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Pyramid Scheme Alert (PSA) provides current and historical news items that are of interest to our members and visitors. None of the reports or commentaries is intended to imply that any of the referenced companies have been charged or convicted as illegal pyramid schemes.

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Read the History of the FTC's Amway Pyramid Case

Government of England Renews Case to Throw Amway Out of Country

July, 2008

After a judge's ruling that severely restricted Amway's operation in England, the English government has appealed the ruling and renewed its case to close Amway down and kick it out of the country.

The Department for Business Enterprise and Regulatory Reform in England charges that Amway is "inherently objectionable" and must be "wound down" (closed down in USA-English). The government claims that Amway violates England's Fair Trading Act 1973 among other laws.

The Fair Trading Act 1973 addresses:-
“Get rich quick schemes [operating] on the same basis as chain letters with each member recruiting further members. Members pay out large sums in the expectation of a high return…the forecasts are derived from…the principle of geometric progression leading to theoretical levels of recruitment reward which, in reality, are impossible to achieve…”

The government based its action partly on findings that show that more than 99% of all Amway distributors lost money; that Amway's top leaders were falsely promising success with the sales of its "tools" (books, tapes and seminars); and that Amway routinely misled recruits in England with false income claims. In fact, the tools only increased the losses of recruit.

After nearly six months of deliberation, a judge decided Amway could continue operations but under severe restrictions, including the complete banning of "tools" by Amway upliners, and massive price cuts. The two main Amway "tools" promoters in England are Britt Worldwide and Network 21. Both have not ceased operations in that country. The ruling to allow Amway to continue was made only after Amway had suspended its recruitment, stopped the tools business, lowered pricing and claimed it had "changed its model."

The government has now decided that the changes were inadequate and to appeal the decision. The judge has allowed the appeal. The government has renewed its case against Amway to close it down completely. The heart of the government's case against Amway mirrors exactly all the claims made against Amway in America, India and many other countries and confirms all the main reasons that China cited when it chose to ban Amway's multi-level pay scheme (and the same for all MLM schemes.)

1. Amway's product are not marketable. They are priced far higher than comparable goods. They are seldom sold to anyone other than the salespeople themselves.

2. More than 99% of all Amway salespeople lose money. More than half quit the scheme within a year, after suffering financial losses

3. The only way to make money in Amway is through "endless chain recruiting", a flawed and fraudulent system that guarantees only the top recruiters can be profitable and is illegal in England and most other places on the planet. (Some have termed this scheme a "closed market swindle.")

4. Extreme deception is used to lure people into the scam

Among the stunning revelations in the judge's ruling:

-- Among Amway's current "active" distributors in the UK, which exceeded 33,000, only about 90 of them earned enough bonus to cover the costs of actively building their business That's a 99.7% loss rate for consumers induced to invest.
-- After the commencement of the investigation Amway cut the cost of homecare products by 48% and personal care products by 29%.
-- For the period 2001-2006, 95% of all bonuses were earned by just 6% of IBO's, 75% of all bonuses were earned by 1.5% of IBO's
-- Over a five-year period, a near 100% turnover rate among the "distributors."
2001-2002: 5,690 were recruited in but 10,149 quit
2002-2003: 6,525 were recruited and 8,000 quit
2004-2005: 12,561 joined and 8,756 quit
-- Amway UK's operation is consistently unprofitable as a business but is sustained by cash from Amway in Korea!
-- Perhaps one of the strangest revelations is that though Amway UK never showed a profit, Amway has dropped prices as much as 48% and eliminated the registration and renewal fees!

The judge's ruling to allow Amway to continue is contingent on:

-- All "tools" business be controlled by Amway UK and it is now impermissible to profit from them.
-- Amway will publish distributor earnings information
-- Both the registration and renewal fees are abolished
-- Amway has restructured so that a new class of representative is created that only retails.

The government did not consider these "reforms" adequate or even basic. Essentially it said the changes don't make a major difference and Amway could not be trusted to implement them in any event.

The case to shut Amway down goes forward, but even under the current ruling of the judge and the changes Amway has made, it is questionable that Amway will survive in the UK. Its entire European operation is badly damaged. And there are even larger consequences.

For example, does the ruling now place Amway in a precarious legal position to put the same safeguards in place in other countries?
Are the findings of the court grounds for lawsuits brought by UK citizens who lost money due to the "closed market swindle."

Victim testimonials and analysis of Amway's USA data prove to be nearly identical in the US and other markets as were revealed in the UK case.

With the UK data as a model, projecting the losses to consumers on a worldwide basis reveals a global scam of mythic dimensions and deception on a scale that few people could grasp.

Related News:

-- A class action lawsuit has was filed against Quixtar (Amway) by plaintiffs who are at the bottom of the Amway/Quixtar pyramid. These charges against Amway/Quixtar assert that there is no retail "direct selling" opportunity, only an endless chain recruitment program. The suit was brought by Boies, Schiller and Flexner.

-- Police officials in India raided offices of Amway in the largest state in the South of India. The police are charging that Amway is deceiving Indian citizens and causing large-scale financial losses by perpetrating a pyramid scheme.

-- China, the largest market in the world, has effectively shut Amway out of that country. The government of China allowed Amway to gain a licence but strictly prohibited Amway from using its pyramid recruitment pay plan. No Amway distributor can earn money from purchases of others in a downline. Without the false lure of the endless chain, Amway's sales will wither in China.

-- Amway founders and top guns have contributed millions to Republican congress members and to President Bush. This was rewarded in 2001 with Pres. Bush's appointment of Timothy Muris, an attorney that worked for Amway, as chairman of the FTC. Muris has since left the FTC and several key Amway protectors in Congress (e.g. Rich Santorum in PA and Tom Delay in TX) were defeated. Dick Devos, the son of Amway founder Richard Devos, ran for governor of Michigan but was defeated.

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This page last updated on 7/21/08