Tag Archives: Pyramid Scheme Alert

Critiquing the Critics

Bloomberg Business Week has today published an article about the direct selling industry that appears to be little more than a propaganda piece straight from the pen of MLM critic Robert FitzPatrick. It astounds me that supposed journalists do so little research on these self-declared “experts” and even less on the claims they’re making. So I’m going to do their job for them and write a series of articles on some well known MLM (and Amway) critics, who they are, and how their claims stand up to the facts.  My current list -

General MLM Critics
Robert FitzPatrick (Pyramid Scheme Alert)
Jon M. Taylor (Consumer Awareness Institute)
Dr Stephen Barrett (MLMWatch)
Bob Carroll (The Skeptics Dictionary)
Rick Ross (The Ross Institute)
Tracy Coenen (Sequence Inc)
Steven Hassan (Freedom of Mind Institute)
Dean Van Druff (What’s wrong with multi-level marketing?)
Peter Bowditch (ratbags)

More Amway-specific Critics
Russell Glasser (The Perils of Amway)
Scott Larsen (Amquix)
Steve Nakamura (JoeCool, various blogs)
David Touretzky ( Amway/Alticor/Quixtar Sucks!)
David Brear (various blogs)
Shyam Sundar  (Corporate Frauds Watch, India)

If there’s others you’d like me to address, please drop me a note in the comments below!

Update:

New post on Steve Nakamura aka JoeCool – Who is Amway critic Joecool? And does he owe me $50000?

Amway Success – What are your odds?

A common cry of the anti-Amway zealots is that the “odds” or “chance” of an individual being successful in Amway are low. They’ll typically look at some of Amway’s published statistics, such as the fact that in 2005, .0120% of “Direct Fulfillment IBOs of Record” qualifed at the Diamond level, and claim that your “odds” of going Diamond are 1 in 8333, so you’d be better off at Vegas, where your “odds” of winning on a single number in say, roulette are 1 in 29.

Oft-quoted anti-MLM zealot Jon M. Taylor, Ph.D., President, Consumer Awareness Institute, and Director, Pyramid Scheme Alert, for example, claims that -

The odds of winning from a single spin of the wheel in a game of roulette in Las Vegas is 286 times as great as the odds of profiting after enrolling as an Amway/Quixtar “distributor”

Amway is not a game of chance

A quick bit of math shows that Dr Taylor thus claims the “odds” of profiting in Amway are 1 in 8294. He calculates these “odds” based on numerous assumptions (for which I might add, he has next to no data to support), including what peoples expenses are. Now, for the purposes of this post I’m going to ignore these type of assumptions, but if they are correct (they’re not) then his “odds” might be a reasonable statistic to consider, except for one thing – unlike roulette, Amway is not a game of chance. Continue reading

Great News for all Network Marketers

As many North American readers would know, in 2006 the US Federal Trade Commission (FTC) proposed a new Business Opportunity Rule which, as written, would require multi-level marketing opportunity promoters to provide prospects with a whole range of new information, such as names of other local participants, lawsuits, etc etc etc. It also imposed a mandatory 7-day waiting period before a person could join.

The MLM and Direct Selling Industry argued that the requirements were not only unduly burdensome on legitimate companies, they would in fact have little effect on illegitimate companies. The FTC has agreed, and MLMs are effectively exempt from the proposed new rule.

There is some very interesting information in the full FTC discussion paper. One area of discussion was the problem of declaring average incomes, when many people join purely for the purpose of receiving “wholesale pricing”. Shaklee for example, revealed that 85% of folk who join that company do so for that reason.

The FTC included summaries of the claims of the bogus “consumer advocates” Pyramid Scheme Alert (Robert FitzPatrick) and Consumer Awareness Institute (Jon Taylor) but appeared unswayed by their arguments that MLM are effectively all illegal pyramids. One particular line from the Jon Taylor’s CAI which always makes me laugh -

“[i]t is extremely rare for MLM victims to recognize the fraud in an MLM program without intensive de-programming by a knowledgeable consumer advocate”

Good grief, get a life Jon.

Folk have argued that the UK BERR and the FTC have recently been in regular contact regarding MLMs. In particular a number of critics have claimed the BERR case has put MLM, and in particular, Amway, under strong FTC scrutiny. If this paper is any reflection of what the FTC and BERR have discussed, then it augurs well for that case.

Post a comment below or Discuss this post on Amway Talk

MYTH: 70% Retail Sales Rule

Is it dishonesty or just ignorance? If you search around the posts of critics of Amway and Quixtar on the internet, something you’ll see regularly is reference to something like “The 70% Retail Sales Rule”.

Here for example, on Pyramid Scheme Alert, the claim is made -

A 70% retail requirement level has been applied in various agreements between state Attorneys General offices and multi-level marketing companies charged with violating pyramid scheme statutes.

and

At least 70% of product must be sold at retail to consumers who are not also Amway distributors.

Continue reading