My Experience of Being in a Pyramid Scheme (Amway) ??
I was in Amway for 12-16 months, never made any real money, couldn’t be bothered to sponsor anyone, but sold products to make a little cash.
In 2006, and nearing the end of my university studies, I was approached by someone I lived with to sign up to an income-generating scheme.?
The details were vague but it didn’t take long for me to find myself at seminars among lots of smartly-dressed people who all seemed to be in a good mood. ??
Home Shopping Scam: “Do All of It Through Amway and Earn Cashback”?
This had originally been pitched as “home shopping” with optional retailing, which I did do a little of. Spend money on stuff to generate cashback.
The basic idea was to sponsor more people who would do the same in order to grow this as a “business” with me being paid increasingly large bonuses for enabling the marketing and sale of products.
I only ever wanted to earn a few hundred quid on the side but found myself being encouraged to covet a millionaire fantasy lifestyle. It became unbelievably boring and disingenious.?
Spend Cash for Points, Redeem Points for Cashback
It initially was sold to me on the understanding that the products in the Amivo shopping portal were no more expensive than those on the high street. ??
Once signed up, I examined the available products on the Amivo shopping portal and discovered how costly they were. This annoyed me but I stuck around anyway.?
The way objections were dealt with (questions like “is this a pyramid scheme?”) included a mixture of humour and logic.
“Well, pyramid schemes are illegal. Pyramid schemes do not have a product. We do. This is multilevel marketing (MLM) also known as network marketing, and it’s legal. Aren't pyramids in Egypt?!"
Applause, laughter, applause.
“Don’t Want to Retail? Fine! Just Shop for Yourself”
If we weren’t retailing to the open market with these “exclusive products”, we were expected to at least purchase products for personal use to generate a reasonable minimum number of points volume (PV).
Getting others to do the same would mean the bonuses gradually increase which in turn would unlock titles like Platinum, Emerald, Diamond, etc. ??
When I hit 200 PV, I “achieved” the 3% bonus level, received cashback at approximately 3% of ￡200 and got a round of applause at the next seminar. The standing up in front of everyone for a pat on the head was part of the routine recognitions that played out each and every time.?
But why spend so much on high-priced household goods just to earn cashback? ??
You could literally save more cash than the 3% bonus was worth by not buying products from Amivo in the first place.?
Explanations for the Expensive Products
Once I had actually bought products I could see they were manufactured by a company called Amway. This was the first time I’d heard of Amway despite having seen the plan and signed up to be part of all of this. Some of these Amway products were heavily concentrated and therefore more expensive (as you might expect).?
For example, it cost over ￡6 (this was 2007 money) for a bottle of Dish Drops washing up liquid which lasted a long time but never shed any light on how much money these “exclusive” and “concentrated” products were actually saving.?
Money Laundering?
Amway’s enormous margins on product sales generate points which travel up the pyramid, are converted to cash and then get paid out as bonuses.
To reiterate my earlier point, if I bought all my goods outside of Amway for half the price, I’d might as well have given the difference saved to my upline as cash in an envelope. It would be serving the same purpose.?
MLM is a Fundamentally Flawed Earnings Model?
The market conditions are not the same as someone who joined, say, thirty years ago.
Early on in any given MLM, future high earners establish themselves as the lord in this commerce feudal system before saturation point is reached. The peasants work to generate points with more peasants being registered beneath those on the assumption the best performers can become a lord.
Sometimes, MLM systems mandate compulsory sign up for introductory kits costing up to $9,000 (like in LulaRoe), with bonuses paid to uplines on these kits which, in my opinion, is the Ponzi aspect. ?
Amway was only about ￡100 to join with a renewal fee of about the same annually, and although there was no outright Ponzi going on in Amway, it’s still a disguised pyramid.
Hard Work, Scant Reward, But Lavish Lifestyles on Display
A lot of work would have been required (it can take decades) just to have been earning the ￡150k annually as people at “Diamond” level were doing in 2007 (they built six “Platinum” legs, all of which generated around 7500 PV).
This is increasingly difficult to do if not impossible.
The hype and preaching of the prosperity gospel with the “You can do it! Anyone can do it” message is what accounts for the enormous churn rate of those participating in these schemes. ????
The Economics of Ponzi, Pyramid, MLM
It’s also not possible for everyone to reach Diamond level – the world’s population is not great enough to support it. Check out the book “Ponzinomics” (Amazon UK / Amazon USA) by Robert FitzPatrick if you want to understand more on this.
How then were high achievers managing to live like millionaires on an unstable, ever fluctuating sales-based commission of ￡150k per year?
The Motivational Tools Cult?
The training system (also known as the tools business) was where the cash was made. These tools businesses were unofficial, not publicly endorsed by Amway, but presented as totally necessary if you wanted to make any amount of money whatsoever. ????
The one I was in was called International Business Systems (IBS). People were basically paying a lot of money to learn how to believe in themselves.
The “system” was comprised of recommended books, CDs, seminars, mentoring, fantasising, religious talk, (mostly when American Diamonds spoke at the events) all designed to indoctrinate.
Influential Books and Reprogramming
Some of the books were good. Seriously! “How to Win Friends and Influence People” predates MLM, but its message had been co-opted by the Amway uplines as part of what I now think of as the Ned Flanders School of Sales Training.
Other books like “Prosumer Power” or “The Parable of the Pipeline” were clearly created purely for MLMs – nonsense propaganda – all against a rather drab backdrop of selling dull products.
What I really saw and felt the most was that our identities were being eroded. We were being turned into Ambots with a set of values chosen by the leaders.?
Question: if the Amway “opportunity” was not part of the equation, would people still sign up to the motivational training and tools system?
Conjecture and Fantasy
An elderly Amway Emerald pin was on stage lamenting the types of people who cannot see a good thing when it’s right in front of them.
“If you showed this to Richard Branston(sic), do you think he would join it? Of course he would!”
This guy loved to tell us about his long, stressful career, how he was working 100 hours a week, how he had a heart attack at his workplace, how him and his wife could now care for their special needs son. But that slip of the tongue with “Branston”, undermined his credibility somehow.
These speakers were either out of touch or just bullshitters.
Selling The Dream to Those With No Chance
The IBS training organisation I had accidentally become a customer of was indeed making money hand over fist.
The real profit was in selling the lifestyle, which is still seen today in all scam industries, as evidenced by any number of annoying YouTube ads for courses claiming to teach YOU how to make a six figure monthly income with no skills or knowledge.
The IBS leaders always claimed they broke even on the money they made from the sales of tools. It was all about covering costs and helping their downlines, supposedly.
Amway Investigated by UK’s DTI in 2007 ??
The Department of Trade and Industry?(DTI) investigated Amway and its unofficial tools organisations, placing a moratorium on all sponsoring for an unspecified period of time.
By this time I was bored silly with it.
The pressure to attend more meetings in spite of my apathy was constant. My uplines had kindly taken me to and from meetings and made time for special mentoring. I’d met the daughter of my upline Platinum and visited the office at his day job.
All part of getting your loyalty.
I was persuaded to go to a “very important seminar” which had been arranged to clarify the situation and answer the rumours that were circulating. It was ￡20 to enter.?
About a thousand people were there, ranging from the fully indoctrinated to the weary and sceptical, but there was no way you’d ever know which was which.
Amway Diamonds Terminated ??
In the end, some of the Diamonds had their contracts terminated, supposedly as Amway’s “way” of trying to look like they were being tough on bad actors that had been misrepresenting the opportunity.
Annoyingly – after they’d played the sympathy card – the now ex-Diamonds wasted no time in pushing brand new “opportunities” with scams like Success University, uVme and some others that were sketchy as hell.
Scammers Gonna Scam
The IBS tools business disbanded but rebranded as “The Team” (really? how original) with the exact same premise as before: paid-for books, CDs and seminars.
It’s a classic move in MLM: start a new “business” and transfer an existing downline from the old one into the new MLM, automatically making someone top of a brand new pyramid.?
Walking Away from MLM
Mentally, I’d already stopped caring about this nonsense and just needed to detangle not only from the entire Amway machine but from those in my immediate upline who, like others, mostly had good intentions but were too low in the hierarchy to know how money was really made.
Once I’d been dropped home from that final seminar, I never spoke to anyone in the upline again.
Lenient High Court Ruling
The secretary of state wanted to see the company wind up its operations. That didn’t happen because of adjustments Amway made.
The changes – including the eradication of the acronym “IBO” (which stood for Independent Business Owner) in favour of “ABO” (Amway Business Owner) – were supposed to prevent Amway distributors misleading potential new recruits. They had been playing it coy by avoiding the word “Amway” when presenting The Plan (as instructed by their uplines).
The DTI underwent structural changes and was replaced by the Department for Business, Enterprise and Regulatory Reform (BERR) in 2007, and then the Department for Business, Energy and Industrial Strategy (BEIS) in 2016.
Makes me wonder… do changes like these – in addition to the average lifecycle of any one government administration – explain the inconsistency or lack of appetite for seriously attacking society’s MLM problem?
Former IBS-Amway Diamonds: Where Are They Now?
I’ve been digging and snooping recently. ??
In 2024, most of these former Diamonds have full time jobs again which include accounting and recruitment.
One of the Diamonds I disliked the most is still at it with various MLMs, as smug as ever, posting inane motivational quotes to his Twitter/X timeline and generally bragging about being rich. Dickhead!
Hype, High Costs, Boredom, Manipulation
If I did try harder, I might have made money, but keep in mind that such “earnings” would only exist because someone in my downline would have been paying over the odds for commodity products you or I can find at any discount supermarket for half the price. ?
It’s fair to say that the road to hell is paved with MLM recruiters! Money is made by those at the top because those in their downline are wasting theirs on overpriced products and propaganda.
Me on the Life After MLM Podcast
I recently appeared on the Life After MLM Podcast to chat with Roberta Blevins (she featured in the 2021 Amazon documentary LuLaRich).
We discussed cults dynamics, predatory behaviour, the Amway tools business, legal rulings, money laundering and more, including the invention of a new alcoholic drink made using J?germeister and Amway’s “XS” energy drink. And what could that be? You guessed it! A Dexter Yagerbomb.?
Do have an MLM story too? Please share in the comments!
This Amway story was also published on my blog.
David Brear How are you writing MLM amd pyramid scheme as same thing. You do realise that pyramid schemes are illegal and amway is not that right? Yes many fail in network marketing as many fail with traditional business. But may I have a reason to why did you falsely put MLM as pyramid schemes? Is it because its trendy to call it that and you failed in succeeding so you can feel better about calling it such?
Marketing & Business Development Professional | Social Media & Digital Strategist | Tai Lopez Certified
1 个月I spoke with someone about this 8 months ago and did not know anything about it. My parents said that one of them fell for it back in the early 2000s. It was a guy, I think his name was Alan, saw me in Publix after I was done with work. He asked what I did for a living and then invited me to coffee at Starbucks 3 days later. I met Alan and his son at Starbucks and he would not tell me exactly what products they sold. He said energy drinks and then "lots of things". Last week, I was at Chipotle and a guy named Nathan saw me and talked to me a little. He asked what I was trying to do, and I told him I was trying to grow my personal brand. He baited me in with a zoom meeting, that happened today, with his "boss", and they mentioned "Amway". He said that they sell "lots of products", "it can be energy drinks or whatever". "I love the financial freedom I have being with my daughter". I was immediately turned off and didn't say much. I don't understand why they waste our time with this stuff.
COPYWRITER
3 个月Just to top it off with some side facts. Millions of people a year start and fail at most of businesses they try whether it's a start up or mlm type. Less than 15% of the U.S. population make over 100k, then it goes to about 8% making a mill, then the 1% a bill. Within this percentage there's lots of failed business ventures but obviously successful as well. Some happen to be MLM, some start ups, but ALL ARE DEFINITELY NETWORK MARKETERS because in order for ANY BUSINESS to be successful, you are gonna HAVE TO NETWORK without a doubt so guess what victims? Yall don't know how to network. Step your game up and you'll see the results from your hard work in any field you go into.?
COPYWRITER
3 个月?? I never understood how people don't understand what's an actual pyramid scheme. Yall hear that term, it becomes trendy, and then misused which makes yall sound completely... incapable of understanding the definition. A pyramid scheme means it's a company or business that DOESN'T PROVIDE ANY PRODUCTS or SERVICES in exchange for money. The question is, how is Amway a scheme or even a pyramid scheme if not only do they provide the WHOLE BUSINESS MODEL AND FORMAT, but also the PRODUCTS you didn't create yourself, delivery services you have to partner with, the licenses and certifications you need for a business to get started, the warehouse it's stored at, the website, the marketing, the branding, you don't even have to buy the products for you to sell. It's an all done for you business model! They paid not only money but INVESTED TIME for ALLLLL THAT. I laugh at the way yall victimize yourselves for not being successful salesman. Yall just suck at selling and didn't bother to learn the actual business side cause yall wanted A GET RICH QUICK OPTION which I can bet yall thought that's what amway was which is why yall considered it in the first place, then yall found out there had to be hard work to put in, so not only do you call it quits but you call it a scam??? Who's really the one scheming thinking yall were gonna get rich without no work to put in? Lol That's like getting fired at a job you either suck at or not doing properly, then calling that company a scam cause they didn't keep you. You just couldn't do the job that was required of you in order to get paid. Stop crying and take responsibility for your strengths and weaknesses.?