Quixtar class action settlement – a brief analysis

Regular follows of this blog will be aware of the settlement in a class action case against Quixtar by Pokorny, Blenn, and Busiere. Today most IBOs and former IBOs covered by the class action have received their second notice about the settlement, so I’ve been receiving a few inquiries about it.

The case was originally against Quixtar, the Puryears and World Wide Group and the Britts and BWW, Amway (formally Quixtar) . Through the process of negotiating the settlement, Amway extended it to include a whole range of BSM (business support material) companies. The second amended complaint lists the following as defendants –

This was a smart move by Amway, as the settlement essentially immunizes both Amway and all the BSM companies against any lawsuits by anyone who was an IBO in the past decade. Amway has made a lot of significant changes in the last few years to better control the activities of the field and BSM companies, as well as make for a better, potentially more profitable business for all. An ongoing lawsuit of this nature, no matter it’s lack of merit, is a costly distraction. Following on from Woodward and TEAM settling their case, the settlement of the Morrison case, the Ribbon gift card settlement, and the Canadian class action being thrown out, Amway has pretty much cleared the deck and can move forward with a clean slate.
The usual handful of Amway critics have of course interpreted settlement as an admission of guilt. It’s nothing of the sort of course, and the settlement documents themselves clearly state this. What perhaps make it even more obvious is the actual dollar figures of the settlement. Here’s what was agreed to –

  1. Amway agrees to a bunch of changes they’ve already implemented – ie more free training, better monitoring of BSM companies etc
  2. a $34 million cash fund to pay administrative costs, attorney expenses, settlement expenses etc
  3. a $21 million product credit fund

The product credit fund is at retail price and offers some product bundles worth up to $75 to anyone who was an IBO, didn’t renew, and didn’t ask for a refund of their membership fee. Amway’s retail price includes approximately 30% retail markup from IBO price, plus an additional around 35% for volume rebates and distributor incentives. On top of that you have Amway’s profit margin. So this fund is actually costing Amway no more than around $5 million or so. So they’re spending $5 million to get a range of Amway’s best selling products in to the hands of people who had already thought joining Amway was a good idea at least once before.

That’s not a settlement – it’s a marketing expense!

Then there’s the cash fund. First thing to note is that nearly $16 million of this has been allocated to pay the plaintiff’s lawyers and expenses and a further $1 million is allocated for administrating the settlement and class notice. In other words, the actual payout to class members is $17 million – or just 0.16% of Amway’s revenue last year, and their total actual costs for the settlement, around $39 million, is less than 0.4% of last years revenues.

I think it’s fair to assume that Amway’s lawyers were costing at least as much as the plaintiffs in this case, and that proceeding to a full jury trial, and the inevitable appeals no matter what it’s result, would have cost at least this amount again. There’s every chance this settlement has saved Amway money. It’s certainly worth the expense to avoid the inevitable bad press the case would have brought.

So, if you were an IBO between January 1, 2003 and February 21, 2012 and didn’t renew or you can prove you lost money with your Quixtar business, check out www.quixtarclass.com you might be eligible for some cash or free products!

6 thoughts on “Quixtar class action settlement – a brief analysis”

  1. I have had personal dealings with the DeVos’ via their realty. They are from my opinion scammers all the way around. Proclaiming… “It’s for a better future for your family” the only family that benefited was DeVo$’!!!
    One of the things I’ve learned is that they keep the same game going, change a few things to make it more beneficial for them, change the name to something else and continue on their way to scamming anyone and everyone that falls into their hands. They become their prey! BEWARE of anything these people offer …it’s poison! They make it sound so enticing. Remember… Satin comes to you as an angel of light! …making everything look good, drawing you in! Then Gotcha!!! …these people have everyone in their pockets… Law enforcement, judges, politicians, ministers, people in the communities. They pay people off via jobs, housing, anything they have a commodity on. They have people everywhere! They bugg peoples homes, steal ideas via their covert listening DEVICES/TACTICS TO they plant. They are always one step ahead, you now know how they do it! …they have others do it for them, they direct people. They commit torturous acts against people with organized gang stalking, electronic harassment and have Eric Prince do a lot of military contracting via contractors by breaking into peoples homes, cars, businesses. They intercept mail, phone calls via ACI Communications anything to be advantageous in every way. DO NOT BE FOOLED!

  2. 2006-My marriage was in trouble, my finances were in trouble and I needed to make more money to just survive.
    Quixstar was introduced to me and I began to dream again. I never made money but I dove into the cd’s, meetings and the dream of a better future.
    For quite some time I didn’t know that it was a breakoff of Amway and I had already done that 2 times. I needed this!
    2007- My marriage was over and I only made $800 a month teaching music lessons at my home. I put my heart into my children and a brighter future for us. Yes, Quixstar seemed to be the answer to all my dreams.
    The Team-I read self help books, listened to CD’s, went to meetings and I was broke.
    2008- Married a long time friend and together we have 14 children. 9 were home at the time, 8 boys, 1 girl. We needed this.
    Mona-Vie- I followed my leaders. We drank our super juice every day. Money was tight and responsibilities were high. This wasn’t working for us.
    Was there a honest business that we could make residual income from home and still spend time with our family?
    2009- The Quixstar/Team/Mona-Vie is over, We learned a lot. We spent a lot of money, and I don’t regret it, this was my education.
    Maybe my husband and I could start a new business that was honest and the prices were comparable to grocery store brands.
    We didn’t have to…
    http://bit.ly/256X7ix I see posts on Facebook that say “I’ve found the answer to staying at and working from home.” They are so excited and…

    2015- Received some products from Quickstar as part of a settlement for a class action law suite. The protein bars were so bad we gave them to the chickens, no one would eat them. We enjoyed the energy drinks though!
    2016- Got a check from Quickstar as the other part of the settlement $746.10 and it cashed!!!

  3. There were no “court charges”. Individuals, not any official body, made allegations against Amway. I’ve previously analysed the allegations, and they’re groundless.

    There have been times when there’s been allegations against Amway that I think have had some basis, and I’ve said so. In this case I think the allegations were bogus, and I’ve said so.

    The reality is though, it is cheaper to just settle this case than to fight it and win it. It’s probably also more sensible from a PR perspective.

    1. You are correct. I was under Billy Florence at that time. Every first night pack that anyone got told you that this was an incredibly challenging business, that was not for people unwilling to invest time and money.
      Like millions of other people, I lost my ass. But there was no question that the concept worked for some and I knew what I was getting into.

      1. Charles,

        According to the class action settlement agreement there are a little under 1.5 million former IBOs from the past decade in the US. It was estimated by an independent consultant that at most only 18% even had $100 worth of expenses on business support materials (including seminar tickets etc). Only about 3% of all the former IBOs contacted have requested any reimbursement through the settlement fund.

        It’s simply mathematically impossible for there to have been “millions” of people who “lost their ass”

  4. I am very alien to legals issues that Amway had, because I understand finance but not much of law or chargesheets. But why do you end up defending Amway payments? I am a biggest fan of both Apple and Microsoft but both of them paid penalties in various places/times I guess. I know Amway has all its bad names and I suffered a bit from my up line, Amway and the system. However, just like Steve Jobs believed, if your products are of better quality and satsifiy need you will have buyers. Especially being in FMCG it should be easy for Amway, I can understand blogs that are meant for flushing out the stress suffered being an IBO (anti-Amway) but I am not sure why an Amway support blog should talk about defending court charges.

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