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Frequently Asked Questions

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Posted on by Scott Johnson (0)

Welcome to the Frequently Asked Questions section, just email stoptheamwaytoolscam@yahoo.com any question you want answered below, and if it is considered an FAQ type question, I’ll address it.

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Q1: Aren’t the failure rates for conventional businesses as high as Amway, and therefore Amway must be as good of a business as any traditional business?

A1: No. According to this document from the SBA (Small Business Administration), the survival rates are much higher for traditional businesses: https___www.sba.gov_sites_default_files_FAQ_Sept_2012. See page 3, near the middle of the page, which states, “What is the survival rate for new businesses? About half of all new establishments survive five years or more and about one-third survive 10 years or more.
As one would expect, the probability of survival increases with a firm’s age. Survival rates have changed little over time (figure 5).” In contrast, well over half of Amway IBOs don’t renew after their first year, and only a few percent remain after about 10 years. Even Jay Van Andel testified in the infamous FTC lawsuit that the first year failure rate is 75% and 25% for every year thereafter, or about 50%/year average, search for “50%” here: Amway vs And keep in mind one of the big selling points of an Amway business is the low capital cost to get started, although this is another of Amway’s numerous lies, as thousands of dollars/year are needed to feed the ATS beast.

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Q2: If the ATS is so bad, why hasn’t the government shut it down yet?

A2: We’re talking about the same government that didn’t shut down Bernie Madoff, despite his case repeatedly being served on a silver platter for several years. He had to turn himself in after his Ponzi scam collapsed and he told his sons, who turned him in, to be “caught.” I believe the FTC is, in this order, incompetent, bureaucratic, and politically influenced, and these factors are interrelated.
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Q3: Do you think tools should be free?

A3: No, I think the tool prices should cover the production costs and provide the upline with a reasonable amount of profit. Rich DeVos indicated 20% of the Amway profit is his limit, I could go as high as 50%. The major point is the amount should be VISIBLE and should include ALL tools, not just some of them.
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Q4: I thought pyramid schemes, like Amway, are illegal, especially if a majority of the products are sold to IBO/distributors?

A4: That’s right but the FTC has muddied the waters by having confusing guidance, such as this FTC letter: http://www.marketwaveinc.com/FTC_Letter.pdf, which some pro-MLM sycophants have misinterpreted as retail sales to non-IBO/distributors don’t matter at all. What the FTC does find objectionable is the “$10,000 pencil” scenario, where the new entrants buy a product one time, and depend on new entrants to fund their profit by doing the same thing. Of course, there is an entire continuum between the $10,000 pencil and the Walmart price, and this is the reason for sale of products to non-IBOs requirement. The BurnLounge decision is an update to this situation, and is making a lot of MLM lawyers very nervous, as well as the MLM companies: http://www.ftc.gov/os/caselist/0623201/120314burnloungeorder.pdf
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Q5: Why are the tools so profitable?

A5: There are 4 major reasons.

1. The markup is very high, which provides for the high profit margin in the first place. For example, full production costs of a CD is about $1 or less, and they are sold for $6-8 dollars. Books can be purchased for far less than half the normal retail cost in bulk. Function costs are covered by a small number of attendees, the rest is pure profit,
2. Marketing costs are near zero, and the IBOs are a captive market, as the tools are promoted as THE shortcut to success (in reality, the tools ARE the “success”),
3. The payout is not shared with the downline, only Platinums and above, and
4. A significant amount of money is spent on the tools, which include various meetings, books, CDs, web sites, voice mail, etc., and not just “standing order” items, but also extra tools for prospecting, followups, having extras on hand in the event a downline’s business grows rapidly, “new” tools that are merely repackaged, etc. Particularly for the new IBO, who is instructed to “tool up,” after all, any other profession, such as dentistry or auto mechanics, require those folks to “invest” in tools. Of course, most IBO drop out in less than a year, are labeled a “loser”, and must be replaced by a new victim.
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Q6: But don’t the rules explicitly say the tools are optional, and the upline has to help an IBO even if they don’t buy the tools?
A6: Technically and theoretically, yes and yes. However, in practice, there are several factors to consider, resulting in these rules having negligible impact:
1. The tools are heavily promoted, and the new IBO typically has never run a business before, so they are operating from a huge disadvantage from the start,
2. The immediate upline is often a trusted friend, relative, coworker, etc., and is taught to transfer giving advice to the LCK upline, as “they know what they’re doing,” and other statements, such as “they have the fruit on the tree,” they don’t know of anyone who has succeeded without the tools, and the immediate upline isn’t even aware of the ATS in most cases,
3. The rules require all tools shown to prospects to be approved by Amway, and the intricate, complex, and nebulous rules are difficult to understand for an experienced IBO, let alone a new one, PLUS it would probably take several MONTHS to get approval from Amway, as my personal experience has shown, and I was merely slightly modifying an existing presentation and was an experienced IBO for several years, and
4. A new IBO not understanding the technicalities and complexities of all of the above, which would be required to buy prospect facing tools and NOT all the other tools, and you have a full fledged SCAM.
By personal experience, and reviewing others’ comments on various blogs over the years, when an IBO stops ordering standing order tools, they immediately are no longer treated as a “best buddy,” but are COMPLETELY ignored by the upline. Contact Amway, you say? I did, they did NOTHING.
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Q7: But doesn’t Amway have an arbitration process you can use to settle disputes?
A7: Yes, and that process has been declared “unconscionable” and/or “illusory” by several U.S. Federal judges, including:
If I missed any, please let me know by emailing me at stoptheamwaytoolscam@yahoo.com and/or leaving a comment!