It seems like more and more these days our Facebook feeds are filled with multilevel marketing. Your high school acquaintance is selling Mary Kay. Your friend’s mom is selling Avon and Plexus. But the granddaddy of all multilevel marketing schemes?
Amway was founded in 1959 in part by Richard DeVos. If that name sounds familiar, it’s because he is the father-in-law of current Secretary of Education Betsy DeVos.
Last week on Sept. 5, the Daily Nebraskan published an article in their news section that may have misled students into believing that Amway is a great way for college students to make money.
In the article, the support for Amway was expressed more than the drawbacks to the company.
Although the comments directly on the article were mostly positive for Amway, the commenters on Facebook took great exception to the tone of the article, to say the least.
“How much did Amway pay you to publish this sponsored advertisement posing as journalism The Daily Nebraskan?” Facebook user Daniel Baer wrote.
While Amway was cleared of being an official illegal “pyramid scheme” by the Federal Trade Commission in 1979, their recruitment and membership doesn’t offer many benefits or opportunities for employees.
Like many multi-level marketing companies, Amway requires an initial investment on behalf of the employee which is used to build a website.
According to Matthew Swanson, a former UNO student and an “entrepreneur” with Amway, that website costs $65 to obtain with a renewal fee of $65 every year.
Most Amway distributors make less than $100 per month, with the average being around $65. That means to buy the privilege to sell Amway products, the average salesperson gives up one twelfth of their profits.
Many people have heard of Amway tangentially, but not as many know what they sell. Amway’s products are varied but most involve health, beauty and home goods.
“It’s almost anything in the house you can think of,” Swanson said.
“Independent business owners” as Amway calls, them often end up spending hundreds or even thousands on seminars, books and tapes that are supposed to help them sell Amway products.
According to the Federal Trade Commission in a 2008 case, only 90 out of 33,000 IBOs made enough to cover the cost of their business.
Amway does 90 percent of its business outside of the United States, which is a bit strange for a company whose name is short for “American Way.” The possible reason why is that Americans have largely come to recognize Amway as a scam. They also have an easier time suing for unethical business practices than citizens of other countries.
What’s important to remember is that there is no base pay, no hourly wage and no salary. The money possibility of making a profit is entirely dependent on what products are sold.
So just know that if your brother’s high school friend invites you out for coffee telling you he’s got a great way to offset those student loans, he doesn’t. What he’s trying to bring you into is a couple hours of conversation about how he blew all his cash, alienated his friends and family and drank the Kool-Aid for a company that wrung him out and left him to dry. And for just $65 a year, you can be a part of that too.