Buyer Beware! (urgent warnings about products/services to avoid at all costs)

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Buyer Beware! (urgent warnings about products/services to avoid at all costs)

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Review of "Buyer Beware! (urgent warnings about products/services to avoid at all costs)"

published 07/10/2004 | Reader1203
Member since : 15/09/2004
Reviews : 7
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"Our Story (The Truth about AMWAY)"

Quite a few years ago my husband and I were contacted by a former work colleague of mine, who asked if we were interested in a unique business opportunity. We were naturally curious and asked for more information, but were simply told that it was too complex to tell us at that moment "you can't give a haircut by telephone", but that he and his wife would be happy to visit us to explain everything. We were a little suspicious, but impressed that they deemed it worthwhile to travel some distance on a weekday evening to spend time with us. Two days later they turned up, smartly dressed in business attire, and showed us ...

1: THE PLAN.

They began by contrasting conventional business opportunities with what they had to offer. Whereas to set up a conventional business venture you risked "losing your shirt", with theirs there was minimal investment and running costs, and you couldn't lose money! There would be no stock or premises costs, and the business would allow access to hundreds of quality goods and services at wholesale prices. Incidentally, it would not really involve selling! If you worked it, it would work for you. It was not a "get rich quick" scheme but would generate for us an income of over £10,000 each month after between 2 and 5 years. Yes, it would involve work, but would be part-time and flexible, taking up about 15 hours each week.

We were then subjected to what they termed a "cost of living exercise", where we were asked to calculate how much it would cost for an average family to live comfortably here and now. Of course it was apparent that my husband’s salary as a Sales and Marketing Manager was barely enough to live on. Obviously this was part of the softening up process to make us amenable to what was on offer.

Then began the process of "dream building". What would you do if you truly had time and money freedom? We discussed holidays, cars, travel etc. and our dreams were developed (what colour would your Mercedes be?). We were told that the business opportunity would be a vehicle to achieve them.

We were then informed of the "Time Trap." We all spend the first 20 years of our lives dreaming and learning, followed by 20 years earning, and then we spend the rest of our lives "yearning" (what if we had/hadn't done this or that) and end up broke reflecting on missed opportunities. Of course their inference was there was an alternative, which lo and behold they were about to reveal.

It was then demonstrated how the traditional method of distributing goods and services to consumers relied upon a whole series of middlemen (wholesalers, retailers, shippers, warehousers etc), each of whom took their cut. A better and more efficient way would be for a broker to purchase such goods and services at cost (cutting out the middleman), sell for a profit to a consumer, and also receive a type of royalty bonus dependant upon volume of goods sold. Everyone would be happy: manufacturers/suppliers would have a market, consumers would receive goods and services costing less than from the shops; and of course the brokers/distributors would be rewarded for their efforts. The logic of this seemed irrefutable, and perhaps blinded me to the more problematic aspects of what was involved.

The mechanics were then explained. Goods and services were accessible from a large and powerful corporation who only operated through distributors. Our line of sponsorship and IBS (a highly successful training organisation in the UK) would provide full comprehensive training. We would get started by purchasing products through our sponsors for self-use and a small amount of retail to friends and family. Even at this level we would make and save money. With limited monthly turnover of say £200, we would show a "profit" of at least £40! Then we would look to expand our business in the same way as McDonalds, for example does, by opening a number of outlets. By recruiting others, we would increase our monthly turnover, thereby increasing the bonuses we would be paid by the corporation. The whole scheme was impeccably fair, as we all (from the highest distributor to the newest recruit) pay the same for the products. Bonuses are paid in direct proportion to turnover. Through this process of expansion, we would earn more and more, until we became financially free. The Plan ended with the statement that we had just been shown the "Amway Sales and Marketing Plan." This was the first mention of Amway.

We were left with some literature, audio cassettes, and a "follow-up" video cassette, and they arranged to see us in a couple of days.

2: THE REALITY.

Unfortunately we were taken in by it. However, before we "signed on the dotted line", we were told we needed to buy some "tools" as necessary investment in our business. Various other Amway Information Sites have detailed how the "Tools Scam" operates in the US. It exists in more or less the same way here, but is, if anything made even worse by a (potential) distributor being expected to have attended functions, and purchase a number of books/tapes/videos from IBS, BEFORE officially signing up as an Amway distributor. We encouraged our potential recruits to attend seminars (for which they paid the £15+ admission). At one such function, we brought 12 people, of whom only 4 were signed up distributors.

During the following year or so, we were active distributors, and we believe our experience to be fairly typical, and was characterised by:

· We signed up to the "book of the month" and "tape of the week" programmes.

· We compiled a list of nearly one hundred names, most of whom we contacted in one form or another to promote "the most exiting business opportunity in the world today".

· Either by ourselves, or with the help of our sponsor, we showed a number of "Plans", and did elicit some interest. We persuaded dozens of people to attend open meetings, and a number to pay for and attend seminars and major functions.

· At one stage, we had a group of 8 fully-fledged distributors, but were still losing money at a rapid rate.

· We were so busy attending functions, that we neglected our children, our home, our relatives and friends, our precious garden and missed out on our holidays and social activities.

· Despite the hype and the froth of the functions, few people were achieving great levels of success. Our very own sponsors, who were prospecting scores of people, and showing at least 10 plans each month never increased their bonus percentage level; (although they never let on, I suspect they're still stuck at 9%, after 5 years of active involvement).

· We did attempt a little retail. Although we enthusiastically promoted the quality and concentration of the products, we rarely achieved a repeat order.

So, after a year or so of dreaming and doing as we were told, the penny finally dropped. We quit the "system", but remained distributors for another year, doing a limited amount of retail, in an effort to recoup some of our losses (estimated at £2000.00).


3: MY CONCLUSIONS.

I invite anyone to refute these: -

1. There is very little retail of Amway products in the UK. Most of the products are purchased by distributors for their own use, with little regard for whether such purchases represent value for money. Despite the efforts of countless thousands of distributors past and present Amway's laundry, home care and personal care products have an insignificant market share. Consequently, they have never appeared in "Which" style consumer reports. Similar reports in the US have found Amway products wanting. I would very much like to see any UK price comparisons.

2. The vast majority of active distributors operate through an AMO: (IBS, DTS etc), where it is stressed that they must be part of the "system" of books tapes and functions. This means the costs of running their Amway business can be in excess of £100 monthly. In the absence of significant retail, a distributor requires a high turnover merely to break even (ie to earn sufficient bonus to cover running costs). I would estimate that this break-even point is at a bonus level of 15% to 18%.

3. It is only direct distributors and above who earn any real money, and I suspect that the source of their income is from the system, as much as bonuses from their Amway business. The "Tools Scam" as it operates in the States is well documented, and I believe it operates in the same way here. I was always skeptical of the claim that no profit was made on such tools/functions: the tape of the week cost £4.20 and I can't believe that they cost more than £1.00 to produce.

4. Amway's own Rules and Code of Conduct are openly disregarded. Examples include:-

(a) The 10 Customer Rule: whereby to be eligible for a monthly bonus, a distributor must sell to at least 10 separate retail customers. For the 10 customer rule to be enforced, you have to fill out a very detailed report form with proof of your 10 customers every month whilst in qualification for direct 'it is called a silver producer report', something which you unfortunately never got the chance to find out for yourself." Can any other present or former distributors in IBS confirm this? Even if true, I thought that the 10 Customer Rule applied to all distributors, at all pin levels, and that by the letter of the Rule a distributor at the 3% level would be denied a bonus cheque if they had not made retail sales to at least 10 customers during that month.

(b) Tools Buy-Back Policy: We were told that there was no obligation to buy back tools (books, tapes etc.). My sponsor had been persuaded to purchase stocks of prospecting tapes and the "Eight Step Pattern" (costing £40). In an effort to recoup the outlay costs, these were sold to new and potential recruits, who were subsequently told that no buy-back policy existed.

5. At the very least, Amway turn a blind eye to the activities of the AMO's. After all, where would they be without them!

6. To my knowledge Amway UK is not a Limited Company, and is therefore under no obligation to publish statutory accounts. Amway is a successful, extremely profitable and debt free Corporation. I have seen via US web-sites that Amway is a substantial donor to the Republican Party and various right wing and Christian fundamentalist causes. Does Amway UK contribute to such organisations? Can we ever know?

I would especially appreciate comments from existing or former distributors who have also seen through the sham.

Thank you for reading

Karen


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Comments on this review

  • KateHurst published 25/05/2009
    I admire your honesty - never heard of AMWAY myself but it's always good to be aware. Great review - it must have taken a lot of putting together.
  • carcraig published 29/06/2008
    My Mum sold Amway ina very small way back in the 70's but I think it was along the lines of Avon back then and she didn't lose money.....Caroline xx
  • Chuchy published 18/10/2006
    It's just a huge scam. I remember two of my friends got involved back in the 90's and they were completely brainwashed!
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Product Information : Buyer Beware! (urgent warnings about products/services to avoid at all costs)

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