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92-483: Amway Corp. (short for "American Way") is an American multi-level marketing (MLM) company that sells health, beauty, and home care products. The company was founded in 1959 by Jay Van Andel and Richard DeVos and is based in Ada, Michigan . Amway and its sister companies under Alticor reported sales of $ 8.9 billion in 2019. It is the largest multi-level marketing company in the world by revenue. It conducts business through

184-1028: A 50% share in Atco Manufacturing Company in Detroit, the original manufacturers of LOC, and changed its name to Amway Manufacturing Corporation. In 1964, the Amway Sales Corporation, Amway Services Corporation, and Amway Manufacturing Corporation merged to form the Amway Corporation. Amway bought a controlling interest in Nutrilite in 1972 and full ownership in 1994. Amway expanded to Australia in 1971, to parts of Europe in 1973, to parts of Asia in 1974, to Japan in 1979, to Latin America in 1985, to Thailand in 1987, to China in 1995, to Africa in 1997, to India and Scandinavia in 1998, to Ukraine in 2003, to Russia in 2005, and to Vietnam in 2008. In 2014,

276-604: A Russian loyalty card program called "Alfa-Amway" was created when Amway joined with Alfa-Bank . Amway was ranked by Forbes as the 42nd-largest privately held company in the United States in 2018, and as the number one largest company on the Direct Selling News Global 100 list in 2018. The founders of the Amway corporation established a new holding company in 1999, named Alticor , and launched three new companies:

368-510: A conservative 527 group , Progress for America . 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

460-612: A fine. Jay Van Andel and Richard DeVos had been friends since school days and business partners in various endeavors, including a hamburger stand, an air charter service, and a sailing business. In 1949, they were introduced to the Nutrilite Products Corporation by Van Andel's second cousin Neil Maaskant. DeVos and Van Andel signed up to become distributors for Nutrilite food supplements in August. They sold their first box

552-683: A hotly contested compromise tax bill that granted Amway and four other companies a tax break on their Asian branches that totaled $ 19 million. In a column published in the Fort Worth Star-Telegram newspaper in August 1997, 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 Pombo of California, and John Ensign of Nevada. Their informal caucus meets several times

644-591: A marketing kit and initial products, as a barrier to entry. Many MLMs emphasize the recruitment of new members over actual sales, particularly sales to individuals outside of the MLM. This focus on recruitment often pressures participants to buy and use the company's products themselves, and exploit their personal relationships for sales and recruiting. Furthermore, MLMs are often scrutinized for having complex and exaggerated compensation schemes, making it difficult for most participants to earn significant income. False claims about

736-553: A network of retail stores promoted by an independent sales force. 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 United States, salespeople in China are ineligible to receive commissions from sales made by

828-517: A number of affiliated companies in more than a hundred countries and territories. Amway has been investigated in various countries and by institutions such as the US Federal Trade Commission (FTC) for alleged pyramid scheme practices. The company has paid tens of millions of dollars to settle these suits. Between 2007 and 2008, Amway was found guilty of illegal business practices in India,

920-531: A plan collapses, most people—except perhaps those at the very top of the pyramid—end up empty-handed." In a 2004 Staff Advisory letter to the Direct Selling Association, the FTC states: Much has been made of the personal, or internal, consumption issue in recent years. In fact, the amount of internal consumption in any multi-level compensation business does not determine whether or not the FTC will consider

1012-494: A privately held business is generally taken to mean one whose ownership shares or interests are not publicly traded. Often, privately held companies are owned by the company founders or their families and heirs or by a small group of investors. Sometimes, employees also hold shares in private companies. Most small businesses are privately held. Subsidiaries and joint ventures of publicly traded companies (for example, General Motors ' Saturn Corporation ), unless shares in

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1104-926: 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. Dick DeVos , son of Amway founder Richard DeVos and past president of the company, served as Finance Chairman of the Republican National Committee, and his wife Betsy DeVos served as chair of the Michigan Republican Party from 1996 to 2000 and 2003 to 2005. In May 2005, Dick DeVos ran against incumbent Governor Jennifer Granholm in Michigan's 2006 gubernatorial election . DeVos

1196-538: A report in Bloomberg Businessweek in April 2010, Amway had 237 retail shops in China, 160,000 direct sales agents, and $ 3 billion in revenue. Since then, Amway has been continuing to expand in China, even as the government has been imposing greater restrictions on the company, and launched a WeChat mini-program in 2021. Amway's product line grew from LOC, with the laundry detergent SA8 added in 1960, and later

1288-532: A ruling upheld by the Supreme Court of India and followed in 2021 by India's Enforcement Directorate attaching company and bank assets, and labeling Amway's business model a "pyramid fraud" and its product offerings a "masquerade". In 1983, Amway admitted to defrauding the Canadian government of customs duties and taxes by falsely undervaluing goods it imported into the country over a period of 15 years; it had to pay

1380-403: 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. The main difference was that each "Independent Business Owner" (IBO) could order directly from Amway on

1472-478: A state-owned or a collectively owned company. In the United States , a privately held company refers to a business entity owned by private stakeholders, investors, or company founders, and its shares are not available for public purchase on stock exchanges. That contrasts with public companies, whose shares are publicly traded, which allows investing by the general public. In countries with public trading markets,

1564-405: A type of direct selling . Some sources emphasize that multi-level marketing is merely one form of direct selling, rather than being direct selling. Other terms that are sometimes used to describe multi-level marketing include "word-of-mouth marketing", "interactive distribution", and " relationship marketing ". Critics have argued that the use of these and other different terms and " buzzwords "

1656-485: A unified Amway brand ( Amway Global ) worldwide. According to the Amway website, as of 2011 the company operated in over 100 countries and territories, organized into regional markets: the Americas, Europe, greater China, Japan and Korea, and SE Asia/Australia. Amway's top ten markets are China, Korea, the United States, Japan, Thailand, Taiwan, India, Russia, Malaysia and Italy. In 2008, Alticor announced that two-thirds of

1748-419: A wide range of issues, including accusations that their operations closely resemble illegal pyramid schemes . Additionally, MLM companies have been accused of engaging in price fixing and participating in collusion and racketeering , often involving secret compensation deals that favor a few participants at the expense of others. Critics also point to the high initial costs for new members, such as purchasing

1840-526: A year with Amway bigwigs to discuss policy matters affecting the company, including China's trade status." 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. 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). According to

1932-479: Is a controversial and sometimes illegal marketing strategy for the sale of products or services in which the revenue of the MLM company is derived from a non-salaried workforce selling the company's products or services, while the earnings of the participants are derived from a pyramid-shaped or binary compensation commission system. In multi-level marketing, the compensation plan usually pays out to participants from two potential revenue streams . The first

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2024-848: Is an effort to draw distinctions between multi-level marketing and illegal Ponzi schemes , chain letters , and consumer fraud scams—where none meaningfully exist. The Direct Selling Association (DSA), a lobbying group for the MLM industry, reported that in 1990 only 25% of DSA members used the MLM business model. By 1999, this had grown to 77.3%. By 2009, 94.2% of DSA members were using MLM, accounting for 99.6% of sellers, and 97.1% of sales. Companies such as Avon , Aerus (formerly Electrolux USA), Tupperware , and Kirby were all originally single-level marketing companies, using that traditional and uncontroversial direct selling business model (distinct from MLM) to sell their goods. However, they later introduced multi-level compensation plans, becoming MLM companies. The DSA has approximately 200 members while it

2116-534: Is banned in Saudi Arabia by imposing religious fatwa nationally, for this reason MLM companies like Amway , Mary Kay , Oriflame and Herbalife sell their products by online selling method instead of MLM. MLM businesses operate in all 50 U.S. states. Businesses may use terms such as " affiliate marketing " or "home-based business franchising". Some sources say that all MLM companies are essentially pyramid schemes, even if they are legal. Utah has been named

2208-636: Is based on a sales commission from directly selling the product or service; the second is paid out from commissions based upon the wholesale purchases made by other sellers whom the participant has recruited to also sell product. In the organizational hierarchy of MLM companies, recruited participants (as well as those whom the recruit recruits) are referred to as one's downline distributors. MLM salespeople are, therefore, expected to sell products directly to end-user retail consumers by means of relationship referrals and word of mouth marketing, but more importantly they are incentivized to recruit others to join

2300-538: Is estimated there are over 1,000 firms using multi-level marketing in the United States alone. The origin of multi-level marketing is often disputed, but multi-level marketing style businesses existed in the 1920s and the 1930s, such as the California Vitamin Company (later named Nutrilite ) and the California Perfume Company (renamed " Avon Products "). Several sources have commented on

2392-402: Is not the MLM company's products or services. The products or services are largely peripheral to the MLM model. Rather, the true sales pitch and emphasis is on a confidence given to participants of potential financial independence through participation in the MLM, luring with phrases like "the lifestyle you deserve" or "independent distributor". Erik German's memoir My Father's Dream documents

2484-414: Is the Nutrilite range of health supplements (marketed as Nutriway in some countries), and in 2008 Nutrilite sales exceeded $ 3 billion globally. In 2001, NSF International issued its first five dietary supplement certifications to Nutrilite. In 2011, Nutrilite brand of vitamins and dietary supplements led Amway's sales, totaling almost $ 4.7 billion. According to Euromonitor International, in 2014, Nutrilite

2576-451: Is then advertised by the MLM company to recruit more distributors in the MLM with an unrealistic anticipation of earning margins which are in reality merely theoretical and statistically improbable. Although an MLM company holds out those few top individual participants as evidence of how participation in the MLM could lead to success, the MLM business model depends on the failure of the overwhelming majority of all other participants, through

2668-644: The Corporations Act 2001 requires publicly traded companies to file certain documents relating to their annual general meeting with the Australian Securities and Investments Commission (ASIC). There is a similar requirement for large proprietary companies, which are required to lodge Form 388H to the ASIC containing their financial report. In the United States, private companies are held to different accounting auditing standards than public companies, overseen by

2760-502: The Center for Science in the Public Interest (CSPI), accused Amway of making unsubstantiated and illegal claims about Nutrilite Fruits & Vegetables 2GO Twist Tubes and threatened to launch a class action lawsuit against the company unless it took remedial action. Amway responded that the claims made about the products were properly substantiated and that they did not plan to change the product's labeling but nevertheless would review

2852-472: The Chinese economic reform of 1978. This rise in multi-level marketing's popularity coincided with economic uncertainty and a new shift towards individual consumerism . Multi-level marketing was banned on the mainland by the government in 1998, citing social, economic, and taxation issues. Further regulation "Prohibition of Chuanxiao " (where MLM is a type of Chuanxiao was enacted in 2005, clause 3 of Chapter 2 of

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2944-470: The Corporations Act 2001 limits a privately held company to 50 non-employee shareholders. A privately owned enterprise is a commercial enterprise owned by private investors, shareholders or owners (usually collectively , but they can be owned by a single individual ), and is in contrast to state institutions, such as publicly owned enterprises and government agencies . Private enterprises comprise

3036-821: The Orlando Magic 's home basketball arena in Orlando , Florida. The Orlando Magic is owned by the DeVos family. The arena, formerly known as the TD Waterhouse Centre, was renamed the Amway Arena . Its successor, the Amway Center , was opened in 2010, and the older arena was demolished in 2012. In 2009, Amway Global signed a three-year deal with the San Jose Earthquakes Major League Soccer team to become

3128-640: The private company limited by shares in the United Kingdom (abbreviated Ltd ) or unlimited company and the proprietary limited company (abbreviated Pty Ltd ) or unlimited proprietary company (abbreviated Pty ) in South Africa and Australia . In India , private companies are registered by the Registrar of Companies , which is under the Ministry of Corporate Affairs . Indian private companies must contain

3220-408: The private sector of an economy. An economic system that 1) contains a large private sector where privately run businesses are the backbone of the economy, and 2) a business surplus is controlled by the owners, is referred to as capitalism . This contrasts with socialism , where the industry is owned by the state or by all of the community in common. The act of taking assets into the private sector

3312-526: The "unofficial world capital of multi-level marketing and direct sales companies" and is home to at least 15 major MLMs, more MLMs per capita than any other state. The U.S. Federal Trade Commission (FTC) states: "Steer clear of multilevel marketing plans that pay commissions for recruiting new distributors. They're actually illegal pyramid schemes. Why is pyramiding dangerous? Because plans that pay commissions for recruiting new distributors inevitably collapse when no new distributors can be recruited. And when

3404-598: 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. Virtually all Amway distributors in North America switched to Quixtar, prompting Alticor to close Amway North America after 2001. In June 2007, it was announced that the Quixtar brand would be phased out over an eighteen– to twenty-four–month period in favor of

3496-507: The Ministry of Commerce ("MOFCOM"). In 2016, there are 73 companies, including domestic and foreign companies, that have obtained the direct selling license. Some multi-level marketing sellers have circumvented this ban by establishing addresses and bank accounts in Hong Kong , where the practice is legal, while selling and recruiting on the mainland. It was not until August 23, 2005, that

3588-662: The Private Company Counsel division of the Financial Accounting Standards Board . Researching private companies and private companies' financials in the United States can involve contacting the secretary of state for the U.S. state of incorporation (or for LLC or partnership, state of formation), or using specialized private company databases such as Dun & Bradstreet . Other companies, like Sageworks , provide aggregated data on privately held companies, segmented by industry code. By contrast, in

3680-627: The State Council promulgated rules that dealt specifically with direct sale operation- Administration of Direct Sales (entered into effect on December 1, 2005) and the Regulations for the Prohibition of Chuanxiao (entered into effect on November 1, 2005). When direct selling is allowed, it will only be permitted under the most stringent requirements, in order to ensure the operations are not pyramid schemes, MLM, or fly-by-night operations. MLM marketing

3772-502: The United Kingdom, all incorporated companies are registered centrally with Companies House . Privately held companies also sometimes have restrictions on how many shareholders they may have. For example, the U.S. Securities Exchange Act of 1934 , section 12(g), limits a privately held company, generally, to fewer than 2000 shareholders, and the U.S. Investment Company Act of 1940 , requires registration of investment companies that have more than 100 holders. In Australia, section 113 of

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3864-598: The United States but not generally in the United Kingdom , the term is also extended to partnerships , sole proprietorships or business trusts . Each of those categories may have additional requirements and restrictions that may impact reporting requirements, income tax liabilities, governmental obligations, employee relations, marketing opportunities, and other business obligations and decisions. In many countries, there are forms of organization that are restricted to and are commonly used by private companies, for example,

3956-847: The United States" while another states "Multi-Level Marketing, a form of Pyramid Scheme, is not necessarily fraudulent." In October 2010 it was reported that multi-level marketing companies were being investigated by a number of state attorneys general amid allegations that salespeople were primarily paid for recruiting and that more recent recruits cannot earn anything near what early entrants do. Industry critic Robert L. FitzPatrick has called multi-level marketing "the Main Street bubble" that will eventually burst. Many Islamic jurists and religious bodies, including Permanent Committee for Scholarly Research and Ifta of Saudi Arabia , have considered MLM trade to be prohibited ( haram ). They argue that MLM trade involves deceiving others into participating, and

4048-640: The XS Energy was the first exclusively sugar-free energy drink brand sold globally. Ditto Delivery is Alticor's automatic, monthly replenishment program that fills orders based on customers' predetermined needs. As of May 2001, Ditto Delivery accounted for 30% of Quixtar's North American sales. Amway combines direct selling with a multi-level marketing strategy. Amway distributors, referred to as "independent business owners" (IBOs), may market products directly to potential customers and may also sponsor and mentor other people to become IBOs. IBOs may earn income both from

4140-642: The Yager group within Amway, 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." 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." Multi-level marketing Multi-level marketing ( MLM ), also called network marketing or pyramid selling ,

4232-418: The author's father's failures through " get-rich-quick schemes " such as Amway . The memoir illustrates the multi-level marketing sales principle known as "selling the dream". Although the emphasis is always made on the potential of success and the positive life change that "might" or "could" (not "will" or "can") result, disclosure statements include disclaimers that they, as participants, should not rely on

4324-580: The belief that they can achieve large returns, while the statistical improbability of this is de-emphasized. MLM companies have been made illegal or otherwise strictly regulated in some jurisdictions as merely variations of the traditional pyramid scheme . Multi-level marketing is also known as "pyramid selling", "network marketing", and "referral marketing". Independent non-salaried participants, referred to as distributors (variously called "associates", "independent business owners", "independent agents", " affiliates ", etc.), are authorized to distribute

4416-517: The business further. Earlier in 1949, DeVos and Van Andel had formed the Ja-Ri Corporation (abbreviated from their respective first names) to import wooden goods from South American countries. After the Chicago seminar, they turned Ja-Ri into a Nutrilite distributorship instead. In addition to profits on each product sold, Nutrilite offered commissions on sales made by new distributors introduced to

4508-531: The company by existing distributors—a system known as multi-level marketing or network marketing. By 1958, DeVos and Van Andel had built an organization of more than 5,000 distributors. However, they and some of their top distributors formed the American Way Association, or Amway, in April 1959 in response to concerns about the stability of Nutrilite and in order to represent the distributors and look for additional products to market. Their first product

4600-481: The company's distribution chain as fellow salespeople so that these can become downline distributors. According to a report that studied the business models of 350 MLM companies in the United States , published on the Federal Trade Commission's website, at least 99% of people who join MLM companies lose money. Nonetheless, MLM companies function because downline participants are encouraged to hold onto

4692-462: The company's 58 markets reported sales increases, including strong growth in the China, Russia, Ukraine and India markets. Amway China launched 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. After the negotiations, some companies like Amway, Avon , and Mary Kay continued to operate through

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4784-468: The company's extensive voice-mail system to rally hundreds of Amway distributors into giving a total of $ 295,871" to Myrick's campaign. 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. Following the 1994 election, Myrick maintained "close ties to Amway and Yager", and raised $ 100,000 from Amway sources, "most notably through fundraisers at

4876-453: The company's products or services. They are awarded their own immediate retail profit from customers plus commission from the company, not downlines, through a multi-level marketing compensation plan, which is based upon the volume of products sold through their own sales efforts as well as that of their downline organization. Independent distributors develop their organizations by either building an active consumer network , who buy direct from

4968-547: The company, or by recruiting a downline of independent distributors who also build a consumer network base, thereby expanding the overall organization. The combined number of recruits from these cycles is the sales force, called the salesperson's "downline". This "downline" is the pyramid in MLM's multiple-level structure of compensation. The overwhelming majority of MLM participants participate at either an insignificant or nil net profit. A study of 27 MLM schemes found that on average, 99.6% of participants lost money. Indeed,

5060-689: The company." (By comparison, skeptic Brian Dunning points out that "only 97.14% of Las Vegas gamblers lose money .... ." ) In part, this is because encouraging recruits to further "recruit people to compete with [them]" leads to "market saturation." It has also been claimed "(b)y its very nature, MLM is completely devoid of any scientific foundations." Because of the encouraging of recruits to further recruit their competitors, some people have even gone so far as to say at best modern MLM companies are nothing more than legalized pyramid schemes with one stating "Multi-level marketing companies have become an accepted and legally sanctioned form of pyramid scheme in

5152-411: The detriment of most of the company's constituent workforce (the MLM participants). Only some of the profits are then shared with individual participants at the top of the MLM distributorship pyramid. The earnings of those top few participants are emphasized and championed at company seminars and conferences , thus creating the illusion that participants in the MLM can become financially successful. This

5244-487: The distributors they recruit. In 2006, Amway China had a reported 180,000 sales representatives, 140 stores, and $ 2 billion in annual sales. 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. In 2008, China was Amway's largest market, reporting 28% growth and sales of 17 billion yuan (US$ 2.5 billion). According to

5336-447: The donation as a ploy to avoid campaign-finance restrictions. In April 1997, Richard DeVos and his wife, Helen, gave $ 1 million to the RNC, which, at the time, was the second-largest soft-money donation ever, behind Amway's 1994 gift of $ 2.5 million to the RNC. In July 1997, Senate Majority Leader Trent Lott and House Speaker Newt Gingrich slipped a last-minute provision into

5428-631: The earning results of other participants in the highest levels of the MLM participant pyramid as an indication of what they should expect to earn. MLM companies rarely emphasize the extreme likelihood of failure, or the extreme likelihood of financial loss, from participation in MLM. MLM companies have been made illegal in some jurisdictions as a mere variation of the traditional pyramid scheme , including in China . In jurisdictions where MLM companies have not been made illegal, many illegal pyramid schemes attempt to present themselves as MLM businesses. Given that

5520-595: The effectiveness of products are also commonly reported. Major revenue for the company, or its leading distributors, often comes from participant-attended conventions, training sessions, and sales of promotional materials, adding another layer of financial burden on members. Some MLM organizations have also been accused of using cult-like techniques to build enthusiasm and loyalty among their members, which has raised additional ethical concerns. "Network marketing" and "multi-level marketing" (MLM) have been described by author Dominique Xardel as being synonymous, with it being

5612-459: The government are classified as private enterprises. This definition encompasses both publicly traded and privately held companies, as their investors are individuals. Private ownership of productive assets differs from state ownership or collective ownership (as in worker-owned companies). This usage is often found in former Eastern Bloc countries to differentiate from former state-owned enterprises , but it may be used anywhere in contrast to

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5704-594: The hair care product Satinique (1965) and the cosmetics line Artistry (1968). In 2018, nutrition and wellness products were 52% of total sales, and beauty and personal care products were 26% of total sales. Amway is best known in North America for its original multi-purpose cleaning product LOC, SA8 laundry detergent, and Dish Drops dishwashing liquid. 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

5796-481: The homes of big distributors", in the 1997–98 election cycle. 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 (RNC), and was the number one corporate political donor in the United States. In the 2004 election cycle, the organization contributed a total of $ 4 million to

5888-489: The immediate erosion of customer and stakeholder confidence in the event of financial duress. Further, with limited reporting requirements and shareholder expectations, private firms are afforded a greater operational flexibility by being able to focus on long-term growth rather than quarterly earnings. In addition, private company executives may steer their ships without shareholder approval, which allows them to take significant action without delays. In Australia, Part 2E of

5980-543: The income level of specific MLM companies or MLM companies in general: In 2015, the Government of Bangladesh banned all types of domestic and foreign MLM trade in Bangladesh. Multi-level marketing ( simplified Chinese : 传销 ; traditional Chinese : 傳銷 ; pinyin : chuán xiāo ; lit. 'spread selling') was first introduced to mainland China by American, Taiwanese, and Japanese companies following

6072-504: The injecting of money from their own pockets, so that it can become the revenue and profit of the MLM company, of which the MLM company shares only a small proportion with a few individuals at the top of the MLM participant pyramid. Other than the few at the top, participants provide nothing more than their own financial loss for the company's own profit and the profit of the top few individual participants. The main sales pitch of MLM companies to their participants and prospective participants

6164-570: The jersey sponsor. In March 2009, Amway Global signed a multi-year deal to become the presenting partner of the Los Angeles Sol of Women's Professional Soccer . The deal, however, would last only one year, as the Sol folded in 2010. In 2011, Amway signed a three-year deal to be the presenting sponsor of the National Hockey League 's Detroit Red Wings . In the 1990s, the Amway organization

6256-508: The largest proportion of participants must operate at a net loss (after expenses are deducted) so that the few individuals in the uppermost level of the MLM pyramid can derive their significant earnings. Said earnings are then emphasized by the MLM company to all other participants to encourage their continued participation at a continuing financial loss. Many MLM companies generate billions of dollars in annual revenue and hundreds of millions of dollars in annual profit. However, profits accrue to

6348-451: The money you make is based primarily on the number of distributors you recruit and your sales to them, rather than on your sales to people outside the plan who intend to use the products. In re Amway Corp. (1979), the Federal Trade Commission indicated that multi-level marketing was not illegal per se in the United States. However, Amway was found guilty of price fixing (by effectively requiring "independent" distributors to sell at

6440-402: The most popular vitamin and dietary supplement brand in China. 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. In 2012,

6532-469: The next day for $ 19.50, but lost interest for the next two weeks. They traveled to Chicago to attend a Nutrilite seminar soon afterward, at the urging of Maaskant, who had become their sponsor. They watched promotional filmstrips and listened to talks by company representatives and successful distributors, then they decided to pursue the Nutrilite business. They sold their second box of supplements on their return trip to Michigan, and rapidly proceeded to develop

6624-400: The overwhelming majority of MLM participants cannot realistically make a net profit, let alone a significant net profit, but instead overwhelmingly operate at net losses, some sources have defined all MLM companies as a type of pyramid scheme, even if they have not been made illegal like traditional pyramid schemes through legislative statutes . MLM companies are designed to make profit for

6716-457: The owners/shareholders of the company and a few individual participants at the top levels of the MLM pyramid of participants. According to the U.S. Federal Trade Commission (FTC), some MLM companies already constitute illegal pyramid schemes even by the narrower existing legislation, exploiting members of the organization. Companies that employ the MLM business model have often faced criticism and lawsuits. Legal claims against MLM companies cover

6808-465: The plan a pyramid scheme. The critical question for the FTC is whether the revenues that primarily support the commissions paid to all participants are generated from purchases of goods and services that are not simply incidental to the purchase of the right to participate in a money-making venture. The Federal Trade Commission warns Not all multilevel marketing plans are legitimate. Some are pyramid schemes. It's best not to get involved in plans where

6900-714: 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". Amway's health and beauty brands include Artistry, Satinique, Hymm, Body Series, Glister, Moiskin (South America), Nutrilite, Nutriway (Scandinavia and Australia/New Zealand), Attitude (India), eSpring, Atmosphere and iCook as well as XL and XS Energy drinks . Other Amway brands that were discontinued or replaced include Tolsom, Eddie Funkhouser New York, or beautycycle (Eastern Europe). Amway's Artistry products include skin care, cosmetics, and anti-aging creams and serums. In 2011, Artistry brand reached sales of $ 2.8 billion. Amway's largest-selling brand

6992-492: The questionable use of evangelical discourse to promote the business (Höpfl & Maddrell, 1996), and the exploitation of personal relationships for financial gain (Fitzpatrick & Reynolds, 1997)". In China, volunteers working to rescue people from the schemes have been physically attacked. MLM companies are also criticized for being unable to fulfill their promises for the majority of participants due to basic conflicts with Western cultural norms. There are even claims that

7084-852: The regulation states having downlines is illegal). O'Regan wrote 'With this regulation China makes clear that while Direct Sales is permitted in the mainland, Multi-Level Marketing is not'. MLM companies have been made illegal in China as a mere variation of the traditional pyramid scheme and as disruptive to social and economic order. MLM companies have been trying to find ways around China's prohibitions, or have been developing other methods, such as direct sales, to take their products to China through retail operations. The Direct Sales Regulations limit direct selling to cosmetics, health food, sanitary products, bodybuilding equipment and kitchen utensils, and they require Chinese or foreign companies ("FIEs") who intend to engage into direct sale business in mainland China to apply for and obtain direct selling license from

7176-446: 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. People may also register as IBOs to buy products at discounted prices. Harvard Business School , 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

7268-651: The same fixed price) and making exaggerated income claims. The FTC advises that multi-level marketing organizations with greater incentives for recruitment than product sales are to be viewed skeptically. The FTC also warns that the practice of getting commissions from recruiting new members is outlawed in most states as "pyramiding". Walter J. Carl stated in a 2004 Western Journal of Communication article that "MLM organizations have been described by some as cults (Butterfield, 1985), pyramid schemes (Fitzpatrick & Reynolds, 1997), or organizations rife with misleading, deceptive, and unethical behavior (Carter, 1999), such as

7360-479: The statements that CSPI has questioned. CSPI later reported that Amway had agreed to changing product labels by the end of 2014. Amway's eSpring water filter was introduced in 2000. According to Amway, it was the first system to combine a carbon block filter and ultraviolet light with electronic-monitoring technology in the filter cartridge and it became the first home system to achieve certification for ANSI /NSF Standards 42, 53, and 55. According to Amway, eSpring

7452-637: The subsidiary itself are traded directly, have characteristics of both privately held companies and publicly traded companies. Such companies are usually subject to the same reporting requirements as privately held companies, but their assets, liabilities, and activities are also including the reports of their parent companies , as are required by the accountancy and securities industry rules relating to groups of companies. Private companies may be called corporations , limited companies , limited liability companies , unlimited companies , or other names, depending on where and how they are organized and structured. In

7544-445: The success rate for breaking even or even making money are far worse than other types of businesses: "The vast majority of MLM companies are recruiting MLM companies, in which participants must recruit aggressively to profit. Based on available data from the companies themselves, the loss rate for recruiting MLM companies is approximately 99.9%; i.e., 99.9% of participants lose money after subtracting all expenses, including purchases from

7636-479: The transaction bears resemblance to both riba and gharar . Privately held company Private companies are often less well-known than their publicly traded counterparts but still have major importance in the world's economy . For example, in 2008, the 441 largest private companies in the United States accounted for $ 1.8 trillion in revenues and employed 6.2 million people, according to Forbes . In general, all companies that are not owned by

7728-466: 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". In the late 1980s and early 1990s, Amway sponsored racing driver Scott Brayton in the CART IndyCar championship . In December 2006, Alticor secured the naming rights for

7820-579: The word Private Limited at the end of their names. Privately held companies generally have fewer or less comprehensive reporting requirements and obligations for transparency , via annual reports, etc. than publicly traded companies do. For example, in the United States, privately held companies are not generally required to publish their financial statements . By not being required to disclose details about their operations and financial outlook, private companies are not forced to disclose information that may potentially be valuable to competitors and so can avoid

7912-494: Was United States Secretary of Education from 2017—2021 under the first Trump administration . Several sources have commented on the promotion of Christian conservative ideology within the Amway organization. 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". In The Cult of Free Enterprise , Stephen Butterfield, who spent time in

8004-664: Was a founding member of the Wireless Power Consortium which developed the Qi (inductive power standard) . In 2007 eSpring was ranked fifth out of 27 brands in a comparison of water filters by Consumer Reports . On January 14, 2015, Amway announced that it had acquired XS Energy, a California-based brand of energy drinks and snacks. The XS Energy brand has been sold as an Amway product since 2003. As of January 2015, it has been distributed in 38 countries, generating annual sales of $ 150 million. According to Euromonitor International,

8096-469: 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.). According to two reports by Mother Jones magazine, Amway distributor Dexter Yager "used

8188-565: Was called Frisk, an 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 Cleaner). They subsequently formed the Amway Sales Corporation to procure and inventory products and to handle sales and marketing plans, and the Amway Services Corporation to handle insurance and other benefits for distributors. In 1960, they purchased

8280-463: Was defeated by Granholm, who won 56% of the popular vote to his 42%. In August 2012, gay rights activist Fred Karger began a movement to boycott Amway in protest of the contribution from a private foundation of Amway President Doug DeVos to the National Organization for Marriage , a political organization which opposes legalization of same-sex marriage in the United States. Betsy DeVos

8372-560: Was the first water treatment system to receive certification for all fifteen NSF/ANSI 401 contaminants which include pharmaceuticals, pesticides and herbicides. The company also claims that, in addition to these 15 contaminants, eSpring is certified for more than 145 potential contaminants, including lead and mercury. eSpring was the first commercial product which employed Fulton Innovation's eCoupled wireless power induction technology. Companies licensing this technology include Visteon , Herman Miller, Motorola and Mobility Electronics. Fulton

8464-401: Was the world's No. 1 selling vitamins and dietary supplements brand. In 2015, it was reported that according to Euromonitor International, Amway was the largest vitamin and dietary supplement vendor in China, with 11% of a market that generated 100 billion yuan ($ 15.6 billion) in annual sales. In 2015, it was reported that according to China Confidential consumer brands survey, Amway Nutrilite was

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