New and improved! The Amway MLM Ethics
Amway is a name that rings a bell to almost every household, and of course to MLM business opportunity seekers. Why would it not? It’s been around since 1952, marketed in 80 countries, and is a 9 million dollar direct selling company.
With 3 million Independent Business Owners throughout the world, Amway created the Rules Of Conduct for IBOs. The Rules of Conduct aims to prevent conflicts among their IBOs and to promote ethical MLM practices. Covering topics from IBO registration, IBO and sponsor responsibilities, to presentation of IBO plan, and even death and inheritance, Amway is making sure that their IBOs represent them well.
A Series of Unfortunate Events
From the 1970’s to the mid 2000’s, Amway took a lot of heat from various sectors of the government and even from previous employees and representatives. To add to that, the then trending term “pyramid scam” affected Amway’s reputation.
Tax evasion, customs fraud, “objectionable practices”, exaggeration of actual income, even satanic are just some of the probably hundreds of thousands of accusations Amway received. In 1985, Amway’s attorney points out, “…the past ten years (1975 to 1985) represents literally thousands of lawsuits, with the file on each lawsuit varying from several pages to entire rooms filled with documentation,” in response to Rick Setzer’s attorney’s request for a copy of the lawsuits filed against Amway and its founders for the last ten years.
New and Improved!
In 2008, the UK DTI compelled Amway to publish publicly and be transparent with the company’s full earnings. Amway actually did more than that. At present, Amway’s Rules of Conduct for IBOs distinguishes them from pyramid scam companies.
The Independent Business Owners Association International, is an Amway IBO’s voice. At the same time, the IBOAI serves as Amway’s 24-hour training and support facility for IBOs. The website features IBO best practices, tax tips, guidelines for speakers, IBO bookkeeping, guide to music copyrights, and even health tips. Most importantly, the IBOAI monitors the IBOs’ MLM practices, ensuring that the Rules of Conduct are followed.
Amway Rules of Conduct
Having faced heaps and heaps of pyramid scam accusations, the Amway Rules of Conduct focuses on ensuring that no recruits are scammed.
Some of the rules stated in the Rules of Conduct are below (from the IBOAI website):
Rule 4. Responsibilities and Obligations of all IBOs
4.4.1. (must not) make exaggerated product claims or non-guaranteed claims with regards to the Corporation’s products or products distributed by the Corporation
4.8. Compliance with Applicable Laws, Regulations, and Codes: IBOs shall comply with all laws, regulations, and codes that apply to the operation of their IB wherever said business may be conducted, and they must not conduct any activity that could jeopardize the reputation of the IBO and/or the Corporation.
4.9. Deceptive or Unlawful Trade Practices: No IBO shall engage in any deceptive or unlawful trade practice. A deceptive or unlawful trade practice is one that (1) has been defined as such by any federal, state, or local law or regulation, (2) has been determined as such by federal, state, or local law enforcement officials, or (3) has been reasonably determined as such by the Corporation. In making a reasonable determination, the Corporation shall obtain the opinion of outside legal counsel and the IBOA International Board Hearing Panel Chairperson.
Rule 8. Presentation of the IBO Plan
8.3.1. Must disclose the average profits, earnings, and sales figures and percentages as published from time to time by the Corporation.
8.3.9. Must not promote the enjoyment of tax benefits as the best or principal reason for becoming an IBO.
8.3.10. Must not say that the business is a “get-rich-quick” opportunity in which it is easy to achieve success with little or no expenditure of effort or time.
Amway is evidently being pro-active in promoting legal practices in the MLM industry. Unfortunately, although reputable MLM companies advocate against pyramid scams, the statistics on networking scams are yet to decrease.