If you or someone in your house signed up as an Amway Independent Business Owner, bought product every month to stay qualified, and never found enough people to sell it to, some of that money is coming back.
On September 17 the FTC and the state of Washington filed a complaint and a proposed order against Amway Corp. and two of its biggest recruiting organizations, World Wide Group and Leadership Team Development, in federal court in Seattle. The judgment is $225 million. The FTC says nearly all of it goes to IBOs recruited by those two groups who lost money, and that it is the largest amount the agency has ever recovered from a multilevel marketing company.
What the government says happened
The FTC says recruits were told they could earn more than $40,000 a year, or replace a full-time income. Then, according to the agency, they were pressured to buy products they were unlikely to resell. Then they were instructed to report those purchases as retail sales, so the paperwork would show customers who were not there.
That last piece is the whole game. Take it out and there is no business. There are just people buying soap from each other.
The 70 percent rule is the real story
The proposed order does not only take money. It rewrites how the thing runs.
An IBO has to resell at least 70 percent of what they buy from Amway each month to people who are not IBOs. Recruiters get paid less when the people under them buy and do not resell. Customer sales have to be reported promptly at the actual price, and Amway has to send the customer a receipt. The sales records get audited independently. Fake a sale, or tell someone else to, and you can be terminated. And approved training providers cannot charge a new IBO for first-year training and services, which had been its own revenue stream.
Translation: prove there are customers.
That is the line between a business and a buying club, and it is worth carrying into any pitch you hear. If the product only moves because the sellers buy it, the sellers are the customers.
Do this
Dig up the records now. Card and bank statements showing monthly orders, plus anything showing which organization signed you up, are what a redress program runs on. Nobody is going to reconstruct them for you six months from now.
Watch ftc.gov/enforcement/refunds for the redress details. The FTC says they are coming. Remember the order still has to be entered by the court.
Pay nobody. The FTC’s refunds page says flatly that scammers impersonate the agency and that it will never tell you to transfer money to get a refund. Anyone who contacts you first and wants a fee is working the other side of this.
And if you are being recruited this month, ask one question before you spend a dollar: how much product did you sell last year to people outside the organization? A real answer has a number in it.
How Candid Yak makes money. Some of the products we write about pay us if you apply or sign up through our links. That never changes our verdict, our rankings, or the numbers in this article. We call a bad deal a bad deal whether it pays us or not. Some brands shown in our comparison tools are placeholder examples while we finalize partner agreements, and we label them as such.