If it’s too good to be true… it probably is

[voice of reason]

Prudence was not always one of my virtues, but I picked it up in the newspaper business and I’ve found it enormously valuable. And not just as a filter for rumors when you’re sitting in the newsroom, wondering what the hell to use as lead story.

Recently, a friend of mine has gotten himself involved with an enterprise through Quixtar, a company whose roots reach deeply into Amway, one of (if not the) largest multi-level marketing organizations in the world.

With the Quixtar scam, one is invited as an independent businessman, becoming a distributor who invests a fair chunk of change in their products for personal use or for sale. One also tries to sell the company right along with the product — essentially roping acquaintances, friends, and colleagues into Quixtar’s dysfunctional family. Because when they make money, you make money. And everybody likes making easy money.

Of course, the problem is it doesn’t matter how many people sign the dotted line — it’s the flow of product that matters. So if you have twenty people enlisted beneath you, but only one is making any progress, well, you can forget the other nineteen.

Amway/Quixtar has made a very small group of people very rich, and their success stories are trumpeted as characteristic of the process. Far from it. The Federal Trade Commission requires Amway to label its products with the message that 54% of Amway recruits make nothing and the rest earn, on average, a whopping $65 a month. Dateline interviewers reported that the figure of individuals who earn no profits is nearer 90%, frighteningly enough. And here he is thinking that if he invests $1,500 in energy drinks, he’ll make $10,000 during Ragbrai.

And of course they target college students. Gullibility and laziness make a frighteningly exploitable combination; rags-to-riches stories are immensely appealing, particularly when they involve minimal effort and maximum gain.

My friend isn’t lazy, but it’s fair to say he’s, well, easily taken. Unfortunately, I’m too much of a sap to let him fall on his face, hence my looking into it. Does no one do research anymore? God. It doesn’t take long to poke around the net, locate a few credible sources, and figure out what the hell is really going on.

What’s most disturbing is that Amway/Quixtar has two operations, and intentionally confuses them in presentation to new “recruits.” From federal complaints against Amway/Quixtar:

Amway enticed prospective distributors into the Amway business with the prospect of owning and operating an independent business, buying and selling Amway products, and thereafter becoming financially independent, if not fabulously wealthy. However, the wealth portrayed as attainable in the Amway business is not attainable in that business because the wealth portrayed is in substantial part due to a separate but related business.

Amway requires its Amway distributors to train and motivate the downline distributors that they sponsor and bring into Amway’s multi-level business. This requirement gave rise to what is commonly known today as the Amway “tool and function business,” or sometimes the “motivational business” (herein referred to collectively at times as “the tool business”). This business is used to train and motivate Amway distributors respecting the Amwaybusiness, including the recruiting of new Amway distributors. The tool and function business is related and supportive of the Amway business, but a separate and distinct business in and of itself. Amway recognizes this.

This “tool and function” business is quite separate from the distribution scheme that finds fertile ground in naïveté. The great lie is that by working hard to build the Quixtar business, Quixtar distributors can build their network to a point where they can earn on a level comparable to Quixtar’s upper echelons. This is, of course, a classic setup: if it sounds too good to be true, it probably is.

One cannot attain comparable riches by simply selling Amway products — that degree of profit is attainable only through participation in the tool and function business, and then only by certain individuals. New distributors, like my friend, are not told this. Instead, they’re led to believe that the riches were in the product operation.

But more distributors means more money for the higher-ups, so it makes perfect business sense to them to keep little details like that in as small a print as possible. And maybe in Swahili.

What’s worse is that even those who understand the tool and function bit harbor a serious misconception about their own potential participation:

The second myth, related to Amway distributors once they became eligible for participation in the tool and/or function profits (Direct level or above), is that those distributors will be treated fairly under the Rules, including the line of sponsorship and/or affiliation and the Servicing Agreement Rule, being honored. The reality is that the Amway kingpins control the destiny of those below them, and they control and manipulate the tool and function business in such a way, with Amway’s assistance, that a tool and function distributor cannot attain these riches unless the Amway kingpins so elect. And few do attain these riches, regardless of the size of their downline distributor network.

It’s a pyramid scheme — of the legal variety, in that it does not require membership dues or fees for special privileges, but no less precarious.

[/voice of reason]

Comments

[Clark Oliver]

I got sucked into Amway just prior to the launch of Quixtar, in 1996. We were told that the dotcom business was the greatest thing since sliced bread, and we all know how that went. My wife and I spent lots of money on tools and functions and contacted like crazy and never made a dime.
I do like some of their products and continue to use a few. My sponsors are very fine people and I continue to be friends with them. There were problems with our upline "diamond" meddling with the affairs of his group and the other diamonds protected him, so we quit. I learned much about people and business.
You assessment was right on, I thought. Cheers. Come on over and visit me at http://croliver.blog-city.com

[random googler]

Great post man. My cousin got into Quixtar and didn't make a dime and niether did the people he got to go in on it with him. Fucking scammers.

[MLMBlog]

It's cool to see that even without expereince in Quixtar, you have a firm grasp of the two basic elements. What many people miss is that the Corporation element is as guilty in this scam as the system element.

[Pj]

I replaced my job income with quixtar income before making some tool money.If someone had to convince you, try to recruit with vague promises then let me appologize for their lack of understanding. Last time I offered the opportunity or any good thing to someone, they said "thank you".

Thanks for pointing out Quixtar as a scam, because its sister company slipped by the F.T.C and still in opperation for over forty years. Then fooled over 67 other countries to run the scam worldwide making it one of the biggest(head of state in these countries are fooled too)

Since big companies like Circuit City, IBM(also built servers for the scam),MCI, K.B Toys and just recently Barnes and Noble would not bother to have their legal departments check out who they become affiliated with, you should let them know this revelation of the Quixtar scam.

Quixtar says its your own business but they probably fooled the IRS into accepting your 1099 and allowing IBO's to take 'BUSINESS WRITE OFFs'.The 25% percent we got discounted from Avis car rental, and the bounes I got is a scam too but citibank couldn't tell that the checks came from a scam.

Its the consumer concern scam because there are money back guarantees.

Its a healthy scam because Nutrilite is one of the world leaders in vitamins as shown on the discovery channel..which of course supports this scam(www.nutrilite.com)

Its a beautiful scam because Artistry is one of the top cosmetic companies according to recent publications.

Its a competitive scam because 'The Internet Retailer ' publication as of last month, ranked Quixtar as the #1 health and beauty site and #12 in overall sites. This is the second time in a few years that Quixtar Scam got this rating(business 2.0 rated quixtar in 2001)

Its a private scam because no stocks are traded and T.V ads are not done, yet they established sales of over 3.3 billion. They paid out about 1billion to IBOs(this was probably tool money), also they had 11.3 millions sales in one day a few months ago.

Its a well lead scam because Steve VanAndel(chairman) Sat on the U.S Chamber of Commmerce as did his Dad, Jay VanAndel. President Ronald Reagan to Alexander Haig spoke at their funtions and didn't even realize that they were affiliating themselves with a scam. In fact The U.S Chamber of Commerce were fooled too.

Its a clean scam, because the U.N gave an award to Amway for their multipurpose cleaner.

Its a confusing scam, because the two companies have the same owners and therefore share common traits. In fact since Lexus is owned by Toyota, this means that the roots go way back to Corolla.Well you should go buy a Lexus/Corolla.

Its a professional scam, because the proffessors, doctors and lawyers on my team were to dumb to realize that quixtar is a scam.

Again thanks for the heads-up and warn everyone you can about a scam that allows an individual to get into a low-risk business with over 1200 companies and has helped someone like me to retire my JOBs in my twenties.

In light of this information I will join all the college students getting free education, books and garanteed jobs dispite having friends that made little money after graduating.I will work at the job where my boss recruits other employees and we can make more than him.

Further I will collect my social security money forty-years from now although, I know people that are getting layed off every few years. Now for the conclusion: I will find the other whinners and victim IBOs and send them here for therapy.

[Derek]

How smashingly convincing! I'm sold. Where do I sign up?

Wait, no, scratch that.

I specifically said this was a legal operation, and had you read (and comprehended) that, you'd have realized immediately that the majority of your response was moot, thereby saving me the time and toil of not only reading it, but responding. More importantly, you could have spared me having to wonder how you managed to make any form of cognitive connection between an award granted to Amway's cleaning products and the deceptive nature of its entry-level recruiting operation.

Yes, fantastic. A top company. Business around the world. Gucci for the masses and Nutrilite has vitamins that come in every flavor of the rainbow. But is that what we're talking about?

Perhaps you could use your retirement money to audit a course in logic and reasoning. Just a suggestion.

What Quixtar is doing doesn't raise much of a blip on the judicial radar, but it's unsurprising that men of conscience are slightly more attuned to wrong-doing than are men of law. The "scam" of Quixtar is its message -- the idea that not only are you able to make bookoo bucks with little risk or effort, you're positively likely to do so. Yes, it's possible -- it's also possible you'll hit the jackpot on your very first nickel. At least casinos don't try to convince you that the slots will replace your nine to five.

Success stories hover in the margins, though I daresay they're few and far between -- and infinitely less than what Quixtar would have its seminar-goers believe. Unfortunately, the fact of the matter -- and we're all very much fans of fact, we questioning folk -- is that most people fall very abruptly on their faces. Most people who buy into the "great opportunity" that is Quixtar see no appreciable return.

That's the discussion. That's the scam. And golly gee, all despite Quixtar's remarkably astounding climb to the top of health and beauty websites.

-----

From Monty Python's Cheese Shop Sketch:

Customer: It's not much of a cheese shop, is it?

Owner: Finest in the district!

Customer: (annoyed) Explain the logic underlying that conclusion, please.

Owner: Well, it's so clean, sir!

[CS]

I am a new IBO and am looking more and more into the business and about Quixtar. I am finding out that many people don't make it in this business yes, but also what are the chances of someone making it as the CEO of a large company? That number is small too, but people work years and years to try and accomplish that and never succeed. They lose out on years of their life sitting behind a desk, or behind the cash register instead of going out and finding an opportunity for themselves and other people.
It is very hard to read some of the negative stories associated with Quixtar because I believe that it is a very good idea and I personally am understanding what they are doing. Of course the people above you are going to make money, but hello, isn't that what you are doing for your boss right now, sitting at work making him more money than you are making. How does that seem fair and different than what Quixtar is all about. I'm sorry if I have a few ways I want to spend my "prime" years and I definetly don't want it to be making some a-hole of a boss tell me what to do. Anybody that goes for this opportunity should always think they are better than the "average" person out there. who wants to be average? I know I don't and the average person either doesn't try new things or the average person fails. Well I know that many of the people I know always say they are better than average, and therefore they will succeed. Just because one person can't do it, doesn't mean that somebody else, such as myself can.
In ending, I don't see how trying to better yourself, rather than do what everybody else is doing which is having someone tell them what to do everyday is a bad way to make a living. Sign me up in a company that wants me to succeed and help others do the same.

[Maria]

I was invited to a Quixtar get together at a co-workers home this week. He gave me the short story and I said I would go. But, anything that is going to be pitched at me that requires me to put my hard earned money and valuable effort into, I research first and weigh my options.

I read both negative and positive sites about Quixtar. I also supported my brother in his endeavor a few years ago. I did not join, but did occasionally buy a few products from him. I saw him fail despite his efforts and "business" trips. Even though he didn't exactly lose thousands, it brought him great disappointment. It's hard to watch someone fail with their friends and family after they preach and sell their plan for success. It's hypocritical, and that's exactly how he felt.

Quixtar does sell good products, the same as all the big stores do. In all my research, I did not find one place that argued that. But, the big stores don't promise to make you rich if you bring a friend shopping with you.

Anyways, it's a game of chance, you might recruit thousands that spend thousands, but chances are you won't and I would rather not take that chance.

I decided I'll keep my day job and focus on climbing up that ladder. Through my experience, that's where hardwork and dedication are sure to pay off. I'm going to go to my co-workers home, thank him for inviting me and try to have a good time.

Good luck to all who do try it. I suppose you'll need it. I just don't beleive that you need to be promised or make promises of fast and almost effortless money to better yourself, succeed, or help others do the same.

[John Corson]

I am an IBO with Quixtar. In 1972, at the age of 18, I became a distributor with the "old Amway," and was somewhat successful. I was generating income and bringing in several friends from high school. In fact, I had a downline of fifteen with six hard-working legs who, themselves, brought in many. Direct Distributor was just around the corner. In 1973 Dexter Yager decided he could market those Motivational Tapes and books and began to insist that all distributors purchase these. Meetings at seminars and rallies became virtually essental and, in fact, if you missed joining the caravan of mobile homes and camper trailers to North Carolina, you got a call from the upline compelling you to attend the next rally!

I moved from Virginia to Georgia to attend college and found a not-too receptive audience in Atlanta. It was not that much of an open ground for some "outsider" to come in and parade products and sales pitches, even among those around my age (19 at the time). My upline direct would call or write to me and by the spring of 74, he was scolding me for not taking every other weekend and drive back to Virginia to attend meetings and the monthly rallies, most of which were in North Carolina. I got out and let a "residual" income (RIGHT) of $400 a month!! My downline was handed off to another distributor and the rest is history.

The return to Multi-Level Marketing was more in the hope that things have changed. I should have known better when, upon going to my first "open meeting" last March, the name "Britt." was used. For those not knowing the history: Dexter Yager (once of Charlotte, NC) sponsored Bill Britt of Raleigh, NC (I think the year was 1965) and Britt became Dex's number one Distributor! Sometime after I got out in 1974 (perhaps 1979??) there was some sort of falling out between the two (and to hear those who were very active and loyal to Britt talk about it) the falling out was over AMT's (Amway Motivational Tools).

It doesn't take a rocket scientist to know that in all Amway (Alticor) "arms", the motivational tools are the money making instruments for diamonds and above. Add the sales of tickets to open meetings, seminars, rallies and quarterly "business" meetings (which by the way do not discuss the building of the business, nor provide training for building your business), then you get a higher loss to gain ratio (i.e., there is more outgo than income). Below, I have provided a quick analysis of a typical IBO's spending (overhaed) if he/she works his business according to the prescribed plans of most of the motivational" arms of Amway/Quixtar:

Description of Overhead Expense (all prices approximate) The first figure of each line is for singles, the second for couples while the third is for couple with children and includes such expenses as baby sitting.

The kit $105 $105 $105
First set of tapes/CDs $84 $84 $84
20 Recruiting tapes/Ad packs $240 $240 $240
Recruiting videos $22 $22 $22
Teaching videos $22 $22 $22
1 "show the plan book" $35 $35 $35
2 "Blue bags" for recruiting $25/each $50 $50 $50
White Board, Easel, Pens $80 $80 $80
Profiles of Success Book $30 $30 $30
Standing Order Tape/CDs $8/wk $384 $384 $384
Pace Setter Tapes 26/year $156 $156 $156
Book Of the Month 12/year $158 $158 $158
Monthly Diamond newsletter showing open meetings $25/yr $25 $25 $25
Long distance calls to recruit out of town friends $5 $260 $260 $260
Postage to send out recruiting tapes (Priority mail $3/each5/week) $780 $780 $780
Stuffing for the blue bag 1 popcorn/gum/cookies 4x/month=$1.77 bag $85 $85 $85
Travel costs to show the plan (20 miles/weekx.30/mile) $312 $312 $312
Baby sitting for showing the plan $4/hrx2/wk $416
Weekly meeting at hotel for recruiting $4/person x50/year $200 $400 $400
Food at night owl after hotel meeting $11 x 26/year $286 $572 $572
Travel cost to hotel meeting (9.5 miles x $.34x50/two-ways) $323 $323 $323
Baby sitting for hotel meeting $4/hr 50/year $1000
Monthly Saturday mini-rally $10/person 8x/year $80 $160 $160
Travel cost to mini-rally (25 miles x $.34x8) $68 $68 $68
Dinner after mini-rally $12 $96 $192 $192
Baby sitting for mini-rally $4/hrx5x8 $160
Function tickets (4 per year @ $95 each, 1 person) $380 $760 $760
Lodging at function (4x2 nights, $55/night shared room) $440 $440 $440
Travel costs to the function (4x400 miles x $.34/mile, shared car) $544 $544 $544
Meals at function ($13x6x4) $312 $624 $624
Baby sitting for mini-rally $5/hrx48x4 $960
KATE Messaging Service (local access assumed) $31.95/month $268 $268 $268
Separate checking account to run the business $10/month $120 $120
First year Costs $5940.40 $7414.40 $9950.40
Re-occurring costs $5272.40 $6746.40 $9282.40

Although this is quite comprehensive, the above financial information serves as the rationale for my "team" not being choked with the burden of buying all those motivational tapes and books, attending every rally and having to show the "plan" five to seven times a week. I am currently shunned by my upline since I don't encourage my downline to purchase such things and am told by my upline Platinum that I will never make it to Platinum (Direct Distributor) myself, never be recognized for any accomplishments (nor would my downline) and could possibly be denied re-registration in Quixtar at year's end, therefore loosing my downline to another "team-player" who will "motivate" them properly.

Oh well!! At least I can live with myself and can look my friends and family who are in my downline in the face and say, "I never used you!" The Quixtar IBO agreement states that membership in any training or tools groups or organizations (AMTs) is optional NOT ESSENTIAL!

---John---

[Alestor Mead]

Nutilife is a Pharmacutical company. Nutrilife vitamins have the highest PV through Quixtar. Coincedence or method for brain washing? Kinda makes you wonder.

[Naya Jayne]

My husband just signed us up for this. our sponsoring IBO has given us all the CDs to listen to. We are discusted with Dexter Yager! I know he makes his money by selling his dogma, that's what it is, his dogma! I am a strong Christian and I hate that these upper people use the Bible to bring in other people to pad their pockets. They quote scripture (out of contex I might add) at these seminars to fool trusting people. If you really read the Bible you will know that it is not a tool to help you make money! God does not want you to be rich, he wants your obedience. Dex and his cohorts spout Blashemy! Do not look up to them, they will have lots to answer for on judgement day.

[Lee Ann Stewart]

I guess stupidity still does exist. After reading this article, I realized that there are still people who use excuses for why they can't succeed in life. Try asking someone who actually has succeeded. Try this old saying: Birds of a feather flock together and so do losers. Yes, the Bible does ask for obedience, but it never says that above all things, I wish that you would be poor. It says I wish that you may prosper. Someone obviously enjoys twisting the Bible--you! Many people will accuse others who are succeeding in order to justify where they are in life. Hope you guys have fun--I sure am!

[sarah]

Um, the Bible says to prosper and be in HEALTH just as our souls to prosper. Not, "prosper with multilevel marketing and get all you can so you don't have to wake up in the morning and go to work-God forbid"...
I am disgusted with the overuse of christianity in this business in order to gain trust of people. I am a christian and I think that hard work and your vocation is your gift and your ministry to people. Getting rich as fast as you can is not. I have spent a lot of time researching quixtar/amway and it is BARELY legal, but legal nonetheless.

[JACK]

HI EVERYONE,I WAS IN AMWAY YEARS AGO LATE 80'S EARLY 90'S.I DID NOT MAKE A DIME.I ALSO SPENT MONEY ATTENDING MANY FUNCTIONS AND TOOLS.I DID NOT SHARE THE PLAN MUCH EITHER.BUT LET ME SAY THIS.I PUT TIME AND EFFORT TO CLIMB THE CORPORATE LADDER,JUST TO FIND MYSELF AND FRIENDS ON THE STREET OF JOB LAYOFFS.I AM DOING EXTREMELY WELL NOW IN THE QUIXTAR BUSINESS 14 YEARS LATER.AFTER BEING IN IT FOR A LITTLE UNDER A YEAR I AM ALMOST ABLE TO QUIT MY JOB ( J-JAIL O-OVERWORKED B-BROKE ).I WISH NOW THAT I WOULD HAVE STUCK IT OUT AND WOULD HAVE BUILT IT THEN AND NOT QUIT.BUT IT'S A NEW TIME NOW.JUST A LITTLE NOTE,PLEASE!!! DO YOUR HOMEWORK REALLY CHECK THIS BUSSINESS OUT. I HAVE OWWNED MY OWN BUSINESS AND WORKED FOR OTHER PEOPLE,NOTHING COMES CLOSE TO THIS BUSINESS.IF, YOU PUT THE EFFORT INTO IT. I PROMISE YOU,YOU WILL HAVE SUCCESS.LET ME LEAVE ONE FINAL THING FOR YOU TO THINK ABOUT.IF ANYONE CAN SHOW ME ANOTHER BUSINESS LIKE THIS ONE,OTHER THAN ANOTHER MLM BUSINESS THAT HAVE MADE MORE PEOPLE FINACIALY FREE THAN THIS BUSINESS OR CONCEPT,THAN MAYBE I'LL LISTEN.OTHER WISE STICK TO THE FACT'S.I DOUBT YOUR JOB IS GOING TO HELP YOU ACHIEVE THAT OR YOUR COWORKERS.THIS BUSINESS IS ABOUT HELPING PEOPLE AND LIFTING THEM UP.SO THEY CAN ACHIEVE MORE IN THEIR LIVES.ALL YOUR BOSS WANTS TO DO IS HELP HIS FAMILY AND HIS LIFE,WHILE YOU DO ALL THE WORK.THINK ABOUT IT??? THANKS FOR READING!!!

[Betsy]

I started to read this comment, but then I remembered that things typed entirely in caps make me want to gouge my eyes out.

[BO]

I almost got scammed by a man in texas. I met him one day while i was pressure washing a womans house. There he invitred me to several meetings and dazzled me with the ciphers. I knew it was a scam when he had the exact same sales pitch at the meeting and at the womans house so when he invited me to his house to sign up and pay the 50 dollar membership fee i stood him up and continued with my education.

[James]

Quixtar is the worst thing i've ever seen. I've seen a person ruin his life over trying to achieve "freedom." Please do not get involved in Quixtar. The only people who are making any money at it are the people who began the company. They prey upon people who need or want easy money, but the fact is there is no such thing as "easy money." DO NOT JOIN QUIXTAR. PLEASE LISTEN!!!!!!!!!!!!!!!

[Bob H]

One thing that I know from my experience about the Quixtar business is that it has great potential of alienating family and isolating it's IBO victims in a cult like hell. They sell this "dream" saying that you can do this all in your free time and so forth and you will have time for your wife and family--that you can "Flush that stinking job!" I just wish they wouldn't keep trying to push this crap product business on my wife. She lies to me about wasting her money helping her daughter make her "point value" requirements to reap a very meager sales bonus of about $7.50 on sales of $250. If the money wasted isn't bad enough, it is all the time she spends having to mother/nanny the Quixtar orphans, the two grandchildren who hardly see their Quixtar parents whom are showing the plan nearly every night of the week.

I've tried to point out how truly impossible this Quixtar Scam is and all my persuasion against participation in this scam/pyramid/ponzi business is met with venom. I am vilanized as a broke looser. I am not welcome and am treated like I've crossed Jordan all ready. I still cannot get my wife to stop her entanglement in this mess. What am I to do with all the dusty old (awful tasting) berry X drinks that are rotting in the basement. In my opionion, I might be able to give them away, but to sell them for retail--fagetaboutit! I just wished they'd quit drinking that berry flavored koolaid that the "Soprano family" has been selling them. Maybe their former church friends will start talking to them again.