Headquarters in Ada, Michigan

Amway is a direct selling company that uses multi-level marketing to sell a variety of products, primarily in the health, beauty, and home care markets.^[3][4][5] Amway was founded in 1959 by Jay Van Andel and Richard DeVos. Based in Ada, Michigan, the company and family of companies under Alticor reported sales growth of 9.5%, reaching US$9.2 billion for the year ending December 31, 2010.^[1] Its product lines include home care products, personal care products, jewelry, electronics, Nutrilite dietary supplements, water purifiers, air purifiers, insurance and cosmetics. Amway conducts business through a number of affiliated companies in more than a hundred countries and territories around the world.^{[6][dead link]} Amway was ranked No.114 among the largest global retailers by Deloitte in 2006, and No.32 among the largest private companies in the U.S. by Forbes in 2010.^[7]

History[link]

Founding[link]

Amway Japan Head Office.

Amway Vietnam (Hồ Chí Minh since 2008).

Jay Van Andel and Richard DeVos, friends since school days, had been business partners in various endeavors including a hamburger stand, air charter service, and a sailing business. In 1949 they were introduced by Neil Maaskant (Van Andel's second cousin) to the Nutrilite Products Corporation. Nutrilite was a California-based direct sales company founded by Dr. Carl Rhenborg, developer of the first multivitamin marketed in the United States. In August 1949, after a night-long talk, DeVos and Van Andel signed up to become distributors for Nutrilite food supplements.^{[8][page needed]} They sold their first box the next day for $19.50, but lost interest for the next two weeks. Shortly thereafter, at the urging of Maaskant, who had become their sponsor, they traveled to Chicago to attend a Nutrilite seminar. The meeting was at a downtown hotel, with over a hundred people in attendance. After seeing promotional filmstrips and listening to talks by company representatives and successful distributors, they decided to pursue the Nutrilite business opportunity with enthusiasm. They sold their second box of supplements on their return trip to Michigan, and rapidly proceeded to develop their new business further.^{[8][page needed]}

In 1949, DeVos and Van Andel had formed Ja-Ri Corporation (abbreviated from their respective first names) for importing wooden goods from South American countries. After their trip to the Nutrilite seminar, they dropped^{[clarification needed]} this business and Ja-Ri became their Nutrilite distributorship.^[9] In addition to profits on each product sold, Nutrilite also offered commission on the sales of products by new distributors introduced to the company by existing distributors—a system today known as multi-level marketing or network marketing. By 1958, DeVos and Van Andel had built an organization of over 5,000 distributors. However, following concerns about the stability of Nutrilite, in April 1959 they and some of their top distributors formed The American Way Association to represent the distributors and look for additional products to market.^[10]

Their first product was called Frisk, a concentrated organic cleaner developed by a scientist in Ohio. DeVos and Van Andel bought the rights to manufacture and distribute Frisk, and later changed the name to LOC (Liquid Organic Concentrate).^[11] They subsequently formed Amway Sales Corporation to procure and inventory products and to handle the sales and marketing plan, and Amway Services Corporation to handle insurance and other benefits for distributors (Amway being an abbreviation of "American Way").^[12] In 1960 they purchased a 50% share in Atco Manufacturing Company in Detroit, the original manufacturers of LOC, and changed its name to Amway Manufacturing Corporation.^[13] In 1964 the Amway Sales Corporation, Amway Services Corporation, and Amway Manufacturing Corporation merged to form a single entity, Amway Corporation^[14] Amway bought control of Nutrilite in 1972 and full ownership in 1994.^[15]

International expansion[link]

Amway expanded overseas to Australia in 1971, to Europe in 1973, to parts of Asia in 1974, to Japan in 1979, to Latin America in 1985, to China in 1995, to Africa in 1997, to India and Scandinavia in 1998, to Russia in 2005, and to Vietnam in 2008.

Quixtar[link]

In 1999 the founders of the Amway corporation established a new holding company, named Alticor, and launched three new companies: a sister (and separate) Internet-focused company named Quixtar, Access Business Group, and Pyxis Innovations. Pyxis, later replaced by Fulton Innovation, pursued research and development and Access Business Group handled manufacturing and logistics for Amway, Quixtar, and third party clients.^[16]

The main difference was that all "Independent Business Owners" (IBO) could order directly from Amway on the internet, rather than from their upline "direct distributor," and have products shipped directly to their home. The Amway name continued being used in the rest of the world. After virtually all Amway distributors in North America switched to Quixtar, Alticor elected to close Amway North America after 2001. In June 2007 it was announced that the Quixtar brand would be phased out over an 18 to 24 month period in favor of a unified Amway brand (Amway Global) worldwide.

In 2006, Quixtar published The Quixtar Independent Business Owner Compensation Plan, in which the company reported that the average monthly gross income for "Active" IBOs was $115.^[17]

Global markets[link]

According to the Amway website, as of 2011 the company operates in over 80 countries and territories, organized into regional markets: the Americas, Europe, greater China, Japan and Korea, and SE Asia/Australia.

In 2008, Alticor announced that two-thirds of the company's 58 markets reported sales increases, including strong growth in the China, Russia and India markets.^[18]

Amway Australia[link]

• See Amway Australia Pty Ltd

Amway China[link]

Amway grew quickly in China from its market launch in 1995. In 1998, after abuses of illegal pyramid schemes led to riots, the Chinese government enacted a ban on all direct selling companies, including Amway.^[19] After negotiations, some companies like Amway, Avon, and Mary Kay continued to operate through a network of retail stores promoted by an independent sales force.^[20] China introduced new direct selling laws in December 2005, and in December 2006 Amway was one of the first companies to receive a license to resume direct sales. However, the law forbids teachers, doctors, and civil servants from becoming direct sales agents for the company and, unlike in the U.S., salespeople in China are ineligible to receive commissions from sales made by the distributors they recruit.

In 2006, Amway China had a reported 180,000 sales representatives, 140 stores, and $2 billion in annual sales.^[21] In 2007 Amway Greater China and South-east Asia Chief Executive Eva Cheng was ranked No.88 by Forbes magazine in its list of the World's Most Powerful Women.^[22] In 2008, China was Amway's largest market, reporting 28% growth and sales of ¥17 billion (US$2.5billion).^[23] According to a report in Bloomberg Businessweek in April 2010, Amway had 237 retail shops in China, 160,000 direct sales agents, and US$3 billion in revenue.^[24]

Brands[link]

Amway's product line grew from LOC, with the laundry detergent SA8 added in 1960, and later the hair care product Satinique (1965) and the cosmetics line Artistry (1968). Today Amway manufactures over 450 products, with manufacturing facilities in China, India and the United States, as well as Nutrilite organic farms in Brazil, Mexico and the United States (California and Washington State). Amway brands include: Artistry, Atmosphere, Body Blends, Body Works, Clear Now, eSpring, Fulton Street, Glister, iCook, Kahve, Legacy of Clean, Nutrilite, Peter Island, Perfect Empowered Drinking Water, Personal Accents, Ribbon, Satinique, Tolsom, XS, and Zsenso

Household cleaners[link]

Amway is best known in North America for its original multi-purpose cleaning product LOC, SA8 laundry detergent, and Dish Drops dishwashing liquid. In the January 2007 issue of Consumer Reports, SA8 with Bioquest was rated the best-performing laundry detergent, scoring 99 out of a possible 100 points.^[25] Consumer Reports did, however, criticise SA8's pricing, a situation which was disputed by Amway.^[26] Consumer Reports conducted blind testing of detergents in 2010 and ranked versions of Amway's Legacy of Clean detergents 9th and 18th of 20 detergents tested. Consumer Reports program manager Pat Slaven recommended against buying the products because consumers can "go to the grocery store and get something that performs a whole lot better for a whole lot less money."^[27][28]

Health and beauty[link]

Amway's health and beauty brands include Artistry, Beautycycle, Time Defiance, Artistry Essentials, Pure White, Satinique, Tolsom, Body Series, Glister, Moiskin (South America),^[29] Nutrilite, Nutriway (Scandinavia and Australia/New Zealand), eSpring, Atmosphere and iCook as well as XL and XS Energy drinks.

Artistry[link]

Amway's Artistry products include skin care, cosmetics, and anti-aging creams and serums.

Nutrilite[link]

Amway's largest selling brand is the Nutrilite range of health supplements (marketed as Nutriway in some countries), and in 2008 Nutrilite sales exceeded US$3billion globally.^[30] In 2001, five Nutrilite products were the first dietary supplements to be certified by NSF International.^[31] Surveys by independent group Consumerlab.com since 2002 have rated Nutrilite as having the highest customer satisfaction rating (96% in 2006) in the direct selling/MLM brand category.^[32][33] In 2006, 2007, 2008, and 2009 in the nutrient and health food category, Nutrilite won "Platinum" and "Gold" awards in Malaysia, China, Taiwan, Thailand, and Asia overall in the Reader's Digest "Trusted Brands of Asia" survey.^[34] In 2008 Nutrilite scientists, in partnership with Alticor subsidiary Interleukin Genetics won the 12th John M. Kinney Award for Nutrition and Metabolism for their research into the interaction between nutrition and genetics.^[35] In January 2009, Amway announced a voluntary recall of Nutrilite and XS Energy Bars after learning that they had possibly been manufactured with Salmonella-contaminated ingredients from Peanut Corporation of America. The company indicated that it had not received any reports of illness in connection with the products.^[36]

eSpring[link]

Amway's eSpring water filter, introduced in 2000, was the first home water treatment system to incorporate a carbon block filter and Ultraviolet disinfection unit, becoming the first home system to achieve certification for ANSI/NSF Standards 42, 53 and 55.^[37] The unit was also the first commercial product to include sister company Fulton Innovations eCoupled wireless power induction technology. Fulton Innovation introduced the technology in other consumer electronic products at the 2007 International Consumer Electronics Show. Companies licensing this technology include General Motors, Motorola and Visteon.^[38][39] In 2006 eSpring was named Product of the Year by the Poland-based non-profit World Foundation of Health, Heart and Mind.^[40] eSpring has won numerous Gold and Platinum awards in the Reader's Digest Most Trusted Brand Asia surveys.^[41]

Atmosphere[link]

In 2008 Amway's Atmosphere Air Purifier became the first air cleaner certified Asthma and Allergy Friendly by the Asthma and Allergy Foundation of America.^[42][43]

Ditto Delivery[link]

Amway owns a patent on the online shopping method of Ditto Delivery, which allows consumers to specify an automatic monthly delivery of each product.^[44] In May 2001, Ditto Delivery accounted for 30% of Quixtar's North American sales.^[45]

Business model[link]

Amway combines direct selling with a (network marketing) strategy. "Independent Business Owners" (IBOs) may market products directly to potential customers and may also recruit (sponsor) and train other people to become IBOs. IBOs may earn income both from the retail markup on any products they sell personally, plus a performance bonus based on the sales volume they and their downline (IBOs they have sponsored) have generated.^[3] People may also register as IBOs to buy products at discounted prices.^{[citation needed]}

Commercial sponsorships[link]

Orlando Arena naming rights[link]

In December 2006, Alticor secured the naming rights for the 17,000-seat basketball arena in Orlando, Florida – home of the Orlando Magic, which are owned by the family of Rich DeVos. The arena, formerly known as the TD Waterhouse Centre became known as the Amway Arena. It is scheduled for demolition by implosion in March 2012, following the 2010 opening of its successor, Amway Center.^[46]

San Jose Earthquakes[link]

Prior to the 2009 Major League Soccer season, Amway Global signed a three-year deal with the San Jose Earthquakes to become the team's official jersey sponsor.^{[citation needed]}

A major part of the partnership is focused on community initiatives in the Bay Area. As a result, Amway Global is now also the official sponsor of the team's Kicks for Kids program that focuses on fitness and healthy lifestyles, as well as bringing underprivileged children to Earthquakes games.^{[citation needed]}

The partnership also saw the creation of the Amway Global Street Team, which appears at all Earthquakes home games and at a number of soccer and non-soccer events throughout the Bay Area. The members of the Amway Global Street Team give away Earthquakes-branded merchandise and provide soccer skills demonstrations at each event.^[47]

Los Angeles Sol[link]

In March 2009, Amway Global signed a multi-year deal to become the official presenting partner of the Los Angeles Sol of Women's Professional Soccer.^[48] The deal, however, would last only one year, as the Sol folded after the 2009 season.

Detroit Red Wings[link]

Prior to the 2011–12 season, Amway signed a three-year deal to be the presenting sponsor of the National Hockey League's Detroit Red Wings.^[49]

Politics and culture[link]

Political causes[link]

In the 1990s, the Amway organization was a major contributor to the Republican Party (GOP) and to the election campaigns of various GOP candidates. Amway and its sales force contributed a substantial amount (up to half) of the total funds ($669,525) for the 1994 political campaign of Republican congresswoman and Amway distributor Sue Myrick (N.C.).^[50] According to two reports by Mother Jones magazine, a liberal news organization, Amway distributor Dexter Yager “used the company’s extensive voice-mail system to rally hundreds of Amway distributors into giving a total of $295,871” to Myrick’s campaign.^[50][51] According to a campaign staffer quoted by the magazine, Myrick had appeared regularly on the Amway circuit, speaking at hundreds of rallies and selling $5 and $10 audiotapes.^[50] Following the 1994 election, Myrick maintained “close ties to Amway and Yager”, and raised $100,000 from Amway sources, “most notably through fundraisers at the homes of big distributors”, in the 1997–98 election cycle.^[51]

In October 1994, Amway gave the biggest corporate contribution recorded to that date to a political party for a single election – $2.5 million to the Republican National Committee – and was the number one corporate political donor in the U.S.^[50] In the 2004 election cycle, the organization contributed a total of $4 million to a conservative 527 group, Progress for America.^[52]

In July 1996, Amway co-founder Richard DeVos was honored at a $3 million fundraiser for the Republican Party, and a week later, it was reported that Amway had tried to donate $1.3 million to pay for Republican "infomercials" and televising of the GOP convention on Pat Robertson's Family Channel, but backed off when Democrats criticized the donation as a ploy to avoid campaign-finance restrictions.^[50][53]

In April 1997 Richard DeVos and his wife, Helen, gave $1 million to the Republican National Committee,^[51][53] which at the time was the second-largest soft-money donation ever, behind Amway's 1994 gift of $2.5 million to the RNC.^[51] In July 1997, Senate Majority leader Trent Lott and House Speaker Newt Gingrich slipped a last-minute provision into a hotly contested compromise tax bill that granted Amway a tax break on its Asian branches, saving it $19 million.^[51]

In a column published in the Fort Worth Star-Telegram newspaper in August 1997,^[54] reporter Molly Ivins wrote that Amway had "its own caucus in Congress...Five Republican House members are also Amway distributors: Reps. Sue Myrick of North Carolina, Jon Christensen of Nebraska, Dick Chrysler of Michigan, Richard Rombo of California, and John Ensign of Nevada. Their informal caucus meets several times a year with Amway bigwigs to discuss policy matters affecting the company, including China's trade status."^[55]

A 1998 analysis of campaign contributions conducted by Businessweek found that Amway, along with the founding families and some top distributors, had donated at least $7 million to GOP causes in the preceding decade.^[53] Political candidates who received campaign funding from Amway in 1998 included Representatives Bill Redmond (R-N.M.), Heather Wilson (R-N.M.), and Jon Christensen (R-Neb).^[51]

According to a report by the Center for Public Integrity, in the 2004 election cycle, members of the Van Andel and DeVos families were the second, third and fifth largest donors to the Republican party.^[55]

Dick DeVos, son of Amway founder Richard DeVos and past president of the company, served as Finance Chairman of the Republican National Committee,^[56] and his wife Betsy DeVos served as chair of the Michigan Republican Party from 1996 to 2000 and 2003 to 2005.^[57]

In May 2005, Dick DeVos ran against incumbent Governor Jennifer Granholm in Michigan's 2006 gubernatorial election. DeVos was defeated by Granholm, who won 56% of the popular vote to Devos' 42%.^[58]

In January 2012, Amway contributed $500,000 to National Organization for Marriage, a political organization which opposes legalization of same-sex marriage in the United States.^[59]

Religion[link]

Several sources have commented on the promotion of Christian conservative ideology within the Amway organization.^{[51][60][61][62]} Mother Jones magazine described the Amway distributor force as "heavily influenced by the company's dual themes of Christian morality and free enterprise" and operating "like a private political army."^[51] In The Cult of Free Enterprise, author (and former Amway distributor) Stephen Butterfield wrote “[Amway] sells a marketing and motivational system, a cause, a way of life, in a fervid emotional atmosphere of rallies and political religious revivalism.”^[60] Philadelphia City Paper correspondent Maryam Henein stated that “The language used in motivational tools for Amway frequently echoes or directly quotes the Bible, with the unstated assumption of a shared Christian perspective.”^[61]

Businessweek correspondents Bill Vlasic and Beth Regan characterized the founding families of Amway as “fervently conservative, fervently Christian, and hugely influential in the Republican Party”, noting that “Rich DeVos charged up the troops with a message of Christian beliefs and rock-ribbed conservatism.”^[53]

High-ranking Amway leaders such as Richard DeVos and Dexter Yager were owners and members of the board of Gospel Films, a producer of movies and books geared towards conservative Christians, as well as co-owners (along with Salem Communications) of a right-wing, Christian non-profit entity called Gospel Communications International.^{[51][61][63][64][65]}

Rolling Stone's Bob Moser reported that former Amway CEO and co-founder Richard DeVos is connected with the Dominionist political movement in the United States. Moser states that DeVos was a supporter of the late D. James Kennedy, giving more than $5 million to Kennedy's Coral Ridge Ministries.^[66][67][67] DeVos was also a founding member and two-time president of the Council for National Policy, a right-wing Christian-focused organization.^[68]

Sociologist David G. Bromley calls Amway a "quasi-religious corporation" having sectarian characteristics.^[69][70] Bromley and Anson Shupe view Amway as preaching the Gospel of Prosperity.^[71] Patralekha Bhattacharya and Krishna Kumar Mehta, of the consulting firm Thinkalytics, LLC, reasoned that although some critics have referred to organizations such as Amway as "cults" and have speculated that they engage in "mind control", there are other explanations that could account for the behavior of distributors. Namely, continued involvement of distributors despite minimal economic return may result from social satisfaction compensating for diminished economic satisfaction.^[72]

Chamber of Commerce[link]

Amway co-founder, Jay Van Andel (in 1980), and later his son Steve Van Andel (in 2001) were elected by the board of directors of the United States Chamber of Commerce as chairman of the private American lobbying organization.^[73]

Environmental initiatives[link]

Amway emphasizes the environmental benefits of many of its products, and in June 1989 the United Nations Environmental Program's Regional Office for North America recognized it for its contributions to the cause of the environment.^[74]

Controversy[link]

Pyramid scheme accusations[link]

Amway has several times been accused of being a pyramid scheme.

Harvard Business School of Leadership, which described Amway as “one of the most profitable direct selling companies in the world", noted that Amway founders Van Andel and DeVos:

"...accomplished their success through the use of an elaborate pyramid-like distribution system in which independent distributors of Amway products received a percentage of the merchandise they sold and also a percentage of the merchandise sold by recruited distributors. DeVos was an extremely charismatic speaker and used this ability to mobilize and motivate Amway distributors."^[75]

DeVos responded to the pyramid scheme accusations about Amway in a 2009 interview with Grand Rapids Press reporter Chris Knape.^[76]

Knape: "Amway has been accused of being a pyramid scheme, of tax evasion and a host of other things. How much of the problems Amway has had over the years can you attribute to the decisions that you made or Jay Van Andel made?"

DeVos: "We failed to come down hard enough, quick enough, to stamp that sort of thing out. That was a sin of omission. We failed to discipline the organization."

FTC investigation[link]

In a 1979 ruling,^[14][77] the Federal Trade Commission found that Amway does not qualify as a pyramid scheme because distributors were not paid to recruit people and had to sell products to get bonus checks, and the company was committed to buying back its distributors' excess inventory.^[78]

The FTC did, however, find Amway "guilty of price-fixing and making exaggerated income claims";^[79] the company was ordered to stop retail price fixing and allocating customers among distributors and was prohibited from misrepresenting the amount of profit, earnings or sales its distributors are likely to achieve with the business. Amway was ordered to accompany any such statements with the actual averages per distributor, pointing out that more than half of the distributors do not make any money, with the average distributor making less than $100 per month. The order was violated with a 1986 ad campaign, resulting in a $100,000 fine.^[80][81]

Amway India (Andhra Pradesh and Kerala)[link]

In September 2006, following a public complaint, Andhra Pradesh state police (CID) initiated raids and seizures against Amway distributors in the state, and submitted a petition against them, claiming the company violated the Prize Chits and Money Circulation Schemes (banning) Act.^[82] They shut down all offices of firm Amway, and Arijit Saha writes that "with it the fate of 80,000 distributors of the company has been indefinitely sealed".

The enforcement said that the business model of the company is illegal.^[83][84] The Reserve Bank of India (RBI) had notified the police that Amway in India may be violating certain laws regarding a "money circulation scheme" and the IB Times article writes that "some say ... Amway is really more about making money from recruiting people to become distributors, as opposed to selling products."^[84] The complaint was initiated following a dowry dispute between a local man and his wife, an Amway distributor.^[85]

Following a petition by Amway, the state High Court issued an injunction against the CID and stated the Act did not prima facie apply,^[86] however after Amway requested the CID petition be dismissed the High Court declared that if police allegations were true, Amway's Indian subsidiary would be in violation of the act and the investigation should continue. On August 14, 2007, the Supreme Court of India ordered the state police to complete the investigation against Amway in 6 months.^[87] In 2008, citing the High Court decision, the Andhra Pradesh state government enacted a ban on Amway media advertisements.^[82] Amway challenged the ban and in July 2009 the AP High Court refused a petition the ban should be enforced.^[88] As of June, 2009 the original 2006 CID case was still pending at the Chief Metropolitan Magistrate Court in Hyderabad.^[89]

On August 6, 2011 Kerala Police sealed the offices of Amway at Kozhikode, Kannur, Kochi, Kottayam, Thrissur, Kollam and Thiruvananthapuram following complaints.^[90][91][92] As a result of it government formed a committee to form guidelines in direct selling in Kerala.^[93]

The Kerala High Court on November 9 directed the DGP, Kerala Police to file a statement regarding the status of the investigation initiated against the multi-level marketing companies.A Division Bench comprising Acting Chief Justice Manjula Chellur and Justice C N Ramachandran Nair issued the directive while considering a petition challenging the government order regarding the Kerala direct selling regulations.^[94]

Class action settlement[link]

On November 3, 2010, Amway announced that it had agreed to pay $56 million – $34 million in cash and $22 million in products – to settle a class action that had been filed in Federal District Court in California in 2007.^[95] The class action, which had been brought against Quixtar and several of its top-level distributors, alleged fraud, racketeering, and that the defendants operated as an illegal pyramid scheme.

While noting that the settlement is not an admission of wrongdoing or liability, Amway acknowledged that it had made changes to its business operations as a result of the lawsuit. The settlement is subject to approval by the court, which is expected in early 2011.^[96] The economic value of the settlement, including the changes Amway made to its business model, totals $100 million.^[97]

Canadian tax case[link]

In 1983, Amway pleaded guilty to criminal tax evasion and customs fraud in Canada, resulting in a fine of $25 million CAD, the largest fine ever imposed in Canada at the time. In 1989 the company settled the outstanding customs duties for $45 million CAD.^[98][99] In a 1994 interview, Amway co-founder Rich DeVos stated that this incident had been his greatest "moral or spiritual challenge", first in "soul searching as to whether they had done anything wrong" and then for pleading guilty for technical reasons, despite believing they were innocent of the charges. DeVos stated he believed that the case had been motivated by "political reasons".^[100]

RIAA lawsuit[link]

The Recording Industry Association of America (RIAA), as part of its anti-piracy efforts, sued Amway and several distributors in 1996, alleging that copyrighted music was used on "highly profitable" training videotapes.^[101] Amway denied wrongdoing, blaming the case on a misunderstanding by distributors, and settled the case out of court for $9 million.^[102] In a related lawsuit initiated by the distributors involved, the Court established that Mahaleel Lee Luster, who had been contracted to make the videotapes, had violated copyright without the knowledge of three of the five of those distributors.^[103]

Procter & Gamble[link]

Some Amway distributors were involved with an urban legend that the (old) Procter & Gamble service mark was in fact a Satanic symbol or that the CEO of P&G is himself a practicing Satanist. (In some variants of the urban legend, it is also claimed that the CEO of Procter & Gamble donated "satanic tithes" to the Church of Satan.)^[104] Procter & Gamble alleged that several Amway distributors were behind a resurgence of the urban legend in the 1990s and sued several independent Amway distributors and the company for defamation and slander.^[105] The distributors had used Amway's Amvox voice messaging service to send the rumor^{[citation needed]} to their downline distributors in April 1995. After more than a decade of lawsuits in multiple states, by 2003 all allegations against Amway and Amway distributors had been dismissed. In October 2005 a Utah appeals court reversed part of the decision dismissing the case against the four Amway distributors, and remanded it to the lower court for further proceedings.^[106] On March 20, 2007, Procter & Gamble was awarded $19.25M by a U.S. District Court jury in Salt Lake City, in the lawsuit against the four former Amway distributors.^[107][108] On November 24, 2008, the case was officially settled.^[109]

Amway UK[link]

In May 2007, the UK Department of Trade and Industry (DTI) accused Amway and distributor organizations Britt WorldWide and Network TwentyOne UK of "objectionable practices" and petitioned to wind up the companies.^[110] The case against Amway was dismissed in 2008^[111] on the condition that a full earnings disclosure is published publicly, no registration or renewal fees are charged and that the sale of business support materials are prohibited. The case against Network 21 was dismissed in 2009.^[112]

[edit] Welcome to Life (Poland)

In 1997, Amway Poland and Network TwentyOne separately sued the makers of a Polish film Welcome to Life for defamation and copyright violations. The director and producer were later acquitted on the charge of disseminating false information.^[113][114] The film, banned for 12 years, was one of the highly anticipated movies of 2009's Warsaw Film Festival and was dubbed by the promoters as a "scary movie about brainwashing"^[113] that depicts hard-sell "pep rallies" and distributors stating meetings were operated similar to the Communist Party and methods of recruitment that confusingly resembled those of a sect.^[115] A best-seller on the local video black market.^[116] the film was banned while the suit proceeded.

In 2001 a regional court ruled in favor of Network 21; however, in 2004 the Warsaw Regional Court dismissed Amway's civil lawsuit. On appeal Amway won the case and the producers were ordered to pay a fine to a children's charity and publish a public apology.^[117][118] As of 2009 the film was still banned due to an ongoing case brought by "private individuals" ridiculed in the film.^[119]

Dr. Phil and Shape Up[link]

In March 2004, TV personality Phil McGraw (aka Dr. Phil) pulled his “Shape Up” line of supplements off the market in the face of an investigation by the U.S. Federal Trade Commission (FTC). The supplements were manufactured by CSA Nutraceuticals, a subsidiary of Alticor’s Access Business Group.^[120] The FTC later dropped the probe; however, in October 2005, a class-action lawsuit was filed against McGraw by several people who used the products and claimed that the supplements, which cost $120 per month, did not stimulate weight loss.^[121] In September 2006, a $10.5 million settlement was reached, in which Alticor agreed to provide $4.5 million in cash and $6 million in Nutrilite products to disgruntled users of Shape Up.^{[122][123][124][125]}

Dateline NBC[link]

In 2004, Dateline NBC featured a critical report based on a yearlong undercover investgation of business practices within the Amway organization.^[126] The report noted that the average distributor makes only about $1,400 per year and that many of the “high level distributors singing the praises of Quixtar [Amway]” are actually “making most of their money by selling motivational books tapes and seminars; not Quixtar’s cosmetics, soaps, and electronics.”

"In fact, about twenty high level distributors are part of an exclusive club; one that those hundreds of thousands of other distributors don’t get to join. For years only a privileged few, including Bill Britt, have run hugely profitable businesses selling all those books tapes and seminars; things the rank and file distributors can’t sell themselves but, are told over and over again, they need to buy in order to succeed."

It was also revealed that an Amway recruiter featured in the report (Chris Fredericks) made misleading and inconsistent statements about Amway earnings during a recruitment meeting and had an outstanding arrest warrant for drug dealing.^[126]

Other issues[link]

Some Amway distributor groups have been accused of using cult-like tactics to attract new distributors and keep them involved and committed.^{[60][127][128][129]} Allegations include resemblance to a Big Brother organization with paranoid attitude to insiders critical of the organization,^[129] seminars and rallies resembling religious revival meetings^[60][129] and enormous involvement of distributors despite minimal incomes.^{[60][128][129]} An examination of the 1979–1980 tax records in the state of Wisconsin showed that the Direct Distributors, reported a net loss of $918 on average.^[69][128]

See also[link]

Companies portal

• Alticor
• Amway Australia
• Artistry (cosmetics)
• Direct selling
• eCoupled
• Kleeneze
• Network marketing
• Nutrilite
• XS Energy Drink

References[link]

Books[link]

• American Victory: The Real Story of Today's Amway published April, 1997 by Chapel & Croft Publishing; ISBN 0-9645171-6-7
• Amway: The Cult of Free Enterprise published December 1, 1985 by South End Press; ISBN 0-9648795-1-4
• Amway Forever: The Amazing Story of a Global Business Phenomenon published August 2011 by John Wiley & Sons; ISBN 978-0-470-48821-8
• Amway: The True Story of the Company That Transformed the Lives of Millions published September 1, 1999 by Berkley Publishing Group; ISBN 0-425-17040-3
• An Enterpising Life published 1998 by HarperCollins; ISBN 0-88730-997-6
• An Uncommon Freedom, the Amway Experience and Why It Grows published 1982 by Revell; ASIN B000HFJE1Y
• Commitment to excellence: The remarkable Amway story published 1986 by Benjamin; ISBN 0-87502-136-0
• Compassionate Capitalism: People Helping People Help Themselves published September, 1994 by Penguin Books; ISBN 0-452-27051-0
• Empire of Freedom: The Amway Story and What It Means to You published September 3, 1997 by Prima Lifestyles; ISBN 0-7615-1088-5
• How to Be Like Rich Devos. Succeeding with Integrity in Business and Life published 2004 by Health Communications, Inc; ISBN 0-7573-0158-4
• Merchants of Deception: An Insider's Chilling Look at the Worldwide, Multi Billion dollar Conspiracy of lies that is Amway and its Motivational Organizations published 2009 by BookSurge Publishing; ISBN 978-1-4392-4715-0
• The First Eleven — The growth of Amway in Britain through the lives of its local heroes published 1984 by AM Publishing; ISBN 0-9509593-0-8
• Promises to Keep: The Amway Phenomenon and How It Works published 1986 by Berkley Books; ISBN 0-425-09856-7
• The Direct Selling Revolution: Understanding the Growth of the Amway Corporation published 1993 by WileyBlackwell; ISBN 978-0-631-19229-9
• The Possible Dream: A Candid Look At Amway published 1977 by Revell; ISBN 0-8007-0857-1

Documentaries[link]

• Profiles of the American Dream: Rich DeVos and Jay Van Andel and the Remarkable Beginnings of Amway 1997 by Premiere Films; ASIN: B000OK0YRA

External links[link]

• Amway Corporation
• Amway Canada French IBO
• Amway and Quixtar at the Open Directory Project
• Opposing Views at the Open Directory Project

Government documents[link]

• Prepared Statement of Debra A. Valentine, General Counsel for the U.S. FTC, on "Pyramid Schemes"

Profiles[link]

Wikimedia Commons has media related to: Amway Corporate

• Alticor Inc.
• Yahoo! – Amway Corporation Company Profile

Robert Toru Kiyosaki (born April 8, 1947) is an American investor, businessman, self-help author, motivational speaker, financial literacy activist, and occasional financial commentator. Kiyosaki is perhaps best known for his Rich Dad Poor Dad series of motivational books and other material published under the Rich Dad brand. He has written over 15 books which have combined sales of over 26 million copies.^[1] Although beginning as a self-publisher, he was subsequently published by Warner Books, a division of Hachette Book Group USA. His new books appear under the Rich Dad Press imprint. Three of his books, Rich Dad Poor Dad, Rich Dad's CASHFLOW Quadrant, and Rich Dad's Guide to Investing, have been on number one on the top 10 best-seller lists simultaneously on The Wall Street Journal, USA Today and the New York Times. Rich Kid Smart Kid was published in 2001, with the intent to help parents teach their children financial concepts. He has created three "Cashflow" board and software games for adults and children and has a series of "Rich Dad" CDs and disks.

As a devout global financial literacy advocate, Kiyosaki has been a staunch proponent of entrepreneurship, business education, investing, and that comprehensive financial literacy concepts should be taught in schools around the world.^[2] Kiyosaki also operates his own blog and maintains a monthly column on Yahoo Finance writing about his latest thoughts on global economics, investing, business, world financial markets, and personal finance.^[3][4]

Life and career[link]

A fourth-generation Japanese American, Kiyosaki was born and raised in Hilo, Hawaii. He is the son of educator Ralph H. Kiyosaki (1919–1991). After graduating from Hilo High School, he attended the U.S. Merchant Marine Academy in New York, graduating with the class of 1969 as a deck officer. He later served in the Marine Corps as a helicopter gunship pilot during the Vietnam War in 1972, where he was awarded the Air Medal.^[5]

Kiyosaki left the Marine Corps in 1975 and got a job selling copy machines for the Xerox Corporation as a salesperson. In 1977, Kiyosaki started a company that brought to market the first nylon and Velcro "surfer" wallets. The company was moderately successful at first but eventually went bankrupt. In the early 1980s, Kiyosaki started a business that licensed T-shirts for Heavy metal rock bands, which was later sold in 1985.^[6]

In 1994, after becoming financially independent through various real estate investments and private business operations, Kiyosaki retired at the age of 47. In 1997, after his short lived retirement, he launched Cashflow Technologies, Inc.^[7] which owns and operates the Rich Dad^[8] and Cashflow^[9] brands.

Personal life[link]

He has been married to wife, Kim, who is an entrepreneur, investor, author, and a motivational speaker. They have been married since 1985. He and Kim have settled in the Scottsdale area in Phoenix, Arizona since 1994. Kiyosaki also has one sister, Emi Kiyosaki, a Tibetan Buddhist nun known by the name Ven. Tenzin Kacho. He has co-authored one book with her called "Rich Brother, Rich Sister".

Business ventures and investments[link]

Aside from operating the Rich Dad Company and Cashflow Technologies, Inc., Kiyosaki continues to operate external business ventures and has continued engaging with various investments since he came out of retirement in 1997.^[10][10]

Mining ventures[link]

Kiyosaki bought a silver mine in South America in 2002, took a gold mining company in China public back in 2002, and took public additional mines from IPOs listed on the Toronto Stock Exchange during the early 2000s. In 2009, Kiyosaki revealed in his book Conspiracy of the Rich that he is currently working on a copper mine that is yet to be taken public once copper prices begin to rise in value.^[11]

Precious metals and coin dealing[link]

Through his teenage years, Kiyosaki dabbled with silver and gold coins as a starting investment during the 1960s. In a July 2005 Yahoo Finance article Kiyosaki states that

If you only have a few dollars, you may want to go to your local coin dealer and buy silver and gold coins as close to the price of gold or silver as possible. I would not invest in 'collectible' precious metal coins unless you really know a good collectible coin from a bad one. For as little as $20 you can buy a few precious metal coins and begin to take steps to prepare for one of the biggest crashes in world history.^[12]

In addition, Kiyosaki states that he is a "gold bug", meaning is that he holds various commodities such as gold and silver to hedge against government misprinting of the U.S. dollar as a fiat currency since the early 1970s when President Richard Nixon took the dollar off the gold standard.^[10]

Real estate acquisitions[link]

Kiyosaki is also an active real estate investor. A large portion of his wealth is concentrated within real estate investing. He has various real estate investments, real estate development ventures, and property management ventures operating around the United States, such as Texas and Oklahoma, particularly in his home state of Arizona, where he lives. Many of his holdings include hotels, golf courses, and large apartment complexes as stated in an interview with The Alex Jones Show back in late 2010.^[13]

Starting with small residential real estate investments back in 1973, Kiyosaki began investing in small condos on the island of Maui, making a small profit from capital gains by the mid 1970's. Kiyosaki starting his own real estate holding company in the 1980s during his tenure with Xerox and continued on with smaller real estate investments after the Savings and loan crisis and the 1986 Tax Reform Act hit the United States in the early 1990s where much foreclosure investment real estate was sold for pennies on the dollar. After progressing with smaller real estate investments, Kiyosaki moved into the commercial real estate business, branching off into semi-large apartment complexes, with a large portion concentrated in Arizona and the Southwestern United States and retired in 1994. Since coming out of retirement in 1997, Kiyosaki still remains involved with the apartment business and stated in an interview with Jason Hartman in 2011 that he owns over 1400 units of apartment houses.^[14][15]

Kiyosaki has been involved with commercial real estate sector such as investing in warehouses, Triple net lease and real estate development ventures around the United States.^[16][17]

Oil wells and natural gas investments[link]

Kiyosaki has stated in a Rich Dad video, several interviews, and a on number of Yahoo Finance articles that he owns oil drilling operations and oil wells around the United States but does not invest in oil company shares such as ExxonMobil or BP.^{[18][19][19][20]}

Solar company[link]

In a 2010 Rich Dad Insiders video, Kiyosaki stated that he also invested in a startup solar company.^[18]

Financial market investments[link]

In his debut book Rich Dad Poor Dad, Kiyosaki mentioned achieving consistent 16% ROI through tax lien certificates.^[21]

Written in a chapter of Rich Dad's Prophecy, Kiyosaki states of having invested in various government tax free bonds such as municipal bonds and municipal mortgage REIT's offered by real estate development companies paying over 12% tax free dividend interest.^[22]

Kiyosaki has also stated in numerous interviews that he does not invest or play the stock market much like the fact that he does not invest in oil company stocks. Instead, Kiyosaki trades stock options, Forex currencies, and other derivatives in the financial markets as stated in a chapter written in his book, Rich Dad's Prophecy and in a 2009 interview with real estate investor John Hartman.^[15]

Kiyosaki has frequently mentioned himself of investing in hedge funds, private placements, and other various funds such as private equity funds typically investments reserved by SEC law only for millionaires or high-income individuals.

Kiyosaki is also involved in the commodity market where he invests in gold and silver commodities as well as gold and silver ETF's, as written in chapter of his 2008 book, "Rich Dads, Increase Your Financial IQ". He stated this for the reason that he uses commodities as a hedge against uncertain economic forces such as inflation and hyperinflation as well as government's mismanagement via printing of the nations currency.^[21]

Teachings[link]

A large part of Kiyosaki's teachings focus on what he calls "financial education" generating passive income by means of investment opportunities, such as real estate investments and businesses, with the ultimate goal of being able to support oneself by such investments alone and thus achieving true financial independence WITHOUT working for a paycheck. In tandem with this, Kiyosaki defines the term "assets" as things that generate cash inflow, such as stock dividends, rental properties, or businesses, and the term "liabilities" as things that use cash, such as houses, cars, and so on. Kiyosaki continuously argues that financial leverage is critically important in becoming rich, despite the inherent financial risks, repercussions, and pitfalls that come with it.

Originally self-published before being picked up commercially to become a best seller, the central concept of the book is an anecdotal comparison of his "two fathers." His "poor dad" was his biological father, who was highly educated and became Superintendent of the Hawaii State Department of Education but was poor. Contrasted with this is his (arguably fictitious, see "Criticism and controversy" section of this article) "rich dad," his best friend's father who became "the richest man in Hawaii" by investing his smaller income into income-producing investments, and was a high school dropout. Its main purpose as a self-help book is to help people rethink their idea of money and especially their concept of themselves as employees who will gain financial rewards from conformity and education.

Kiyosaki uses the "rich dad, poor dad" comparison to illustrate his view that the majority of people are stuck in what he refers to as "the rat race"—living paycheck to paycheck and spending all of their time working to pay bills and other expenses. In his books, Kiyosaki advocates tax-advantaged investment vehicles, such as real estate or businesses, rather than ownership of securities such as stocks. This idea is further developed in his later books and "Rich Dad" became Kiyosaki's personal brand for various publishing ventures.

Kiyosaki continuously stresses financial literacy through the acquisition of he calls "assets" as the means to obtaining wealth. He says that life skills are often best learned through experience and that there are important lessons not taught in school. He says that formal education is primarily for those seeking to be employees or self-employed individuals, and that this is an "Industrial Age idea." And according to Kiyosaki, in order to obtain financial freedom, one must be either a business owner, an investor, or both generating passive income, particularly on a monthly basis.

Kiyosaki often refers to The CASHFLOW Quadrant, a conceptual tool which he developed to categorize the four major ways income is earned. Depicted in a diagram, this concept entails four groupings, split with two crossed lines (one vertical and one horizontal). In each of the four groups there is a letter representing a way in which an individual may earn income. The letters are as follows.

• E: Employee — Working for someone else.
• S: Self-employed or Small business owner — Where a person owns his own job and is his own boss.
• B: Business owner — A person who owns a business to make money; typically where the owner's physical presence is not required.
• I: Investor — Investing money in order to receive a larger income in the future.

For those on the left side of the divide (E and S), Kiyosaki says that they may never obtain true wealth. Conversely, those on the right side of the divide (B and I) are supposedly following the only road to true wealth.

Kiyosaki also classifies the four main "asset" classes as means of gaining wealth.^[23]:

• Businesses: Businesses that generate monthly cash flow that don't require the owners physical presence.
• Real Estate: Real estate such as owning warehouses, small family homes, or apartment houses that generate monthly cash flow.
• Paper Assets: Investments such as stocks, bonds, hedge funds etc.
• Commodities: Gold, silver, iron ore, or copper that are used to hedge government's mismanagement printing of the nations currency.

Games[link]

Kiyosaki also stresses the value of games, particularly Monopoly, as tools for learning basic financial strategies such as "trade four green houses for one red hotel." Kiyosaki has created several games such as Cashflow 101 and Cashflow 202 to reinforce the information in his book.

Media appearances[link]

Several local stations of the Public Broadcasting Service (PBS), including WTTW of Chicago, KAET of Phoenix, KOCE of Orange County, California, WLIW of the New York/New Jersey area, and WGBH of Boston, have featured Kiyosaki with his now cancelled Rich Dad TV series. His latest TV special was a fund-raising drive. During this television special, Rich Dad's Guide to Wealth with Robert Kiyosaki, he provides viewers with financial education, opposing the common notion of getting a college degree and downplaying the importance of attaining academic or professional education.

Kiyosaki has been seen giving financial advice on various network television news channels such as on CNBC, Fox Business, and Bloomberg. He has appeared on various programs such as The Oprah Winfrey Show,^[24] Fox and Friends,^[25][26][27] Larry King Live,^[28] The O'reilly Factor, The Alex Jones Show,^[13] Glenn Beck,^[29] and Your World with Neil Cavuto.^{[25][30][31][32]}

In 2002, a speech given by Kiyosaki became the subject of a CNN story.^[33]

In 2006, Kiyosaki appeared on CNBC, discussing financial issues, answering questions from the audience, and comments by the financial experts werere also invited. In particular, Kiyosaki also filled in a few episodes under the title The Millionaire Inside Debt-Free and The Millionaire Inside: Get Inspired. Other financial experts accompanied Kiyosaki, including David Bach, Jennifer Openshaw, Larry Winget, Keith Ferrazi, and Dr. Laura Morgan Roberts have also been invited to the event.^[34][35]

In 2009, Kiyosaki was featured in a 10 Questions session in Time Magazine.^[36]

Over a number of years, Kiyosaki has repeatedly criticized other financial gurus, particularly the financial teachings of Suze Orman and Jean Chatzky, calling it “bad advice”. Because of this, Orman responded to Kiyosaki's attacks via Twitter and the two engaged in a Twitter war back in March 2010.^[37]

In September 2011, Kiyosaki along with wife Kim were featured on the front cover of JETSET magazine.^[38]

Financial advice[link]

Mutual funds[link]

Kiyosaki wrote in one column that investors in any mutual fund with a 2.5% annual fee would, over a long time period, surrender 80% of the earnings to the fund.^[39] Kiyosaki expanded on his criticism of mutual funds in another column by stating they are for "losers."^[40] Despite the fact that most mutual funds actually charged less than 1.1%.^[41] He has drawn much criticism for comparing investing in mutual funds to playing the lottery, and for discouraging 401(k) investing, contrary to the advice of most professional financial advisers.^[42] In contrast to these statements, Kiyosaki wrote in his book Prophecy that while mutual funds are not great investments, they remain one of the few acceptable investment vehicles available to those who will not educate themselves financially.

Kiyosaki's criticisms are supported by the founder of the mutual fund Vanguard, John C. Bogle. In a Frontline episode titled "401(k)s: The New Retirement Plan, For Better or Worse", Bogle stated that management fees and trading costs gobble up approximately 2.5% of an investor's annual returns and approximately 80% of an investor's long term gains. He says management costs reduce the value of a $1,000 investment over 65 years from approximately $140,000 at 8% compounded annually to a mere $30,000 at 5.5% compounded annually. Bogle's solution is to utilize index funds, which charge as little as 0.09%, to substantially reduce or eliminate management fees.^[43]

Criticism and controversy[link]

Kiyosaki's books and teachings have been criticized for focusing on anecdotes and containing little in the way of concrete advice on how readers should proceed.^[44] Kiyosaki responds that his material is meant to be more of a motivational tool to get readers thinking about money rather than a step-by-step guide to wealth. He also says the books are supposed to be "interesting" to people, which precludes involving a lot of technical material.^[45]

The Canadian Broadcasting Corporation consumer affairs program Marketplace ran an investigative piece on Kiyosaki's questionable business practices on Jan 29, 2010. It includes interviews with Kiyosaki.^[46]

Bibliography[link]

Kiyosaki is best known for his book Rich Dad, Poor Dad. Kiyosaki followed with Rich Dad's CASHFLOW Quadrant and Rich Dad's Guide to Investing. He has now had at least a dozen books published, including:

• If You Want to Be Rich & Happy: Don't Go to School? : Ensuring Lifetime Security for Yourself and Your Children (1992). ISBN 0-944031-38-2.
• Rich Dad Poor Dad - What the Rich Teach Their Kids About Money - That the Poor and Middle Class Do Not! (first published in 1997) Warner Business Books. ISBN 0-446-67745-0.
• CASHFLOW Quadrant: Rich Dad's Guide to Financial Freedom (2000). ISBN 0-446-67747-7.
• Rich Dad's Guide to Investing: What the Rich Invest in, That the Poor and the Middle Class Do Not! (2000). ISBN 0-446-67746-9.
• The Business School for People Who Like Helping People (March, 2001). ISBN 99922-67-42-9 - endorses multi-level marketing
• Rich Dad's Rich Kid, Smart Kid: Giving Your Children a Financial Headstart (2001). ISBN 0-446-67748-5.
• Rich Dad's Retire Young, Retire Rich (2002). ISBN 0-446-67843-0.
• Rich Dad's Prophecy: Why the Biggest Stock Market Crash in History Is Still Coming… and How You Can Prepare Yourself and Profit from It! (2002). Warner Books, Incorporated. ISBN 0-641-62241-4.
• Rich Dad's The Business School: For People Who Like Helping People (2003) ISBN 979-686-729-X.
• Rich Dad’s Success Stories (2003)
• You Can Choose to be Rich (2003) 12-CD Audio series with three books.
• Rich Dad's Who Took My Money?: Why Slow Investors Lose and Fast Money Wins! (2004)ISBN 0-446-69182-8.
• Rich Dad, Poor Dad for Teens: The Secrets About Money—That You Don't Learn in School! (2004) ISBN 0-446-69321-9.
• Rich Dad's Before You Quit Your Job : 10 Real-Life Lessons Every Entrepreneur Should Know About Building a Multimillion-Dollar Business (2005). ISBN 0-446-69637-4.
• Rich Dad's Escape from the Rat Race - Comic for children (2005)
• Why We Want You to Be Rich: Two Men, One Message (2006) co-written with Donald J. Trump ISBN 1-933914-02-5.
• Rich Dad's Increase Your Financial IQ: Get Smarter with Your Money (2008). ISBN 0-446-50936-1.
• Rich Dad's Conspiracy of the Rich: The 8 New Rules of Money (2009). ISBN 0-446-55980-6
• Rich Dad's Rich Brother Rich Sister (2009) co-written with Emi Kiyosaki
• The Real Book of Real Estate: Real Experts. Real Stories. Real Life. (2010). ISBN 1-4587-7250-0.
• An Unfair Advantage: The Power of Financial Education (2011). ISBN 1-61268-010-0.
• Midas Touch: Why Some Entrepreneurs Get Rich And Why Most Don't (2011), co-written with Donald J. Trump ISBN 1-61268-095-X.

Notes[link]