Amway mlm – profit on training materials instead on amway products?
Formed by Jay Van Andel and Rich DeVos in 1959, Amway is almost a $10 billion MLM company. 3 million Independent Business Owners are in the 80 markets of Amway worldwide. How they have been in the business for 52 years is a controversial topic. Just like most MLM companies, Amway has had their share of lawsuits and rumors.
Some of the lawsuits filed against Amway were tax evasion, “objectionable business practices”, and pyramid scheming. On top of that, reports say that some Amway distributors in the 1990’s were sued for defamation and slander. Allegedly, these distributors spread rumors about Procter & Gamble bearing a satanic symbol in their service mark.
Dateline NBC did an undercover investigation on Amway business practices in the organization. They featured this report in 2004. Dateline investigator reports that Amway is “making most of their money by selling motivational books, tapes, and seminars; not Quixtar’s [Amway] cosmetics, soaps, and electronics.”
Amway’s Rules of Conduct
Having been accused of profiting from training materials more than their products, Amway includes the Code of Ethics and Rules of Conduct sections in their Business Reference Guide to address this concern. Amway stresses that purchasing of such materials are voluntary.
“Education, training, and motivation are critically important to building a successful independent business…”
“All materials produced and distributed by the Corporation are subject to its Satisfaction Guarantee and Buy-Back Rule.”
“Amway Global makes no money from the purchase of BSM from IBOs or third parties.”
Some IBOs are allowed to come up and sell their own BSM, as stated in Amway’s Rules of Conduct, Rule 7:
“Some IBOs offer for sale to other IBOs in their Personal Group a variety of business aids such as books, magazines, flip charts and other printed materials, online literature, internet websites, audio and video media, rallies, meetings and educational seminars, and other types of materials designed to assist IBOs in building their businesses, which are not offered by the Corporation (“Support Materials” or “SM”). Materials relating to prospecting, the Amway Global IBO Compensation Plan, motivation and/or administration and management of the IBO’s business are referred to as Business Support Materials (“BSM”). Products and materials that support the sale of products or services offered through the Corporation are Product Support Materials (“PSM”) as defined and governed by Rule 7.10. SM is entirely optional and IBOs who choose to sell, purchase or utilize such SM must comply with this Rule. IBOs who choose to sell or distribute SM must emphasize that the purchase of SM is strictly voluntary; no IBO may ever require another IBO to purchase any SM. IBOs may not sell BSM to prospects, including customers, but only in accordance with Rule 4.14 and 7.10.”
Past IBOs report that they spent as much as $700 monthly on Amway training kits. They, however, do not indicate whether these materials were Support Materials, meaning these were independently produced by their uplines; or the training materials were Business Support Materials, which actually come from the company.
Fortunately, IBOs can actually return for repurchase qualified BSMs under Amway’s Rules of Conduct 7.6:
Rule 7.6 BSM Buy-Back Policy
The Corporation’s Satisfaction Guarantee and Buy-Back Rule DO NOT APPLY to any BSM. The Corporation will only honor the Satisfaction Guarantee with respect to its own materials. The terms of the refund policy adopted by an IBO selling BSM, including terms regarding procedures for the resolution of disputes and the responsible person for return, must be clearly communicated to the purchaser prior to any such sale. In the event such terms do not include the responsible person for returns, the seller and the purchaser’s Platinum IBO or above shall be responsible for handling returns. Selling IBOs shall ensure that the terms and conditions of any refund policy adopted comply with all applicable laws. Only the BSM end user is eligible for the terms of the BSM Buy-Back Policy described herein. IBOs who sell BSM and who may have stock for other than personal use, are subject to the return policies agreed to with the individual from whom they purchase.
Upon request, an IBO who sells BSM must buy them back from the original purchaser on commercially reasonable terms for a period of 180 days after the sale thereof; the purchaser must, upon request, provide proof of the purchase if a buy-back of BSM is demanded.