Thursday, 28 August 2008

Amway breaths hard when new thugs entered the scene

It is time Amway checked its blood pressure as it is breathing hard to resist the moves of new thugs in its arena. Mona Vie, a new entrant in the multilevel marketing in the United States of America, has causing shivers to Amway which has already filed a suit against the other fraudster that it is encroaching upon its right to cheat people. What Mona Vie is selling is nothing but fruit concentrate which it deceptively claims that it would cure arthritis and even cancer and sell it an exorbitant price. In fact it also indulged in money circulation scheme branding it as good business opportunity.
We, in India, have a similar product with the brand name of 'Noni'. It is quite interesting to observe that even thugs fight for space instead of accommodating each other to loot people. It is hightime people watched all these crooks with open eyes and not to fall prey to these fraudulent activities of these cheating companies.

Wednesday, 27 August 2008

It is a virtual fight among thugs Amway and Mona Vie

Amway is foundering and fighting for its life. New upstarts are challenging it, riding on the political and legal highway that Amway paved. Though Amway is huge, it is also hugely vulnerable, a house of cards.The newly challenging MLMs use all the tricks that Amway taught them and they play off against Amway’s long rap sheet of lawsuits, bad publicity, regulatory fines and its long trail of “quitters and losers.” This gives the new schemes the chance to claim they are “better” or “different”, and really do offer an income opportunity.The new schemes also enjoy the unregulated legal environment that Amway paid for. No worries about the FTC in America where Amway is based. After pouring millions into the coffers of the Republican Party, Amway got President Bush to appoint an Amway attorney as FTC chairman. The agency was put on a chain and immediately stopped enforcing the law against “pyramid selling schemes.” Amway was safe for a time, but it also opened the inferno’s gates for new MLMs to devour Amway’s base. The newest upstart, called Monavie, achieved a billion in sales and a million followers in less than three years. It sells fruit juice that is priced higher than a bottle of fine French wine. Blatantly deceptive claims and promises about this juice curing arthritis and preventing cancer are all over the internet and are routinely made by Monavie's “independent” salespeople. Much of Mona Vie’s “sales” were taken right out of the revenue/recruitment base of Amway and its old protégé, Herbalife. Amway has sued Monavie and is trying desperately to stop the hemorrhaging of recruits. But, it is not Monavie that is causing Amway’s collapse. As an upcoming False Profits Blog will reveal, Mona Vie offers nothing more than Amway. It is not “different” or “better.” It is the same. The same false promises of income based on endless chain recruiting. The same promotion of ridiculously overpriced, over-hyped products that most new recruits stop using within a year but buy for a few months while they still believe in false income promise.. Mona Vie is causing the very same financial losses to 99% of its recruits that Amway has perpetrated for decades. It is using the same book of deceptions honed to perfection by Amway, and Mona Vie is structured exactly like Amway. It has even imported Amway’s Top Gun recruiters, the very same tricksters that publicly admitted in a lawsuit that they were running the notorious “tools” scam at Amway.No, Amway’s apocalypse has been a long time coming and is of its own doing. For about 25 years, Amway has been on a pyramid recruitment rampage all over the globe, escaping saturation levels in older markets by opening new ones. The truth is finally catching up with Amway. Saturation time has arrived. Eventually, the recruitment spree (70% quit each year, 99% lose money) led Amway to the last and largest market on earth for pyramid exploitation, China. But Amway’s reputation had preceded it. China enacted a new law in 2005 that bans Amway’s keystone pyramid pay plan. And some of Amway oldest markets, the USA and England, are now showing extreme distress. In England, Amway is being prosecuted for fraud. English regulators are trying to kick Amway out of that country, crippling it in Europe. Already, Amway has been ordered to drastically reduce prices, ban its “tools” scheme and clearly disclose the reality of enormous loss rates suffered by its hapless recruits.In the US, some of Amway’s top insiders have become whistle blowers, revealing that less than 5% of Amway products are ever retailed; its products are “hopelessly overpriced”; that it is impossible for a new recruit to be profitable; and that within a few years, Amway churns nearly 100% of its entire “sales” base. The insiders themselves charge that Amway is operating illegally.These charges are mirrored in an important class action lawsuit brought in US courts by the law firm, Boies, Schiller and Flexner (which represented Al Gore to the Supreme Court). This firm has the expertise and the resources to sustain a potentially devastating financial attack on Amway. The case has overcome Amway’s main legal defense – that Amway recruits are not entitled to a day in court because they agreed, when they signed Amway’s contract, to submit themselves to Amway’s own “arbitration” system. The judge termed the Amway contract “unconscionable.”Perhaps the most obvious sign that Amway’s Judgment Day is at hand is Amway’s recent media advertising. Amway ads are now running on the Keith Olbermann show on MSNBC and on CNN and in magazines. These strange new ads pretend that Amway is a common household name, associated with products, like Tupperware is, and not with a massive financial scam, besieged by lawsuits and whistle-blowers.Actually, the Amway name is so ruined by widespread association with pyramid scam that Amway tried to replace it in North America with the “Quixtar” name. The name change trick did not work. Now, Amway is trying to resurrect, redefine and polish up its defiled name with deceptive advertising. The ads vaguely refer to the Amway “opportunity.” Yet, just like the old tactic that became Amway’s infamous trademark – inviting people to a social event without telling them it’s actually a high pressure Amway recruitment meeting – the media ads dare not describe the “opportunity”. 99% of all who try it lose their shirts! The ads are clear signals of market distress. In the end, the Amway ads are an effort to uphold a crumbling house of cards.
Robert L. FitzPatrick, Pres.
1800 Camden Rd. Ste. 107 #101
Charlotte, NC 28203

What happened my friend why silence?

It seems that our Amway friend has turned a stoic philosopher. He is not at all reacting to the comments. On the other hand, he is inviting us to participate in another forum. We did not invite him to respond to our blog. They only started and it is their responsibility to respond to our queries if they are honest and committed to their cause. They must answer to the queries wholeheartedly without deviating from the subject. They must also answer as to why the Amway is not an exploiter. They have to prove beyond doubt that the Amway is not siphoning off money from our country. The ball is in their court. React my friend. Say something.

ఆమ్వే స్నేహితుడికి ఎదురు దెబ్బ తగిలినట్టు ఉంది ఏమీ మాట్లాడడం లేదు

Thursday, 21 August 2008

New age Goebbels Amway propagandists

The fallacies put out by Amway
1) Profit is earned through sale of products
2) No commission is earned through recruiting
3)Amway India sales have increased substantially in the past year, not decreased
4)Amway proa ducts have won numerous independent consumer awards.

Hi guys Excellent, the way the so called business of Amway is explained in a nutshell is just excellent. I would like to say that right examples could also be given to support a wrong cause. Amazobies (the people in Amway business) do exactly the same way. Before I go deep into the subject, I would first put certain records straight.
In the Amway "business" the language used by the IBOs (Independent Business Owners) is basically altogether different from other human beings. Words carry different meanings with an underlying aim to confuse people so that they do not understand that they are cheated and reach out to the real back end business.
For example one of the salient features of Amway is claimed as "Profit is earned through sale of products". Correct and it is 100% correct. The Amway Company does earn profit by selling its products to its stupid IBOs and it should be understood accordingly. This is how it is? The "sale of products" in the above proposition is nothing but the “sale of products by the company” to the IBOs who are in real terms the “consumers” although the fact remains that they do not buy these products to consume but only to resell which any way is impossible.
The mandatory "purchase of products" made by every new IBO at the time of walking into the trap of Amway business is the only actual “sale” to the company achieved through the false promises of making big money and the company earns a huge profit as it rightly claimed. It is to be noted that the people who take up the business of Amway do not earn any profits just by selling the products of the company because it is next to impossible to sell these products in the open market particularly in India-like third world countries. Then how would these stupid IBOs earn profits, that too, so huge profits that this deceptive company promises through its “senior” people (uplines) in its regular meetings showing testimonies of success stories?
Is it possible to earn great profits and big money just by selling products to the prospective consumers? Assuming that it is possible, how do the IBOs to identify these prospective consumers every time to have regular sales so as to make good profits? More so when there is no publicity back up by the company promoting the products by way of advertisements as the company itself claims that it does not “waste” money on publicity and the money, thus saved is instead passed on to the consumer?
How much time do the IBOs have to spend in convincing the prospective consumers for selling them the products by telling them all the lies and pestering them to buy? Where do thye have to go everyday to sell these products and who would buy these stupid products for such an exorbitant prices when established and regularly advertised brands are available for much cheaper price? And ultimately what is that the IBOs get in net effect by confining themselves to only selling the products and thereby earning a profit?
Having found that it is impossible to sell these products to unknown people, the IBOs try to catch hold of friends, relatives, colleagues, neighbors, acquaintances, etc, and try to use all their family and social leverage to “sell” them the products or try to give them freely so that they would buy them in case they are satisfied with their quality or entice them into the business with copy cat promises which they themselves have not been benefited. In any of these possibilities, the IBOs do not earn any profits; forget about those huge profits but by enticing and enrolling new people into the business every time, because it is alone the company that gets a sale.
Krishna Mohan,
Journalist, Hyderabad, India

Fraud means deception my friend

Fraud, according to Wikipedia, is a deception made for personal gain or to damage another individual. All these multilevel marketing companies indulge in fraudulent activities. Why they are fraudulent because the method they adopted, i.e., money circulation scheme, is expressly prohibited by the law of the land. They may camouflage their activities with product sales or service providing. But we have to remove the veil and look for the real activity of these companies.
In the case of e.Biz, it has indulged in money circulation scheme in the name of providing the service of computer education. The company first charged exorbitant fee from the members and later induced them to bring in more members with the offer of commission. If they enroll more members they would get more commission. If anybody has any doubt, they can go through the Prize Chits & Money Circulation Schemes (Banning) Act, 1978 and it is available in the older posts of this BLOG.
My learned friend raised a doubt that the Harvard and Stanford universities praised the multilevel marketing schemes stating that they are best form of business. For that matter, astrology is a subject in the Telugu University in Andhra Pradesh. Can we say that it is scientific and can be proved beyond doubt. Let us not be carried away by them. One close look at the business model of Amway revealed in the articles of this BLOG clarifies that the scheme, in fact, is nothing but money circulation scheme benefiting only the company with huge margins. And the common man is the loser buying things at an exorbitant price and caught in the web of inducement of more commission. Anyway, truth is bitter and people who are getting the benefit of the scheme never accept that it is a fraud. Amway indulged in fraud that is to make personal gains and nothing else.

Wednesday, 20 August 2008

Why silence again my Amway friend

Come out my friend. Let us speak truth and stick to facts. It is convenient to say that this is not in the priority list to answer the genuine doubts. But the fact is that the Amway is unjustly lining its pocket with people's money depriving millions of people their hard-earned money. And people who line their pockets never concede that. As long as you find new victims, there would be no problem. But once the chain breaks, the problem starts.
So far this column never indulged in mudslinging or distorting facts. Facts are there to see. The facts are quoted from the Writ Petition filed by the Amway in the Andhra Pradesh High Court. And if anybody thinks that those facts are fictitious nobody can help it. Let us be honest. And it is hard to think that a fraudster or a crook could be honest. The whys were never answered and my friend chooses to cast aspersions about rivals paying for writing these queries.
Anyway it would be interesting to learn about the rivals, who are they and why there is rivalry. It would be better if the rivals' names are pronounced.

Saturday, 16 August 2008

ఆమ్వే మొదలు పెట్టిన మోసాన్ని మిగతా కంపెనీలు కొనసాగిస్తున్నాయి వీటిని ఆపడం మన ధర్మం

Come to the point my Amway friend

It has been umpteen times made it clear that this movement is against all multilevel marketing companies whether the fraudsters are from abroad or Indian crooks. But the mother of all scams is the Amway which brought this multilevel marketing in the guise of product sales and actually indulged in money circulation scheme. That is why the main target is Amway. Ask any multilevel marketing agency they point out at Amway and say when they are doing business why not we.
Our IBO friend is conspicuous by his silence over the Rs. 1,800 collected by the Amway for merely becoming a member. Does any businessman collect subscription fee for purchasing products from him. That is the point. And merely saying that the rival is paying for pointing out the easy and quick money racket is nothing but cover up.
Ignoring those comments shall we move forward for the next course of exploitation by the Amway.
The terms and conditions of 'Distribution Renewal Form' supplied by Amway clearly state the following issues.
Condition No 3: The distributionship agreement if not renewed by Amway shall stand terminated on December 31 on or expiry of one year from the date of distributionship, as the case may be. Condition No.12: The Renewal of subscription fee including Block Renewal Subscription fee is non-refundable. Condition No. 14: Renewal of subscription fee is mandatory to continue with business and maintain your position in line sponsorship.
It can be safely said that from 4,50,000 distributors, the company would get a sum of Rs. 44,77,50,000 (Rupess Forty Four Crore Seventy Seven Lakh and Fifty Thousand only: at the rate of Rs. 995X4.5 lakh) per annum towards renewal fees on completion of every year without offering any service to the distributors. This can only be stated as Easy and Quick money.
Let us look at the renewals for the last three years: From September 2004 to August 2005, the Amway has received Rs. 24, 91, 35, 424; From September 2005 to August 2006, it has received Rs. 25,71,80,305 and from September 2006 to August 2007 the Amway received Rs 30,78,66,574 as renewal of subscription fee. This is apart from the new enrolments.
In the name of merely subscription renewal the Amway has garnered several hundreds of crores of rupees. If this is not easy and quick money what else is my friend.

Friday, 15 August 2008

Unjust enrichment Amway style

So far, the so-called apologists of Amway failed to justify many a point and it could be ascertained giving a glance at the earlier articles and their meek responses.
Let us move further to find out how the Amway is lining its pocket in easy and quick way.
A person who wants to join as a distributor or independent business owner (IBO) for Amway has to pay a subscription fee of Rs 4,400 out of which Rs. 1,800 is directly credited to the account of Amway company. Amway in the Writ Petition Nos.20470 & 20471 of 2006 filed by it in the Andhra Pradesh High Court categorically stated that they have enrolled 4,50,000 distributors all over India. Even taking this as true, a sum of Rs. 81 crore was appropriated by the company at the time of enrollment of the members. Isn't it easy and quick money got by Amway from the called distributors/members without offering any service.
Let us move on further, a distributor has to maintain a minimum business level of 50 personal volume (PV) to qualify for getting higher commission and that is sufficient inducement for the members to strive relentlessly for maintaining the PV level at or above the said minimum level. To ensure that he would not lose the opportunity of receiving performance commission @ 15% and above every month (with effect from September 1, 2007), @ 21% and above every month between September 1, and August 31, 2007)each IBO has to distribute/purcahse/sell Amway products worth Rs.2,250 every month lest he becomes ineligible to get commission at higher rate. Thus each member is forced/induced/lured to purcahse Amway products worth Rs. 2,250 every month to keep his chance of getting substantial commssion alive. Thus Amway would automatically get a business quantum of Rs. 1,215 crore per annum without offering any service to the distributors/members, getting an an astronomical amount without any effort on its part, which can be stated as windfall. Isn't it easy and quick money.Amway conveniently refers this as turnover by sale of products irrespective of whether its IBOs sell the productrs or not.
We shall explore more avenues of Amway exploitation in the coming episodes.

Tuesday, 12 August 2008

Silence again: Did it hurt my Amway friend

It seems that our friend is hurt with my latest piece. Because truth is bitter and hard to swallow. Before moving forward with more bitter truth, let us wait for some more time for a comment or two. People who line their pockets with other's hard work never take it light when they are shown the hard reality. Shall we wait for some more time for our Amway friend to respond. Or he may be busy collecting data from Amway India Enterprise regarding the payment of tax to the Andhra Pradesh State Government on the ex-factory price of Amway products. Anyway let us give the 'IBOs' some more time to respond.

Sunday, 10 August 2008

Owning up downline IBOs business Amway style

The easiest thing in the world is to convince yourself that you are right. The Amway apologists do the same thing. The IBO who did personal sales worth Rs. 4,500 and enrolled his downline members cannot claim that all the sales did by those members as his own. Then the downline members have nothing to claim as their own sales. If they claim again that amounts double jeopardy.
My fight is against all types of these fraudsters whether they are Indian crooks or from abroad.
Let us move forward ignoring these comments. For the personal sales of Rs. 4,500 at Stage-1, each IBO would make Rs. 56,925 per month and the Stage-2 IBO would make Rs. 9,540 and the Stage-3 IBO would make Rs. 1980 and the Stage-4 IBo would make only Rs. 1035 per month.
Moreover, if an IBO fails in any month to make such purchase, he will be denied the applicable bonuses and commissions for that month on the downline volume which will then most unfairly pass on to the next eligible upline IBO who satisfied this requirement of personal purchase in that month.
The provisions of the Indian Contract Act prohibits unlawful enrichment of one at the cost of many. Being the promoters, the initial members or uplines to the majority members into the scheme get easy and quick money without any effort. Thus they are unlawfully enriching themselves at the cost of innocent distributors downline.
Therefore, a substantial part of the income which the first sponsor member of the group gets indubitably depends upon the event or contingency relative of the enrollment of members into the scheme downline. This can only be stated to be easy and quick earned by its distributors.

Saturday, 9 August 2008

Amway's 6-4-3 principle racket

Amway repeatedly uses the Sales and Marketing Plan of 6-4-3 principle in its publicity (it is available at According to the plan, initially a person (stage-1) sponsors six members (stage-2) and these six members in turn enroll/sponsor four persons each totalling to 24 members and these 24 members in turn enroll/sponsor three members each totalling to 72 members (stage-4) thus making a total of 103 members known as one leg of the sponsor at stage-1. In this illustrative example, as per the calculation done and shown by Amway itself, the IBO at Stage 1 earns Rs. 56,925 per month for enrolling/sponsoring 102 members his donwline though his monthly business is only worth Rs. 4,500. In conventional distributional channels, it is not possible to get Rs. 56,925 for selling products worth Rs. 4,500.
IBOs never register with local authorities for selling products. Some top level IBOs may be incorporated their entitites but all other IBOs remain mere independent business owners without registration. Simply claiming it is false, it cannot escape its liability.
Glister toothpaste or for that matter for all its products, the Amway India pays sales tax to the Andhra Pradesh Government as per the cost of ex-factory price of its products. IT is easy to find with Amway India to find how much ex-factory price it is fixing for its products and how much tax it is paying. In fact, it is paying sales tax for the Glister toothpaste claiming its ex-factory price as Rs. 16 only.
It can be checked with the Indian subsidiary of Amway.

Friday, 8 August 2008

Profits, heck of a lot to the Amway intermediaries

When one's point is weak, their voice becomes louder. Instead of making their own point, what is point in hurling epithets. It only shows the arrogance of presenting one's case forcibly.
Let us come to the point. According to the tax paid by the Amway to the Indian government, the ex-factory price of Glister toothpaste is Rs. 17. But it is sold to the end-customer at a whopping price of Rs. 120. Now who is sharing the difference of price. This is only an example.
The direct selling is age-old. The milkman who directly brings milk to your home and the farmer who brings to you vegetables directly from his farm. The direct selling indulged in by the racketeers may be hundred year old but it would not make it legitimate. It was formulated by the fraudsters when there was no law of the land anywhere in the land. That would never make it legitimate. It is a fraud pulled on people for decades and it is high time we put an end to it. They always look for new gullible people to fall prey to the smooth talk and 'good business' oppoeruniry.
About the philosophy of sharing, it is not my philosophy but that of Amway. The Amway while applying for the company registration stated that its philosophy is to allow the consumer of saving additional costs. Instead of saving, he is being shaved while buying a Rs. 17 worth toothpaste for Rs. 120.
Moreover, these intermediaries never got registered as a trader or shopkeeper or a business house though they 'buy' in huge quantities. They never pay any tax to local authorities for running business.
The truth is bitter.

Wednesday, 6 August 2008

Fraudsters come up with another money circulation scheme a la Amway

Congratulations to the Warangal police under the able guidance of the star police officer, Viswanath C. Sajjanar who busted another racket. This time it is a computer education company which indulged in money circulation scheme in the name of giving computer education to the youth. The modus operandi is same that of Amway which has been into money circulation scheme in the name of selling products.
On 05.08.2008 basing on a specific complaint, a case has been registered vide Cr.No. 338/08 U/s 385, 420 and 34 of IPC and Sec 4, 5 & 6 r/w 2 (c), 3 of Prize Chits and Money Circulation Scheme (Banning) Act, 1978 of PS Hanamkonda against “ Pvt Ltd.”, Pavan Malhan, Managing Director of Pvt. Ltd., Ayyappa Swamy, Aditya Bhogaraju, Mohith Manjunath, Rajesh Kumar, Phani Kumar etc.
The complaint reveals that the complainant was trapped by members and they induced him to become its member. After taking membership he was initially asked to enroll further members to get more commissions. Later on he was harassed mentally in this regard. The complainant further explained about the details of the scheme which involves enrollment of members, commission earned and also the titles given to various members depending on their enrollment. Pvt Ltd. has started its business in India from 2001 headed by one Pavan Malhan with its Head Office at Noida, U.P., and started promoting computer educational programme. In the name of computer educational programme, they have schemes which are in the nature of enrollment of members.
To become a member of the scheme, a person has to pay Rs. 7, 585/-. Then the member has to further enroll more members to earn more commission. The enrollment is as per Binary plan.
If the associate sells eBIZ educational programme and web first 3 packages with 1/3:2/3 ratio under him he will get Rs.2000/-, for next 3 sales he will get Rs2000/- with 1/3:2/3 ratio, for another 3 sales he will get another Rs2000/- and this will become a cycle of 9 Sales and the associate will get a total of Rs.6000/- and for the 2nd, 3rd, 4th, 5th cycles of each 9 sales, the associates will get Rs. 3000/- for each cycle. For the 6th cycle of 5 sales the associate will get Rs. 8.000/- and the total sales will become 50 which is also called an ORBIT and the total sum of Rupees earned by the associate will become Rs. 26,000/-. From the 2nd Orbit onwards the associate will earn for 1st, 2nd, 3rd, 4th, 5th cycles of each 9 sales get Rs. 2,500/- each and for the 6th cycle of 5 sales the associate will get Rs. 7,500/- and the total sales become 50 and the earning for the 2nd Orbit will become Rs. 20,000/-. Thus depending upon the enrollment the chain continues and the member continues to get commissions.
Depending upon number of members enrolled, the members are given fancy names like:-
Silver Associate, Gold Associate, Diamond Associate, Diplomat, Silver Diplomat, Gold Diplomat,Diamond Diplomat, Ambassador, Silver Ambassador, Gold Ambassador, Diamond Ambassador, Chairman Circle.
1st Step 3 Sales: one gets Rs.2000 with sales in the ratio of 1/3 : 2/3
2nd Step next 3 Sales one gets Rs.2000/- with sales in the ratio of 1/3 : 2/3
3rd Step next 3 Sales one gets Rs.2000/- with sales in the ratio of 1/3 : 2/3
Thus every member of Pvt Ltd., tries to enroll new members and thus accumulate sales, orbits so as to enable them to become Sliver Associate and thus go up the ladder to become Diamond Diplomat to Chairman Circle and so on. If he/she fails to get further enrollment, then the member tries to make his own sales to accumulate orbits and be in the rat race.
The members also arrange meetings in star hotels, big hotels with entrance fee for luring and inducing public.
Further people specially the middle class, innocent students are lured into such schemes and thus they contribute money and waste their precious time to such schemes and thereby set up a chain of further contributors, from each of whom the original contributor will get back an amount of money he had initially paid to the scheme and thereby gain financially. Each of the second set of contributor is expected to generate further sets of contributors likewise and gain money. It is financially impossible for such a chain to work endlessly with profit to everybody concerned.
All such schemes finally get broken at some stage, resulting in financial benefit to a few who had joined at the beginning of the scheme and financial loss to a very large number of contributors who had joined the scheme at a later stage. Such schemes mostly work to the detriment of middle class people and innocent students, who invariably look for some short-cut or the other for augmenting their income. Thus the gullible public would have just fallen for the scheme without understanding its non-workability.
In this case further investigation is on.
Alert: Thus the public is once again requested not to fall prey to such Direct Marketing, Multi-level Marketing, Network Marketing, Referral Marketing, Sponsor Marketing, Chain Marketing etc. Such schemes are prohibited under the provisions of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978.

Tuesday, 5 August 2008

Why studied silence my friend

Shall we take it for granted that our friend is silent over the issue because it is the last nail in the coffin. But it is not so. There is more to come. Lies, lies and again lies regarding the scheme and its implementation. Ok my friend break the silence and say something even if it is ridiculous and meaningless and even stupid coment.
Let us go deeper in the scheme in the next episode.

Sunday, 3 August 2008

The role of intermediaries in the Amway 'business model'

Let us move on further on the role of intermediaries of Amway as there is a stone-wall silence on the fraud of foreign direct investment (FDI) in India. Let us take it for granted that the Amway lied to the Andhra Pradesh High Court regarding the FDI in India. And as per the meaning of direct sales, Indian Federation of Direct Selling, which is an independent body, defined its own version of direct selling and the members of the Federation are only bound by it. Direct selling means only direct selling goods and services to the customers. There is no question of ignorance or arrogance.
Before citing the number of intermediaries in the Amway business model, let us look at the various incentives/commission/profit paid from the cost of Amway products to the intermediaries. Profit @ 20%, maximum peformance @ 21%, leadership commission @ 4%, Ruby commission @ 2%, monthly depth commission @ 1%, Emerald commission @ 0.25%, Diamond commission @ 0.25%, Diamond Plus commission @ 0.25%, Founder's Achievement award Rs. 6 lakh - Rs. 264 Lakh, Founder's Distinguished Service award Rs. 240 lakh - Rs. 960 lakh and All expenses paid-up trip to Peter Island at a substantial cost. In essence it can be safely said that out of the price paid by the end-consumer approximately 49.75 per cent goes towards incentives/commisisons mostly to the IBOs in the upline or top level and the inherent costs incurred by Amway in awarding Founder's Achievement award and Founder's Distinguished Service awards. Moreover, the expenses of paid-trips to Peter Island also included in it. Now it is irrefutably and conclusively proved that more than 50 per cent of the cost paid by the end-consumer for Amway products is spent to enrich the toplevel IBOs besides Amway. To be precise most of the expenditure incurred by the end-consumer of Amway goes into the hands of the top few IBOs and Amway. This is totally contrary and inconsistent with the philosophy of saving additional costs.
Now let us list out the titles/names of intermediaries--Silver Producer, Gold Producer, Platinum, Ruby, Founder's Platinum, Founder's Ruby, Sapphire, Founder's Sapphire, Emerald, Founder's Emerald, Diamond, Founder's Diam ond, Executive Diamond, Founder's Executive Diamond, Double Diamond, Founder's Double Diamond, Triple Diamond, Founder's Triple Diamond, Crown Diamond, Founder's Crown, Crown Amabssador, Founder's Crown Amabassador. In all there are 22 intermediaries who line thier pockets with the price paid by the end-consumer.
More in the coming episode.

Saturday, 2 August 2008

All Multilevel marketing schemes are money circulation schemes

All multilevel marketing schemes, whether it is Amway, Herbalife, Tianshi, GoldQuest, or V-Can Network, are money circulation schemes being conducted in the guise of product sales. The camouflage may vary from scheme to scheme and company to company but they are illegal attracting the provisions of the Prize Chits & Money Circulation Schemes (Banning) Act, 1978.
For instance, Amway claims that its business is direct selling. It promised to the Government of India that it would bring in foreign direct investment into the country. As per the information furnished by the Reserve Bank of India, from 1994 to 2006, the Amway has brought in only Rs. 18 crore of foreign investment. But it stated in the affidavit filed by it in the writ petition before the Andhra Pradesh High Court that it invested in excess of US$35 million (151 crore) in India which is patently false.
The term direct selling presupposes that there is no intermediary between the manufacturer and end-consumer. Commencing its commercial operations in India, the Amway, instead of selling goods direct to the end-consumer, has floated this multilevel marketing scheme of enrolling members by sponsoring and introduced many intermediaries in the name of distributors, encouraged its members to sell the articles with retail profit of 20 per cent apart from other performance bonuses. In fact, the Amway is not selling the products direct to the end-consumer. The truth is that the consumer cannot purchase products direct from Amway without becoming its distributor.
Let us explore more of its exploitations in the next instalment.