themselves".

When discussing the miserable average income of an IBO, supporters like to cite that some IBOs do little or nothing but fail to mention that when calculating the average income, Amway disregarded the IBOs who were not considered active. And because we know that you need to move at least 100 PV pv to earn a bonus, then we can conclude that IBOs as a whole, earn very little, with a few big pins bringing up the average. I believe if we looked at the median income for IBOs, it would be far less than $115 a month.

So the question is how can an IBO actually prove that they are successful? Maybe the first step is to be willing to talk about your business. Most IBOs are anonymous commentor on this blog, yet outright refuse to disclose any details about their business, and downplay the expenses associated with the business, even when upline will promote "low overhead" as an incentive to join Amway. While $150 or $200a month might be low overhead, it is very high if your monthly income is $10 a month. Somehow, upline will convince IBOs that taking losses is a sign of success. Or that an IBO is successful as long as they remain on standing order and continue to attend functions.

Honesty and transparency is how an IBO can prove his or her success. Making a nice living on the backs of your downline is not success, that is exploitation of your downline.

The Millionaire Next Door?

 I keep hearing from some IBOs that they belive that Amway has created more millionaires than any other company in the US. I call BS on that claim. I am not saying that Amway hasn't created any millionaires, obviously, the Amway owners are worth billions of dollars. But what the IBOs are apparently implying is that the diamonds are millionaires. I'm sure there are some diamonds who indeed are millionires, especially if they are tenured diamonds, in particular the double diamonds and higher. But conversely, I believe that many high level diamonds are not millionaires. I believe it is just as common for a diamond to be in debt as it is for a diamond to be living large. I also believe that many diamonds did not accumulate their alleged wealth exclusively from Amway.

The reason why this is an issue is because these big pins will stand on stage and show off excessive wealth and imply that it is their Amway income that pays for these mansions, sports cars, and in some cases, jets. In the US, I attended a function called "Dream Nite" where these kinds of trapping are displayed, to the tune of the song "I wanna be rich". The diamonds would say that you can have what they have, if only you will do what they advise. These functions still go on today and I believe it is now called Winter Conference.

Stanley and Danko's book, "The Millionaire Next Door"
http://www.personalfinanceplaybook.com/2009/08/the-millionaire-next-door/

This book makes some very interesting points which I believe applies to Amway diamonds. I will outline the significant ones and I will comment below:

**Predictably, the data shows that most people who you believe to be very rich are not.

**High net worth individuals, statistically, tend to be people that live within their means. They don’t spend a lot of money. They don’t waste money. They tend to be pretty frugal people.

**The authors point out that most of the richest people you know aren’t driving expensive luxury automobiles. That’s what the people who want everyone to think they’re rich drive.

Joe's commentary. The book does say that about 1/3 of millionaires acquired their wealth thru a J-O-B and saved and invested, but did mention that many millionaires were also business owners, such as a pest control company, etc. But based on the points made by the book above, I can see where it is likely that diamonds portray a wealthy lifestyle as a recruitment tactic, when the reality is they may be living very middle class lifestyles off stage, or may even be in debt. I have seen evidence of diamonds having their homes foreclosed and being in debt (Ruth Carter's book: Amway: Behind the Smoke and Mirrors). Recently, there was also a report that a Triple Diamond filed for (chapter 7) bankruptcy in 2009 or so. The report indicated that he could not make his mortgages, or something to that tune. Odd, because when I was in WWDB, some of the upline leaders said diamonds paid cash for everything because paying interest to the bank wasn't very smart.

My question is why IBOs continue to make up these claims? Try googling millionaire or Amway millionaire. There is nothing to indicate that Amway was responsible for creating the "most millionaires" of any US company. If this were true, wouldn't Amway state it on their website? If someone finds any veracity about this claim, inform me and I will post it.

Ineffective Tools?

 One of the things my Amway upline always pushed on us was the tools system. While the tools are said to be optional, they are not promoted that way. They were promoted as vital, necessary, almost as if you were insane to try and build an Amway business without tools. Basically the tools were a defacto requirement. My upline always claimed that nobody ever "made it" without tools. Some Amway defenders insist that the tools work, and that IBOs who were on the system proved it with higher levels of success and product volume. But the tools work for maybe a fraction of 1% of IBOs who try them. The vast majority of people who use tools make nothing or lose money. Similar to a lottery.

IBOs participating in the system (voicemail, book of the month, standing orders, functions, etc) do more PV. I believe this is true, but it is true, only because once the upline can convince you to participate in the system, then that same IBO is also convinced that they should or must do 100 PV as part of the deal. People who aren't convinced that the system is vital, subsequently do not purchase or sell as much PV because they have not been convinced that moving PV will make them successful or wealthy.

Critics and Amway supporters have debated this issue for years, but clearly, the evidence supports my position. Why? Because if there was a true demand for Amway products because of their quality and/or value, then there wouldn't be such a steep drop off in movement of volume when an IBO becomes a former IBO. Many, probably most former IBOs never buy a single Amway product once they leave the business. If the products had true quality and value as Amway supporters claim, why don't people continue to purchase 100 PV per month when they quit? Because they never wanted or needed all of that product in the first place? If former Amway IBOs continued to but products, Amway sales would continue to increase. Amway's sales and revenues dropped more than 25% from 2014 to now (2018).

If someone is convinced that Amway will be their financial savior and that by using tools and moving 100 PV will result in long term financial security and residual income as claimed by upline, then that is what they will do in hopes of achieving the end goal. When that goal or dream doesn't materialize, the former IBOs realize that the tools and products no longer have the value they once thought they had. How many former IBOs will buy standing order or attend functions? If these materials really made you nicer, or saved marriages, why don't any former IBOs keep buying them? Why do they resort to selling them for pennies on the dollar on Ebay or Craigslist? What happened to the great return policy?

Bottom line is that the tools don't work. They only work for the uplines who directly profit from the sale of tools, plus the artificial demand in product sales created by those IBOs who are convinced that Amway wil make them rich. Once the reality sets in that Amway will not make them rich, and that the tools are simply draining their resources, then the demand or tools and Amway products disappears almost instantly. There is no unbiased evidence that I know of to suggest that these tools work, and basically, the miserable amount of new diamonds emerging in the US seems to confirm this fact.

Submit To Upline?

  Another cult-like teaching that comes from upline diamonds is to submit to upline.  Sometimes it’s called being teachable but as you get more immersed in the system, you are expected to consult with upline for everything, including important life decisions such as getting married or buying a new car.  In retrospect, I believe it’s done because upline doesn’t want you making decisions that could hinder your ability to purchase tools.  Thus IMO, they will advise you to do things that keep disposable income available so they can teach you to buy more tools and functions.

But they make it sound harmless, that checking upline can help you because upline has experience in the business and can tell you how some decisions can impact your business.  Sounds harmless but the upline teaches this more likely for their own benefit than for your benefit.  If you can recognize the game, you can see thru the idiocy of upline teaching.  Looking at it in another angle, how much analysis did upline do on your business before giving you business advice.

Some upline even “counsel” their downline.  Can you imagine submitting to someone for such important decisions that can affect your life and your upline's only real qualification to do this is they joined Amway before you.  You could actually be a counselor, but you would be counseled by someone upline with less qualifications simply on the basis that they joined Amway before you.  Or can you imagine a young say 30 year old single guy sponsoring a 45 year old married guy.  The married guy would get advice from someone who isn't married any may not have been in Amway for long.   Yes, the sponsor will go upline to seek more expertise, but is that really a reliable "system"? 

When I was an IBO back in the 1990s, I was engaged to be married and my upline advised to dump my fiancée because I could build the business faster and if I achieved diamond, women would line up to court a single diamond.  By then I had already smelled a rat with regards to Amway teaching so that was the last straw for me. 

I was a 4000 PV IBO at the time, so I told my group what happened and that because of what happened, I had decided to walk away from Amway.  All of my group except 1 or 2 IBOs downline from me walked away when I did.  So, my upline and sponsor went from direct distributor to less than 4000 PV and I do not believe he ever requalified at that level again.  

I do know that my sponsor was still active as recently as 2019 but I’m not sure if he’s still chasing Amway in a "all in" manner.  Being that he was a physician, I see it as a life wasted on Amway.   Submit to your upline is total BS.  

Always A Diamond?

 I've seen some interesting discussion recently about how a diamond pin is like winning a gold medal. That you don't get it taken away from you later even if you don't qualify anymore. The discussion also flowed as to where they mentioned that former US President Jimmy Carter is still addressed as Mr. President. Or that someone with a Superbowl ring can be addressed as a Superbowl champion. While I agree with that to some degree, I think the issue of diamond or former diamond is significant and different from former President Carter or a former Superbowl Champion. Terry Bradshaw or Peyton Manning don't parade around as if they just won the Superbowl last year.

The diamond pin is a significant achievement for sure. Seems that recently, it's even harder to achieve in North America. I don't know of more than a few new diamonds emerging in the last 25 years or so in the US. But if say a diamond qualified in 1988 and never qualified again, how would you as an IBO feel about paying to see this diamond speak function after function and how many would continue to buy standing orders from a guy who may have achieved diamond 25 years ago and never again? Would the audiences be "fired up" to see these speakers? I find this ironic also, because many Amway defenders like to criticize Amway critics for having an outdated experience. Well, conversely, a one-time diamond would be basically the same thing. If not, then Joecool should command the respect of a 4000 PV Eagle since that was my highest level.

I actually have no issue with Amway allowing the achiever to carry their highest pin as a recognized achievement, but I do believe that those who use their former pin status to exploit and profit from new IBOs and prospects should be stopped. I know I would not have been so excited attending a function where the keynote speaker went diamond for 6 months a decade ago and was no longer qualified. Else, by upline's definition, he will teach me to go diamond and fall apart? I believe there are fewer North American diamonds now than ten years ago. Some diamonds resigned and some outright quit. So much for residual/passive income. Obviously if these things existed, then nobody would quit or walk away from residual income.

BTW, an article on an Amway Corporate website says this about passive income:
"Passive income is a term we do not permit distributors to use and it’s not a term the Corporation uses. In our business, there is no such thing as doing no work, and expecting money to still come in.” Link:
http://blogs.amway.com/answers/2010/11/02/unwelcome-words/#comments

Still think there's a free ride at the end of the tunnel?