These comments follow the Open Meeting held on August 17, 1998. The speaker's statements are in dark blue, followed by the corresponding comment/ critique.
"We're talking about a legal, ethical, moral business that pays more six figure incomes than any other company in the United States."
Even though the speaker produces no evidence of how "legal, ethical, [and] moral" the business is, evidence to the contrary is starting to emerge. In most of the lawsuits against the Amway Corporation and its distributors, plaintiffs allege numerous illegal acts, unethical acts, and questionable moral acts. But these are still allegations, and courts have yet to decide whether there is merit to the lawsuits. Speakers still feel the need to mention this phrase to the audience, though.
"Approved by the Federal Trade Commission."
The fact is, the FTC found Amway guilty of two counts of price fixing and restraint of trade, and one count of misrepresentation. (Amway and its distributors had misrepresented possible earnings to prospects and new distributors.) Later, Amway was found in violation of the compliance order, and fined $100,000 and ordered to publish real earning figures annually, which became the SA-4400.
As part of the settlement, distributors were now required to keep track of how many customers bought their products. This is the 10 customer rule: each distributor must have at least 10 customers to retain their distributorship. This rule is now commonly ignored and/ or unenforced. In 1997, Amway eliminated the 10 customer rule and replaced it with the 50 PV rule (where each distributor must maintain at least 50 PV in order to remain a distributor). This too is never enforced.
"68 cents of every dollar is eliminated and goes into a profit pool"
If 68 cents of every dollar goes into a "profit pool," how much profit does the Amway Corporation keep for itself? After all, just like other businesses, Amway is in the business to make money. If 68 cents of every dollar goes into a "pool," either Amway's profit margin is very small or the products are over-priced to make up for the "profit pool percentage."
"Because... distribution in the past, had a manufacturer, that manufactured
something, whatever it may be. And that's gone through a conventional chain of
brokers, warehouses, salesmen, and... then it gets to us. Because of all this, the
price of the item goes up. There's no real value added."
It may just be my opinion, but it seems like this model is still the chain of distribution for many of the tools, especially the audio tapes: Dexter Yager produces an audio tape, then it goes to the Diamonds, then to the Emeralds, then to the Directs, then to the downline distributors. And along the way, each distributor adds their own profit to the price of the tape. In Ken's words, "Because of all this, the price of the item goes up. There's no real value added."
"the Neilsen studies say the average family spends 4 to 6 hundred dollars a month on stuff."
(and) "the Neilsens have already run the studies and 75% of us hate to do the mundane shopping of consumables."
Unbeknownst to many distributors (and this speaker) is the fact that the A.C. Neilsen group (which supposedly conducted this "study") must approve any reference to their company, data, statistics, or studies. According to an e-mail forwarded to me:
I work for... a major company who happens to be a Nielsen client. In fact, we have Nielsen reps on-site in our offices. He verified that the claims and comparisons [found in Amway and InterNet Services- produced brochures] were misleading. He asked for a copy of the brochure to show to the folks at the home office.
[It] turns out [that I] triggered a letter from Nielsen to Amway demanding they stop using their data as presented in the brochure. Nielsen clients must submit for approval any materials used externally that contains Nielsen data. The reason is to insure the data is used in a "fair" and sound manner. The data in the Amway brochure was not cleared with Nielsen before its production.
This would probably explain why the "study" is never presented with supporting information- it hasn't been approved or even cleared by the Neilsen people! This makes a person wonder, why do distributors need to use "unauthorized" studies to bolster the idea of building an Amway business?
"First thing we do is use your own products. Then save 30% off retail if you're used to paying retail."
He never makes it clear, but the "30% off retail" is actually a price comparison to such higher-end mail-order catalogs such as Land's End, Whackenhut, and L.L. Bean. What if a person does his shopping at local stores, such as Wal-Mart, K-Mart, Costco, Sam's Club, or other discount warehouses? There are a number of websites that argue the so-called "30% off retail" statement is just not true.
"but if you spend $200 a month, John, on stuff, we have bonus scales"
1. Spend $200 on stuff. Sounds like a good idea. The only problem is, the speaker NEVER mentions that the $200 is actually BV dollars, NOT the cost of products. The SA-4400 states, "BV for Amway products and services...averages 87% of suggested retail price. BV for catalog products averages 33% of suggested retail price." That means if you only bought Amway-branded products, $200BV would equate to almost $230.00 retail. But, by distributors' own admissions, Amway-branded products only account for about 20% of the total product line. If you bought non-Amway-branded products, $200BV would equate to over $600 retail! No wonder the speaker talks about the $200 in BV. If I heard that I had to spend $600 a month just to get a $6 bonus payment, I'd leave the room!
2. The speaker quickly mentions that there is an average 2:1 PV:BV ratio and that the bonus scale is based on the amount of PV. This relationship between PV and bonus payments is never fully explained since he doesn't talk about the performance-bonus scale.
"It's not, you know, the key is, how many times you [talk to people], not exactly what you say"
This is his hint that when people build the business, they discover that "some will, some won't." He is hinting that distributors must talk to many, many people just to find a few people who will build the business.
"Alright, 6 who share it with 4 who share it with 2, take it serious, ok. Like a penny chef: 2, 6, over 4, 2, 21 new dollar increase in you income per month."
In entire time of showing the plan, he NEVER once mentions that the 6-4-2 pyramid is a "hypothetical monthly BV performance." (as stated in the SA-4400) The audience gets the impression that this is the "normal" way to build an Amway business. In fact, just the opposite is true: (again from the SA-4400) "One out of every 45 'active' distributors actually achieved the hypothetical monthly BV performance illustrated above in at least one month during the 12-month survey period." The SA-4400 also states, "Approximately 41% of all distributors of record were found to be 'active.'." Now, technically, the speaker never said that the 6-4-2 was "average," but he never said it was so un-average.
"But, probably the first year you're gonna maintain this, make over 50 thousand dollars."
Let's look at this statement carefully. Obviously, he does not take the time to explain how a person would actually make this kind of money, nor does he explain the bonus payment scale.
If you maintain the 6-4-2 for six months, you become a Profit Sharing Direct (PSD). You get a bonus check from Amway for achieving this. After 12 months, you receive another bonus. If you are making over $2,000 a month from the products flow, that equals about $24,000 a year. Plus the bonuses from the Amway Corporation and that becomes $50,000?? Amway bonuses are over $26,000?! No, not really. But, since he offers no evidence either way, there is no way to prove this statement (at least at this meeting).
The riches the speaker hints about is actually the money a PSD will make from the sales of tools. It is only at the PSD level that distributors are let in on the "dirty secret" of making money off the people below them. And of course, income from the sales of tools is NEVER mentioned in an Open.
"when we're talking about helping others, now, use your own products, you know, merchandise a little."
In other words, this business is about showing people how they can make money by shopping at home. At no time, do you actually have to "merchandise" (or sell) products. This is the complete opposite of the 1979 FTC ruling that mandated that every Amway distributor must show proof that, in order to maintain a distributor, he must have 10 customers. Then again, this my be completely irrelevant since Amway rescinded the 10-customer rule in 1997. Instead, distributors are required to do at least 50PV in volume per month. Is this Amway's method of getting around the FTC order or does Amway really think that 50PV per distributor is "selling?"
"first there's an education. This is optional. So is the success."
And here the speaker implies that if you do not use the "optional" system, you won't be successful in the Amway business. Then is the system really "optional?"
"They handle warranties, satisfaction guaranteed."
Let me just relate my own "satisfaction guaranteed" story:
When I was a distributor, I bought a few bottle of vitamins and later returned them, unopened. I filled out the return form properly, and a few weeks later, received a "business voucher," redeemable on my next order. I wrote back to the Corporation stating that I wanted a cash refund. A few weeks after that, I received a letter stating that I had to give them invoice numbers and the date-of-purchase. Of course, this information was on both the voucher and the original return form. Finally, after my second letter to them, I received a check for the entire amount... more than a month after I returned the products. So, who was satisfied with this transaction? I certainly wasn't.
"We're, we're cheaper 70 percent of the time."
This statement has been argued almost to the point of irrelevance- it is just NOT TRUE. I won't even attempt to argue this point, as another website is dedicated to the numerous price comparisons. Go to The Amway distributors little white lie.
"Their D&B rating is the best you can get."
With this statement, the speaker violates the Amway Business Manual's Business Regulation 3. Click here to read about Amway's regulations on the use of its Dun & Bradstreet rating (on my Deceptions page).
Since the speaker made this claim, it is obvious that he either a) does not know about the rule (contained in his own 'Amway Business Manual') or b) he knows about the rule, but is choosing to ignore it. I don't which is worse- ignorance of your business manual or ignoring your business manual. Are there any more rules that he is not aware of and/ or ignoring? Just remember, this speaker (Ken Stickler) is one of the "successful leaders" of the Amway business.
"I've been to their main manufacturing facility in Michigan. It's like 10 million square foot under the roof"
The fact is, Amway's "10 million square feet" is spread out over ALL of its facilities worldwide- from the research & development centers to the RDC's. The SA-4400 states, "[Amway's headquarters stretches] along a mile-long, 380-acre site in Ada." Can "10 million square foot under the roof" really fit on a 380-acre site? I'll leave the math to the reader.
"Called Amway Corporation."
It is only now that the speaker mentions that the business is actually Amway. Of course, it is more than an hour into the meeting. Why doesn't he mention the word "Amway" as the meeting begins? After all, isn't Amway's vision "to be the best business opportunity in the world?" Then why does the speaker have to wait so long to tell everyone they are seeing the Amway business? I would have though that distributors would he proud that they are in the Amway business. Why hide it from the new people?
"Well, come to find out they joint-ventured with a lot of Fortune 500 companies"
In fact, there is absolutely NO "joint-venture" whatsoever. The truth is, Amway is just another catalog-reseller of the other company's goods and services, not unlike Wal-Mart, K-Mart, Costco, and Sam's Club.
Consider this statement from Amway president Dick DeVos:
"Amway Corporation and MCI are business partners. Other companies are either manufacturers or catalog vendors that market their products and services through Amway and should not be referred to as "partners" or "joint ventures"." (emphasis mine)
Or this statement from Hershey's Food:
"Hershey Food's relationship with Amway was simply a business association and not a joint venture of any type." (emphasis mine)
Or this statement from Nabisco:
"Nabisco sells to Amway as we do with any other distributor/trade customer. I would not consider this association to be a joint venture." (emphasis mine)
So where does the speaker get the idea that Amway is in a "joint-venture" with ANY company?
"And without that, I can't say, what your, ah, chances are but, I am gonna say it's not that good."
And here again we see just how "optional" the system is- the speaker says you're chances are not good if you don't use the system. How "optional" is a system if you can't be "successful" without it.
Then again, if you're not making money off the sales of tools (and therefore, participating in the system), can you really make much money (and be "successful") in the business?
"So, for this kind of money, maybe 300 hundred, 350 dollars, there's an education."
And for that kind of money, what do you get? For about half the price ($150), you are "licensed" by the Amway Corporation to be a distributor. For $300, you get some audio and video tapes, some books, and a lot of literature about the benefits of the "educational system." And don't forget, ALL of the $300 to $350 goes to pay the upline- none of it goes to Amway.
"There's a seminar coming up Saturday, August 22nd right here in Orlando, at
the Expo Center, starting at 6 pm for ah, 15 dollars. What a great way to start on
your business, your helping business. I suggest you ah, put that on your calendar.
Also coming up is, ah, November in Washington DC, got a three day get together. It's
ah, you know, I can't explain."
And here is the customary "promotion" (or plug) for the latest meeting. As usual, everyone is more-than-encouraged to attend.
He also plugs the upcoming major function, but can't explain what happens there. I can understand his hesitation to explain the function: sleep deprivation, disorientation, and information/ sensory overload commonly occur at functions. I wouldn't try to explain it, either!
"I don't what your other options are to create that, but this is a for-real
thing. It's not a fantasy, it's working now. It's working without us, it'll work you,
if you elect to participate. It's gonna happen whether you participate or not."
And this is nothing more than a cult-group's scare tactic- "Our system is working, if you really want to better your life, you'll join us. If you don't want to better your life, that's up to you."
"we went on faith that what they told us to do would work. And that we did the work."
And now, the speaker's wife starts to talk. Typically, she supports her husband, but this time, she makes sure to tell the audience to "[go] on faith." In other words, don't think about what is happening- just do the work. And this is where the suppression of critical thinking begins, right here at these Open meetings.
From these statements, which vary from unsupported claims to flat-out lies to violations of Amway's rules to cult-like statements, it is easy to see why these meetings are so important. Obviously, no true "business meeting" would contain this many false statements. Actually, it is doubtful if the distributors really care. After all, Opens are used mainly to keep existing distributors in the business. And existing distributors rarely question the statements made by the speakers. As people attend these meetings on a regular basis, the lectures begin to influence their thinking. One more meeting is one more step deeper into the cult atmosphere of unquestioning loyalty and dedication.