Back in the beginning of May I published a letter from Ben Woodward of Amway that had been sent to all Amway IBOs in the United Kingdom and Republic of Ireland. The letter announced that, effective immediately in these markets, all previous BSM approvals had been withdrawn, all IBO meetings requiring payment were banned, and all sponsoring was suspended.
Coming as it did late on a Friday, and otherwise completely unannounced, this came as a huge shock to Amway IBOs. After further investigation it came to light that the UK Department of Trade and Industry (DTI) had actually moved to have Amway closed immediately in the UK. Quite obviously Amway had to act fast, hence the lack of communication.
After further digging I discovered that the DTI had been investigating Amway for nearly a year, and it culminated in them moving not only against Amway, but also against the two IBO organizations that had an incorporated presence in the UK – Network TwentyOne and Britt WorldWide. Other organizations such as IBS were not included as they were apparently setup in such a way as to be outside the jurisdiction of the DTI. Nevertheless this was an issue directly affecting all IBOs and IBO organizations.
From my time battling "the critics" on the internet, I was aware that a number of Amway/Quixtar critics, including Scott Larsen of Amquix, Eric Janssen of Quixtar Blog, and Robert FitzPatrick of Pyramid Scheme Alert, had for some years been encouraging people to submit complaints to the DTI, including the necessary contact information and links on their websites. If even a tiny, tiny percentage of Amway IBOs had an issue (and there’ll always be folks who encounter problems), a concerted campaign such as this could easily lead to hundreds of complaints being submitted. The DTI would have little choice but to investigate further. What’s more, from the way this spread on critics websites, it appears to me that someone contacted them to inform them of the investigation. The idea that the DTI has actively conversed with some of these critics is outright scary. While some of them raise legitimate issues, folk like Robert FitzPatrick literally make stuff up and state outright falsehoods about the nature of Multi-level Marketing. I recommend everyone reads Len Clements’ Anti-MLM Zealots article for more background.
So, we have the DTI investigating Amway, aided and abetted by known critics of the business model. Not a good situation.
A week after Amway’s initial letter I received a copy of an email that Founders Crown Ambassador Jim Dornan had sent to his organization, Network TwentyOne. The letter seemed to me very professional and supportive of the actions Amway was taking. To my shock, Amway publicly responded with an attack against Jim Dornan – one of the most respected IBO leaders. I pulled the post in confusion – what had generated such a response? Shortly afterwards I received a request from Network 21 not to repost the letter. Frankly I wish I could repost it, then I’m sure you’d agree that Amway’s response was uncalled for and unprofessional. Later, in the Quixtar vs TEAM dispute, the same type of "attack" posts were common on the Alticor Blog. The posting were roundly condemned by IBOs both within and outside of TEAM as being disgraceful and harmful to the reputation of the company and our business.
In their response to Jim Dornan, Amway clearly indicated that the DTI problem in the United Kingdom was primarily a result of the actions of IBOs and IBO organizations and that Amway’s "guilt" was in failing too properly police these actions. In their original letter, Amway also said –
The DTI has in particular raised issues as to the manner in which the business is promoted and the sale and promotion of BSM.
It appeared a fairly straightforward situation – some IBOs, either individually or as organizations, had been "behaving badly" and the DTI had received complaints. Fair enough – I’ve been a critic of the behaviour of some IBO organizations for some years myself. But as I researched further I discovered something quite interesting – from my reading of UK law, it’s essentially illegal to get anyone to join Amway by telling them they’d receive any "benefit" by getting other people to join. I was quite stunned. The law was incredibly broadly written – even pointing out that by sponsoring people you’d benefit from their volume was illegal! The idea of the "4% money" was even more blatant. This law was a decade old and, while it appears to have been meant to address the normal type of "illegal pyramid" problems (ie getting paid for recruiting), it actually appeared to ban the very basis of multi-level marketing. Had the DTI realised the same thing?
Amway, however, continued to push the line that the problem was the IBOs and the "system companies" –
The heart of the DTI’s position, as we understand it, is that the business opportunity is promoted by incorporated and unincorporated organizations in a manner that does not reflect the financial rewards people are likely to earn when they participate in the Amway business.
The DTI also objects to the manner and frequency in which meetings and BSMs are promoted by the sales organizations in conjunction with the Amway business opportunity.
In short, it’s a problem with the way BSMs are promoted and the way IBOs present the business. Yet if my reading of the law is correct, the very concept of multi-level marketing was at the heart of the problem – not IBOs.
Last Friday it became even clearer to me that Amway has not been forthright on this issue. Amway UK&ROI announced some quite dramatic changes to the business model. While the ban on BSM and "system-organized" meetings continued, none of these new changes were at all related to BSM or the BSM companies. Furthermore, sponsoring continues to be suspended.
Some simple questions arise –
- If "the heart of the problem" is the BSM and the way the business is promoted, why all these dramatic changes to the Amway business model itself?
- If this is "the heart of the problem", and BSM is banned, why is the DTI still pursuing Amway in court?
So what IS, truly "the heart of the problem"? Many folk have asked – "can’t we just go to the court/government/wherever and get a copy of the complaint?". You would think so. I emailed the DTI and asked and was told "we don’t comment on the affairs of individual companies".
Today however we received some insight. A poster called "SystemBalance" has said we can get a copy – It’s "available from the UK public records office for a fee 1 GBP per page" – and it’s more than 8 pages!!!! SystemBalance goes on to say that he/she has read these 8 pages (!) and that my thesis is essentially correct. Now, with a name like "SystemBalance" I think it’s fair to assume that the poster has a "pro-system" perspective, but nevertheless it appears to me, as outlined above, that this is clearly not just a "system" problem. What’s more, as SystemBalance points out, Amway’s attempt to deflect the blame elsewhere may have quite drastic consequences, not only for Amway IBOs undergoing all these changes, but the direct selling industry as a whole.
Amway – in the UK you’ve renamed Amway Independent Business Owners (Amway IBOs) to simply Amway Business Owners (ABOs). Well – the thousands of Owners of Amway Businesses in the UK deserve to know the whole story. What is it?
Folks – go read the post from SystemBalance and tell me your thoughts.