Wednesday, 30 July 2008
MLM is not genuine business
In spite of the tall claims by the multilevel marketing companies including Amway, Herbalife and a plethora of others, it is not a genuine business. They never clarify what happens if the chain breaks at a particular level. The business collapses in the answer. This they never agree. If a person buys the product they may use it. But unless he enrolls more members he would never receive commission or profit through selling of products. This is the fact.
The tall claims are abundant a la the quality of products. In Indian context, people are very cost-conscious. They never a toothpaste for Rs. 130 when a number of branded toothpastes are available in the market for Rs. 10. What makes people to become member of Amway is the inducement and lure of becoming rich. They claim that they can earn huge amounts as commission if they enroll more members and sell more products. If they buy and use them for personal purpose, they never get any money. If they are lured with cash incentives if they enroll more members only, they join the scheme.
It is a scheme not business opportunity. Several thousands of people who became members and could not enroll new members silently suffer without any complaint because they were introduced by their relative or close friend or their personal physician. That is the catch point. On the other hand, they will be blamed for not taking initiative to enroll more members and branded as people with lack of 'motivation'.
A super specialist doctor in Vijayawada prescribes several Amway products to his patients as if they are medicine. It is not medicine and Amway claims that it is food supplement. What is the necessity of food supplement to a patient. He needs only nutrition and good food is enough. As a well-wisher of his patient, the doctor should told the patient to take nutritious food which is cheap. But he prescribes very costly Nutrilite to his patients. Out of respect, the patient may purchase the product blindly believing his physician. But that is exploiting the patient's confidence which is unethical.
The doctor is said to be advising his colleagues in the city to become the member of that MLM company to become rich. "What have you earned in all the years of practice. Look my income from this scheme. Please become a member," he advises his fellow-doctors in the city. But few doctors heeded his advise, and that is another thing. May be their conscience did not agree to that practice.
The tall claims are abundant a la the quality of products. In Indian context, people are very cost-conscious. They never a toothpaste for Rs. 130 when a number of branded toothpastes are available in the market for Rs. 10. What makes people to become member of Amway is the inducement and lure of becoming rich. They claim that they can earn huge amounts as commission if they enroll more members and sell more products. If they buy and use them for personal purpose, they never get any money. If they are lured with cash incentives if they enroll more members only, they join the scheme.
It is a scheme not business opportunity. Several thousands of people who became members and could not enroll new members silently suffer without any complaint because they were introduced by their relative or close friend or their personal physician. That is the catch point. On the other hand, they will be blamed for not taking initiative to enroll more members and branded as people with lack of 'motivation'.
A super specialist doctor in Vijayawada prescribes several Amway products to his patients as if they are medicine. It is not medicine and Amway claims that it is food supplement. What is the necessity of food supplement to a patient. He needs only nutrition and good food is enough. As a well-wisher of his patient, the doctor should told the patient to take nutritious food which is cheap. But he prescribes very costly Nutrilite to his patients. Out of respect, the patient may purchase the product blindly believing his physician. But that is exploiting the patient's confidence which is unethical.
The doctor is said to be advising his colleagues in the city to become the member of that MLM company to become rich. "What have you earned in all the years of practice. Look my income from this scheme. Please become a member," he advises his fellow-doctors in the city. But few doctors heeded his advise, and that is another thing. May be their conscience did not agree to that practice.
Monday, 28 July 2008
Amway's half truths and outright lies
The turnover of Amway India has come down to Rs. 100 crore as against the earlier year's Rs. 800 crore and it has been announced by the very CEO of Amway India in a press conference and it was widely published in all newspapers. He also said that the Amway has been changing the course of business in India and is planning open spas all over India to boost the business. It cannot be assumed that all newspapers published imaginary figures announced by the CEO of the company.
And it is not true that upline members do not receive any commission by the sales of downline people. That is the exact business model of Amway and it is the crux of the major income both to the company and the upline members.
In the case of Rajan, it has been clearly stated that through his personal group--and who formed this group other than downline members--he gets an additional wholesale markups between 6% to 21%. As per his personal sales he gets 30% commssion and nobody would believe that he would personally sell all the products going home after home and make millions since there is no shop registered under Shops and Establishments Act.And it has been agreed that out of sales from downline members he gets 4% commission. That is what has been said that the upline members receive commission from the sales of downline members and actually that is the money circulation scheme prohibited under certain laws in India. The exorbitant price is the central point and from that price only money is generated and is circulated.
Rs. 150,000 dollars is sixty millions in India mind it and it is certainly lot of money and not all members make that amount because it is virtually impossible to enroll so many members. In the multilevel marketing, at the tenth level the population of India that is one billion would be covered and there would be none to enroll.
In summary,
1) profit earned through sale of products by downline members
2) Every members who enrolls new members gets 45 points and that is the incentive.
3) Amway India sales have substantially dwindled according to Amway CEO.
4) Several Amway products were found to be misbranded, adulterated and overpriced.
It is high time the Amway wound up its operations in India and start looking for greener pastures elsewhere in the third world.
And it is not true that upline members do not receive any commission by the sales of downline people. That is the exact business model of Amway and it is the crux of the major income both to the company and the upline members.
In the case of Rajan, it has been clearly stated that through his personal group--and who formed this group other than downline members--he gets an additional wholesale markups between 6% to 21%. As per his personal sales he gets 30% commssion and nobody would believe that he would personally sell all the products going home after home and make millions since there is no shop registered under Shops and Establishments Act.And it has been agreed that out of sales from downline members he gets 4% commission. That is what has been said that the upline members receive commission from the sales of downline members and actually that is the money circulation scheme prohibited under certain laws in India. The exorbitant price is the central point and from that price only money is generated and is circulated.
Rs. 150,000 dollars is sixty millions in India mind it and it is certainly lot of money and not all members make that amount because it is virtually impossible to enroll so many members. In the multilevel marketing, at the tenth level the population of India that is one billion would be covered and there would be none to enroll.
In summary,
1) profit earned through sale of products by downline members
2) Every members who enrolls new members gets 45 points and that is the incentive.
3) Amway India sales have substantially dwindled according to Amway CEO.
4) Several Amway products were found to be misbranded, adulterated and overpriced.
It is high time the Amway wound up its operations in India and start looking for greener pastures elsewhere in the third world.
The deceptive Amway business model
Nobody can say honest business earning is wrong. When the business model itself is wrong you cannot help but say it is a deceptive model. A business is onething through which one earns money by selling products earning some profit. It may vary from five per cent to ten per cent. But in the case of Amway, one person enrolls two more persons and in turn they have to enroll two more members each. The first person have a little role or no role in the enrolling of downline members. Of course, he may organise meetings and 'motivation' classes to encourage the downline members to enroll more members. If that is working hard, I can't help it.
To earn money one has to work hard. In the case of Amway business, what hard work other than enrolling members and coaxing the downline members to get more members enrolled is involved. And moreover, from where he is getting money. Is that by way of directly selling products to the customers or commission through enrollments? This is a very important question. Money should be generated from somewhere. By selling products at exorbitant price, the extra money apart from production cost, is going to the company and the upline members. This is how the booty is shared. And the Amway calls it hard-earned money.
The claim that Raja Naren is getting only 4 per cent commission is a hoax. From what kind of sales he is getting that commission. Is that from his personal sales or from the sales of the downline members. It is certainly from the sales of downline members and, that is called commission and that would be naturally huge. To earn that substantial amount, how much volume of the products he must have sold personally. That is why it is called easy and quick money. Here 'quick' is a relative term. Generally, it is takes decades to earn millions in any legitimate business. If it is done in less than half a decade, it is called quick and easy money.
The claim that members need not buy products compulsorily is again false. If the member did not purchase products, he has to enroll afresh by paying the fee and otherwise he is not entitled to draw commission.
In the Nutilite case, if it is manufactured locally everywhere and standards are not maintained, how can anybody say that it is wonderful product. By merely saying that quality was not maintained due to the local government requirements is the biggest hoax. No government ever says tht low quality products should be manufactured.
And finally, if it is direct sales as the Indian Direct Selling Association (IDSA) for which the Amway is the founding member, claims what is the necessity of enrolling and entrance fee and renewal fee. Let us not skip this major aspect.
That people already realised the hoax of the direct sales by the Amway is evident in the dwindling of its business in India. According to the Amway India CEO, in a recent report published in the New Indian Express, the sales have come down to Rs. 100 crore from the previous Rs. 800 crore. No wonder the Amway would be compelled to close down its fraudulent business in the country soon if the same trend continues.
Let us hope that sanity prevails over the Government of India to cancel the business license to the Amway and close down the company.
To earn money one has to work hard. In the case of Amway business, what hard work other than enrolling members and coaxing the downline members to get more members enrolled is involved. And moreover, from where he is getting money. Is that by way of directly selling products to the customers or commission through enrollments? This is a very important question. Money should be generated from somewhere. By selling products at exorbitant price, the extra money apart from production cost, is going to the company and the upline members. This is how the booty is shared. And the Amway calls it hard-earned money.
The claim that Raja Naren is getting only 4 per cent commission is a hoax. From what kind of sales he is getting that commission. Is that from his personal sales or from the sales of the downline members. It is certainly from the sales of downline members and, that is called commission and that would be naturally huge. To earn that substantial amount, how much volume of the products he must have sold personally. That is why it is called easy and quick money. Here 'quick' is a relative term. Generally, it is takes decades to earn millions in any legitimate business. If it is done in less than half a decade, it is called quick and easy money.
The claim that members need not buy products compulsorily is again false. If the member did not purchase products, he has to enroll afresh by paying the fee and otherwise he is not entitled to draw commission.
In the Nutilite case, if it is manufactured locally everywhere and standards are not maintained, how can anybody say that it is wonderful product. By merely saying that quality was not maintained due to the local government requirements is the biggest hoax. No government ever says tht low quality products should be manufactured.
And finally, if it is direct sales as the Indian Direct Selling Association (IDSA) for which the Amway is the founding member, claims what is the necessity of enrolling and entrance fee and renewal fee. Let us not skip this major aspect.
That people already realised the hoax of the direct sales by the Amway is evident in the dwindling of its business in India. According to the Amway India CEO, in a recent report published in the New Indian Express, the sales have come down to Rs. 100 crore from the previous Rs. 800 crore. No wonder the Amway would be compelled to close down its fraudulent business in the country soon if the same trend continues.
Let us hope that sanity prevails over the Government of India to cancel the business license to the Amway and close down the company.
Sunday, 27 July 2008
That is exactly the point my friend
That is exactly the point my friend. People in the top of the pyramid only make money. And Raja Naren is no different. After enrolling a couple of members he passed on the baton to his downline members and they continued to bring commissions to him. That is why the Chinese government banned receiving commissions and naturally Amway could not continue its operations there. The company survives solely on high prices and makes millions if not billions. The tall claims of superior quality of Amway products was proved wrong when a district consumer forum of Krishna district in Andhra Pradesh fined heavily after it was conclusively proved that Nutrilite, is an adulterated product, misbranded and high priced.
The Amway claims that it is resorting to direct sales. Any direct salespersons never collect membership fee. Direct sales means the company directly selling its products eliminating the middleman. Here is the upline members are middlemen who collect huge commission.
Referring to the Andhra Pradesh High Court's comment on vicious circle, the induced members are compelled to buy products and sell them to the downline members in an attempt to garner more commission. They try to induce more members to join the scheme. If that is not vicious circle what else is my friend. I agree that it is easy to come out but the lure of huge commissions and inducement and above all, the 'attractions' of holiday trips and others force them to hook to the scheme.
Everyone refers to the 2003 circular of Union Ministry of Consumer Affairs and conveniently ignore the rejoinder sent by the same Ministry contradicting its earlier circular.
And the Supreme Court of India clearly stated that it is the clear case of multilevel marketing and the police could continue their investigation and file the report in six months. It is another matter that the police have taken more time to file the chargesheet in Amway case. The case is pending in a Hyderabad court.And it is anyone's guess what would happen to that case keeping in view the High Court judgment in this regard.
It is rightly pointed out that the Amway has to up its game, since it is the game of deceit.
People have learnt that Amway has the dubious distinction of pioneering the most deceitful model in India and it is being followed by many such fraudulent companies like Herbalife, GoldQuest, Tianshi, V-Can Network and many more. People are now realising the fraudulent operations and slowly coming out of it.
People who garner easy and quick money never accept that it is a fraud pulled on people. And no wonder they try to justify their acts.
The easiest thing in the world is to convince oneself that one is right.
The Amway claims that it is resorting to direct sales. Any direct salespersons never collect membership fee. Direct sales means the company directly selling its products eliminating the middleman. Here is the upline members are middlemen who collect huge commission.
Referring to the Andhra Pradesh High Court's comment on vicious circle, the induced members are compelled to buy products and sell them to the downline members in an attempt to garner more commission. They try to induce more members to join the scheme. If that is not vicious circle what else is my friend. I agree that it is easy to come out but the lure of huge commissions and inducement and above all, the 'attractions' of holiday trips and others force them to hook to the scheme.
Everyone refers to the 2003 circular of Union Ministry of Consumer Affairs and conveniently ignore the rejoinder sent by the same Ministry contradicting its earlier circular.
And the Supreme Court of India clearly stated that it is the clear case of multilevel marketing and the police could continue their investigation and file the report in six months. It is another matter that the police have taken more time to file the chargesheet in Amway case. The case is pending in a Hyderabad court.And it is anyone's guess what would happen to that case keeping in view the High Court judgment in this regard.
It is rightly pointed out that the Amway has to up its game, since it is the game of deceit.
People have learnt that Amway has the dubious distinction of pioneering the most deceitful model in India and it is being followed by many such fraudulent companies like Herbalife, GoldQuest, Tianshi, V-Can Network and many more. People are now realising the fraudulent operations and slowly coming out of it.
People who garner easy and quick money never accept that it is a fraud pulled on people. And no wonder they try to justify their acts.
The easiest thing in the world is to convince oneself that one is right.
Friday, 25 July 2008
Indian judge got it right, my dear friend
It seems that my learned friend has read only the first part of the 'England's case against Amway continues'. There is the second part below and he should read that also fully before coming to conclusion.
Our friend conveniently skips the fact that the Amway products are not marketable.They are seldom sold to anyone other than the salespeople themselves. In Indian context, it is not a fair practice. And they priced far higher than comparable goods.
I would like to point out what is said in an open court by an Indian High Court judge in the State of Andhra Pradesh, India, while delivering judgement on a writ petition No. 20470 and 20471 of 2006 filed by Amway India Enterprises on July 19, 2007, that "it is evident that the whole scheme is so ingeniously conceived that the inducement for aggressive enrollment of new members to earn more and more commission is inherent in the scheme. By holding out attractive commission on the business turned out by the downline members, the scheme provides for sufficient inducements for its members to chase for the new members in their hot pursuit to kmake quick/easy money."
".....From the whole analysis of the scheme and; the way in which it is structured it is quite apparent that once a person gets into this scheme he will find it difficult to come out of the web and it becomes a vicious circle for him."
Criminal activity: The very scheme itself is against the law of the land in India under the provisions of the Prize Chits & Money Circulation Schemes (Banning) Act, 1978. The learned judge rightly pointed out that it is a criminal case and that too a cognisable offence. It is in the interest of the public at large, such companies should close operations not only in England but anywhere in the world. The intention is criminal only to make fast buck for the vortex of the pyramid depriving everyone of their money.
It is really heartening to note that the England government had decided to review the case obviously with the intention of throwing the company out of its shores.
Our friend conveniently skips the fact that the Amway products are not marketable.They are seldom sold to anyone other than the salespeople themselves. In Indian context, it is not a fair practice. And they priced far higher than comparable goods.
I would like to point out what is said in an open court by an Indian High Court judge in the State of Andhra Pradesh, India, while delivering judgement on a writ petition No. 20470 and 20471 of 2006 filed by Amway India Enterprises on July 19, 2007, that "it is evident that the whole scheme is so ingeniously conceived that the inducement for aggressive enrollment of new members to earn more and more commission is inherent in the scheme. By holding out attractive commission on the business turned out by the downline members, the scheme provides for sufficient inducements for its members to chase for the new members in their hot pursuit to kmake quick/easy money."
".....From the whole analysis of the scheme and; the way in which it is structured it is quite apparent that once a person gets into this scheme he will find it difficult to come out of the web and it becomes a vicious circle for him."
Criminal activity: The very scheme itself is against the law of the land in India under the provisions of the Prize Chits & Money Circulation Schemes (Banning) Act, 1978. The learned judge rightly pointed out that it is a criminal case and that too a cognisable offence. It is in the interest of the public at large, such companies should close operations not only in England but anywhere in the world. The intention is criminal only to make fast buck for the vortex of the pyramid depriving everyone of their money.
It is really heartening to note that the England government had decided to review the case obviously with the intention of throwing the company out of its shores.
Thursday, 24 July 2008
England's case against Amway continues
England Government Seeks to Shut Down Amway in England as "Inherently Objectionable" (Translation: Fraud)
The case brought against Amway by the government of England is moving forward. After a judge allowed Amway to continue - under strict restrictions and changes - the government has appealed the decision and is moving to close it down. The government's actions are based on its findings that in England:
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. Virtually all the commissions that Amway pays wind up in the hands of a tiny group at the top.
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.
4. Extreme deception is used to lure people into the scam.
The data reveals that Amway has been harming English consumers for decades, deceiving people about the "income opportunity" and siphoning money to a small group of recruiters.
See a full report below and a related article that offers background on the judge's ruling, which is now appealed.
The case brought against Amway by the government of England is moving forward. After a judge allowed Amway to continue - under strict restrictions and changes - the government has appealed the decision and is moving to close it down. The government's actions are based on its findings that in England:
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. Virtually all the commissions that Amway pays wind up in the hands of a tiny group at the top.
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.
4. Extreme deception is used to lure people into the scam.
The data reveals that Amway has been harming English consumers for decades, deceiving people about the "income opportunity" and siphoning money to a small group of recruiters.
See a full report below and a related article that offers background on the judge's ruling, which is now appealed.
How Amway spins the 'Big Lie'
The Amway Myth:
Analogy to the Days when Cigarettes Were Good for Us.
England wants to kick it out of the country; China banned its pay plan; its offices in India were raided; Top Gun insiders sue it as a massive pyramid scheme; a class action case brought by distributors claim it is an illegal fraud under American law; books and websites detail victim losses.
Yet, Amway maintains the myth of being a "direct sales" company (though it has no retail customers) and a "unique income opportunity" (though indisputable data show that 99% of all Amway distributors lose money.)How does it maintain the lie?A comparison with how the tobacco industry maintained its myth for decades that "cigarettes are harmless" helps to clarify.
See The Amway Myth
Analogy to the Days when Cigarettes Were Good for Us.
England wants to kick it out of the country; China banned its pay plan; its offices in India were raided; Top Gun insiders sue it as a massive pyramid scheme; a class action case brought by distributors claim it is an illegal fraud under American law; books and websites detail victim losses.
Yet, Amway maintains the myth of being a "direct sales" company (though it has no retail customers) and a "unique income opportunity" (though indisputable data show that 99% of all Amway distributors lose money.)How does it maintain the lie?A comparison with how the tobacco industry maintained its myth for decades that "cigarettes are harmless" helps to clarify.
See The Amway Myth
England's case against Amway continues
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 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 of Andhra Pradesh 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 President 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.
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 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 of Andhra Pradesh 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 President 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.
Saturday, 19 July 2008
From cushioned life to hard reality
It has been a long journey for the now infamous Pushpam Appala Naidu, the beleaugured managing director of GoldQuest International Ltd from the air-conditioned cushioned life to the hard reality of spending time in various jails in the country.
The high-profile entrepreneur had been leading the luxurious life inducing several lakhs of people all over India if not all over the sub-continent and for the matter South-East Asia with her smooth sales talk selling great luxury life to all and sundry till the long arm of the law caught her. Now she is in Warangal Central Jail and before that she was in Chennai Central Prison. Spending nights in the dark prison cells without air-condition is not easy for people like her.
The much-travelled middle-aged lady 'inspires' and 'hypnotises' the audiences with her glib talk of getting rich quick and retire early in life. Of ocurse, almost all the executives deliver such talks while addressing a large number of audiences in huge auditoria offering sumptuous lunch. Usually she is followed with much fanfare creating hype among the audiences she is going to address. These fraudsters never leave a doubt in the minds of people about what they are doing is a banned activity in various countries under relevant laws.
Yes. It is a banned activity. The money circulation schemes are banned across the globe. That is why they came up with product-based money circulation schemes like Gold coins, memorabilia by GoldQuest International or self-styled herbal products by Herbalife or so-called luxurious cosmetics by Amway. They all do the same trick of cheating the gullible people with false promises of getting rick quick and early retirement in life and happy holidays in the tropical islands.
But these fraudsters must remember that the long arm of law would not leave anyone and nobody is above law. These fraudulent companies should close shop sooner the better for the good of the people and the country.
People should not fall prey to the false promises of these fraudsters and allow them to plunder our country.
Wednesday, 16 July 2008
Cases piling up against GoldQuest, Herbalife in queue
A number of criminal complaints have been filed against the scandalous GoldQuest International Ltd in spite of threatening by its parent companyQuestNet to file defamation cases against police officers who filed accepted criminal complaints against the company.
Three cases in Warangal District and two cases in Vijayawada, Krishna district were already filed and consumer activists are gearing up to file class action suits against the fraudulent company deamanding compensation from the company for cheating them in the name of sending them coins purportedly having numismatic value which in fact is not true. They also claim refund of their hard-earned money and compensation.
More cases are likely to be filed in Visakhapatnam and Guntur districts soon. It may be recalled that several thousands of people were cheated all over the country with the promise of getting quick rich. In fact, the organisers of the scheme and the vortex in the chain have only benefitted. They amassed enormous wealth. For instance, Eenadu, a vernacular newspaper reported that one of the top grossing members, Padma, has amassed Rs. 22 crore within a short span of three years. If it is not getting quick rich, what else is? It is a classic case of getting quick very rich and followed by Ravi Ramesh Babu of Vijayawada and Rajendra Kumar Solanki of Vijayawada. Bo the latter are anywhere between Rs. 50 lakh to Rs. 2 crore each earned while enrolling new members and getting commissions through enrolling.
One has to wait and watch to see the logical end of these cases and it may drag on for years to come. And this multinational fraudster has not dearth of funds to drag on the case for years. It is high time that the Central Government woke up and threw these fraudulent companies like Amway, Herbalife, GoldQuest and a plethora of similar companies out of the country to save the country and people.
Wednesday, 2 July 2008
GoldQuest racket rocks Andhra Pradesh
There has been uproar all over Andhra Pradesh over the GoldQuest racket in which a sizable number of top shots were involved making a biggest racket in recent times.
GoldQuest International Ltd is a registered company under Companies Act with its registered office at Chennai and it has entered India on the pretext of foreign direct investment. In fact, it started multilevel marketing and garnered several tens of millions of rupees in the name of selling memorabilia including gold and silver coins and others to the gullible people promising nothing short of moon. People were promised that they would get enormous money if they sell the same memorabilia in future as they would get numismatic and antique value. People were also lured into bringing in more members into the scheme to get huge commissions. What the company exactly did was the money circulation scheme which was banned way back in 1978 with a perfect enactment.
If a member is sponsored by an existing member, he is eligible for becoming a member and in turn he can sponsor further two more members. They in turn can sponsor two more members each and one can easily understand that it is a money circulation scheme. But strangely, neither the government officials, nor the Police Department took cognizance of the offence and the company continued the plundering for at least a decade. This resulted in heavy outflow of Indians’ hard-earned money which may be at least Rs. 10,000 crore at a rough estimate.
The money circulation scheme should stop at a logical end and this also reached a stagnation point where no new person is interested in taking membership. Naturally, the persons who joined late are the losers and they started pestering their upline members for refund of money. When they did not get their money back, they started filing cases in police stations.
So far, cases were filed against a number of doctors and other professionals who were attracted to the scheme for the easy and quick money. Naturally, they have taken advantage of their relationship with their clients and made them members in the scheme. Now they repent and say that they were not aware of that the scheme was illegal. They forgot that “ignorantia juris non excusat”. Ignorance of law is no excuse. They are running helter skelter to save their skin and recover their lost glory. They have turned out to be criminals.
Wait and Watch what will in store for them in future. Many of them have already appealed to the Andhra Pradesh High Court for anticipatory bails.
One thing we wish to mention. Your Corporate Frauds Watch has been instrumental in filing cases against these unscrupulous, money mongering people. Watch this space for more news soon.
GoldQuest International Ltd is a registered company under Companies Act with its registered office at Chennai and it has entered India on the pretext of foreign direct investment. In fact, it started multilevel marketing and garnered several tens of millions of rupees in the name of selling memorabilia including gold and silver coins and others to the gullible people promising nothing short of moon. People were promised that they would get enormous money if they sell the same memorabilia in future as they would get numismatic and antique value. People were also lured into bringing in more members into the scheme to get huge commissions. What the company exactly did was the money circulation scheme which was banned way back in 1978 with a perfect enactment.
If a member is sponsored by an existing member, he is eligible for becoming a member and in turn he can sponsor further two more members. They in turn can sponsor two more members each and one can easily understand that it is a money circulation scheme. But strangely, neither the government officials, nor the Police Department took cognizance of the offence and the company continued the plundering for at least a decade. This resulted in heavy outflow of Indians’ hard-earned money which may be at least Rs. 10,000 crore at a rough estimate.
The money circulation scheme should stop at a logical end and this also reached a stagnation point where no new person is interested in taking membership. Naturally, the persons who joined late are the losers and they started pestering their upline members for refund of money. When they did not get their money back, they started filing cases in police stations.
So far, cases were filed against a number of doctors and other professionals who were attracted to the scheme for the easy and quick money. Naturally, they have taken advantage of their relationship with their clients and made them members in the scheme. Now they repent and say that they were not aware of that the scheme was illegal. They forgot that “ignorantia juris non excusat”. Ignorance of law is no excuse. They are running helter skelter to save their skin and recover their lost glory. They have turned out to be criminals.
Wait and Watch what will in store for them in future. Many of them have already appealed to the Andhra Pradesh High Court for anticipatory bails.
One thing we wish to mention. Your Corporate Frauds Watch has been instrumental in filing cases against these unscrupulous, money mongering people. Watch this space for more news soon.
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