If everything I’ve been hearing is true, there’s been strange goings on indeed in the UK. I thought I’d share some of this with site readers, but please note, while my sources are generally good, these are unconfirmed for now. We should however know more in the next few days. So, here we go.
- The DTI will be publicly announcing the case soon, perhaps as early as tomorrow (Thursday 8 November)
- Network TwentyOne is no longer being pursued by the DTI, however N21 has acknowledged to the DTI that if Amway is closed down Network TwentyOne UK will also close operations. If Amway wins, it’s business as usual.
- BWW has elected to close their operations in the UK and the DTI has elected to no longer pursue the case against them
- Termination of IBS may have backfired – one source tells me Amway and the DTI was close to a settlement, then some former IBS leaders contacted the DTI! Can anyone confirm or deny this?
So it would appear that contrary to Amway’s official take on this matter, Network TwentyOne and Britt World Wide have had a relatively minor part to play in this whole affair. What do you think the odds of an apology to Jim Dornan for their Misrepresenting and Un-Spun posts? It would appear Dornan’s original description of the DTI case was pretty close to the mark.
In the end what it all means is that the DTI is still pursuing court action against Amway, and if Amway loses, we all lose. I’ve heard that Amway’s various changes in the UK do indeed address the issues raised by the DTI, but there’s some heavy anti-Amway feeling within the DTI and it’s felt that if it’s not taken to court then anyone can break the rules and only worry about changing if "caught". I can certainly understand that thinking.
As I’ve mentioned before, it appears to me that UK law can be interpreted in such a way as to make normal MLM operations illegal in the UK, however this is primarily because of one word. UK Statutory Instrument 1997 No. 3 says –
1. It is illegal for a promoter or a participant in a trading scheme to persuade anyone to make a payment by promising benefits from getting others to join a scheme.
I’ve underlined the word of concern. In most jurisdictions around the world they don’t refer to "benefits", they refer to "payments" – in other words, you get paid for recruiting people. In legitimate MLMs like Amway, you do not get paid for recruiting. However – the UK law is different. Do you get any benefit from getting others to join? Sure – if they buy stuff you can earn a commission. What’s more, if they get large volumes moving, you get the 4% bonus etc etc etc.
The early version of this law – The Pyramid Selling Schemes Regulations 1989 explicitly had an interpretation stating the law only applied if –
(b) the only prospect held out to any participant of receiving payments or other benefits in respect of matters so specified is the prospect of receiving a sum not exceeding £3 in respect of the introduction by him of another person who becomes a participant.
In other words, the law was only of concern if you got paid for recruiting, ie classic pyramid schemes. Ten years ago, the law was changed, and in that change "benefits" was no longer defined. It appears that nobody has noticed, until now, that this oversight has made Amway, Avon, Kleeneze, Herbalife etc etc all illegal businesses.
It’s my belief this particular law is what has lead Amway UK & Ireland to dropping all joining fees. Once there is no requirement for payment to join, the new law no longer applies to Amway.
So what’s the result going to be out of all of this? Well, it appears to me that the court could easily interpret "benefit" the way I did, and thus confirm that all MLM companies which require a payment to join are operating illegally in the United Kingdom. But change "benefit" to "payment", and most, if not all of them, would be legal again.
Now, as mentioned this no longer applies to Amway with it’s new model. This is still mostly guesswork on my part, and we still haven’t seen what else the DTI complaint may be about, but if this is the heart of the issue and the rest is essentially about Amway somehow exploiting people because of this (lack of profitability etc) then I doubt, given all the changes to operation, that this will lead to Amway being shutdown. I can however imagine Amway receiving a fine as a result. Given this law has been in place a decade, it could be one very large fine indeed.
(PS The DTI is now known as BERR, but I’m sticking with the old name)
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