Saturday, 31 July 2010

Amway's money circulation scheme stems from overpriced products and enrollment

The idea behind pointing out the real value of Glister toothpaste is how many times of its value Amway India is charging its consumers. And they claim that it is direct selling. The money circulation scheme stems out from the overpriced products and above all the 'enrollment'.
Without enrollment these MLM companies would not survive. That is why the Andhra Pradesh High Court has rightly pointed out that,
"It is thus, evident that the whole scheme is so ingeniously conceived tha 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 make quick/easy money. On the part of the promoter (Amway India) by pushing each member to achieve the minimum sales worth Rs. 2000 per month (this sale includes enrollment of new members) the promoter is assured of about Rs. 1000 crore (Rs. 10 billion) per annum. All this squarely satisfies the description of quick/easy money. In addition to this it is an admitted fact that each person in order to continue to be the distributor, shall opya renewal subscription fee of Rs. 995 per annum. In para 11(b) of the counter affidavit on the admitted number of distributors of 4,50,000 this amount is calculated at about Rs. 45 crore per annum. These figures are not denied by the first petitioner (Amway India) in the rejoinder. The plea of the first petitioner that there is no compulsion that a member shall renew his distributorship looks to be specious. Once a person becomes a distributor in a scheme of this nature where the sops in the shape of commission are so luring, it would be very difficult for a member to withdraw from their membership to avoid payment of the annual renewal subscription fee. (Para 34)."
This is enough for the Amway apologists to shut their mouths. But they never agree to the reality.

9 comments:

Shyam Sundar said...

Why you are calling it a lie? Isn't true that the price of Glister toothpaste cost is only Rs. 16. And isn't true that it is sold for Rs. 120? And who have not answered the question how much is going to the Amway India and how much is being shared by the downline members.

Shyam Sundar said...

You conveniently skip the second point. The enrollment. The members share the extra money collected from the consumers and the enrollment money. Otherwise, how could an IBO could earn Rs. 56, 500 every month if he could enroll 102 persons under his downline. Enrollment is nothing MLM and it is described as a vicious circle by the Andhra Pradesh High Court.

Admin said...

Well said. The technical term is "pyramid scheme".Almost all Pyramid schemes masquerade as MLMs.
Do lookup the keyword pyramid scheme on wikipedia.I found a better precise definition at investopedia.
http://www.investopedia.com/terms/p/pyramidscheme.asp

newpoint said...

I loath MLM schemes. I was an Amway member in the UK for over 4 years. I believed the hype and it cost me a lot of money and many of my friends and relatives didn't want to talk to me because I got so obsessed with 'living the dream'. The only difference between high street products and MLM products is that your upline convinces you that selling their products will make you a millionaire. Examples: Aloe Vera drinks. From Forever Living = £50. From Holland & Barrat = £16. Same quantity, both 100% pure stabilized Aloe Vera barbadensis leaf.
MLM businesses are unethical. They do not exist to give consumers good value for money - they exist to make a small number of people a lot of money. Anyone who thinks they can build a network of thousands of people making them rich buy working 15 hours a week part time is deluded. Beware of MLM dream builders!

newpoint said...

I loath MLM schemes. I was an Amway member in the UK for over 4 years. I believed the hype and it cost me a lot of money and many of my friends and relatives didn't want to talk to me because I got so obsessed with 'living the dream'. The only difference between high street products and MLM products is that your upline convinces you that selling their products will make you a millionaire. Examples: Aloe Vera drinks. From Forever Living = £50. From Holland & Barrat = £16. Same quantity, both 100% pure stabilized Aloe Vera barbadensis leaf.
MLM businesses are unethical. They do not exist to give consumers good value for money - they exist to make a small number of people a lot of money. Anyone who thinks they can build a network of thousands of people making them rich buy working 15 hours a week part time is deluded. Beware of MLM dream builders!

newpoint said...

Hi. Sorry I posted twice above. Anyway I just need to correct an error: I said 'Aloe Vera drinks. From Forever Living = £50. From Holland & Barrat = £16. Same quantity, both 100% pure stabilized Aloe Vera barbadensis leaf'. The prices were for the Forever Argi (L'Arginine) supplement not the Aloe Vera drink. The FLP drink is £20 and the nearest competitors is £11.

Shyam Sundar said...

surfmeneThat is the point dear newpoint. All these are out to make a lot money with the promise that you would make lots of money. Actually they are the winners and you are all losers. That is why it is a money circulation scheme benefiting the organiser. Do not fall for such things.
Anyway, who said that merely taking some drink would make your health better. Go for regular exercise and take good natural diet including milk and nuts.
All these schemes are there only to strip you off your money.

newpoint said...

You’re absolutely right of course.

In the UK the Forever Living MLM system is gaining a lot of poor souls who are being sold the same old line 'join us and live your dreams'. The company seems to have worked out a slightly different pay structure which on the face of it appears believable. The problem is of course it is still a MLM scheme and ultimately works the same way as all the rest: Its success is based on a constant flow of distributors who quit and have to be replenished. You could say that the people are the company's stock, not the products. Groups flourish in the first 6 to 12 months and then fall apart when most of the people in the ‘front line’ quit.
The products are vastly overpriced and all of its distributors have to become overnight quacks, sorry I meant expert nutritionists. The other interesting point is the small print at the bottom of all their official product literature. It states;
'The contents of this publication are to be used solely for education and not as a sales supplement, handout or publication for use in conjunction with a sales promotion'.
Hmmmm, why not?

newpoint said...

I have recently made a comparison between Forever Living Aloe drink and a high street brand (Holland & Barrat Aloe Pura drink). Basically the FLP drink costs £2.40 per day and the competitor costs £0.50p. Now you can see how MLM companies make their money.