Background on Amway/FTC Petition

The 1979 FTC v Amway case laid some important ground rules for the developing MLM industry. Many MLM companies have incorporated these rules into their guidelines for distributors, and defended themselves in court cases, by claiming to follow the "Amway Rule."

In a nutshell, the "Amway Rule" states that, for an MLM business to be a legal -- as opposed to illegal -- pyramid, three things must happen.

1. At least 70% of product must be sold at retail to consumers who are not also Amway distributors.
2. Distributors must maintain a base of retail customers (the magic number for Amway distributors was 10) and
3. If a sponsored distributor is leaving the business, the upline distributor must buy back all saleable inventory of product, sales aids, or literature. If the distributor will not buy it back, Amway will.

If you are a distributor or a former distributor, now is your chance to make your voice heard! An official request has been made by a retired Assistant Attorney General, who prosecuted a number of illegal pyramid cases during his tenure with the State of Wisconsin. Let the FTC hear from you about your experiences with the enforcement of these rules in Amway.