Amway Review – Pyramid Scheme or Legit MLM?

Amway is an MLM company that sells health, beauty, and home care products. It is not a pyramid scheme, and it is one of the legit MLM companies.

There is a good chance that you heard about Amway through someone – a friend or family member.

Many people these days are looking for additional income, and you are most likely one of them. There was then an opportunity to work from home by joining Amway as one of their independent distributors.

However, as I’ll discuss in this review, there are some reasons why success with Amway is unlikely. Experienced salespeople and well-funded recruiters are the only ones I can think of to have real success with this MLM program.

As a disclaimer, I’m not affiliated with Amway. It means I’m not paid to write this review. So you can rest assured that you will get an honest and unbiased review from me.

At the end of this review, I’ll also tell you the best alternative to the Amway MLM program that has enabled me to make a full-time passive income online.

Amway MLM Review – Key Takeaways

  • Name: Amway MLM
  • Pros: MLM opportunity to make money
  • Cons: Amway MLM has a very low success rate; Amway products are expensive; Amway is a cult
  • Overall Rating: 1/5
  • Who is Amway MLM For: Amway MLM is supposed for marketers to make money. But you are unlikely to make a penny because of the MLM nature and you may end up losing a lot of money.
  • The Best Alternative: An All-in-One Platform to Make Passive Income Online

In this Amway MLM review, I’m going to cover the following topics:

What is Amway?

Founded in 1979, Amway is a multilevel marketing company best known for its home products and its groundbreaking verdict against pyramid schemes.

The founders of Amway Corporation formed a new holding company in 1999 called Alticor and launched three new companies: a sister (and separate) company focused on the Internet called Quixtar, Access Business Group, and Pyxis Innovations.

Amway Global is the world’s leading direct selling company with annual sales of $8.9 billion. That puts the company $3 billion ahead of Avon and Herbalife.

No other multilevel marketing company makes as much money as Amway, just by looking at the numbers.

Amway distributors used to be found on every street corner. Amway employs more than 17,000 people in more than 100 countries. Although no official figures have been released, the number of distributors is estimated at three to four million.

According to the latest Forbes ranking, Amway is the 44th largest privately held company in the United States by revenue.

Amway has been listed in the Direct Selling News “Top 100 List” for several years in a row.

The company’s headquarters spans one mile and includes 80 buildings totaling 3.5 million square feet.

In addition, the company owns an Amway Grand Plaza Hotel in Grand Rapids.

Recommendation: Here’s The Best Alternative

Who Founded Amway?

Amway was founded in 1959 by Jay Van Andel and Richard DeVos. Van Andel and DeVos met at Grand Rapids Christian School. They met because they were both interested in business and sales.

Both DeVos and Van Andel had previously worked together in other businesses, most of which failed. Nutrilite was one of those failed businesses.

Nutrilite was different from most other companies at the time in that it offered both sales bonuses and incentives to attract others as suppliers.

In other words, Nutrilite’s main business was selling nutritional supplements, but later the company expanded into cleaning products like Fluid Organic Cleanser.

Jay Van Andel and Richard DeVos had finally found a business model they were convinced would work. They left Nutrilite and founded Amway, which stands for “American Way.”

The company quickly became known around the world. In the United States, however, Amway’s online reputation quickly deteriorated as people began to view it as a pyramid scheme.

In 1999, the company’s name was changed to Alticor and its sales divisions were renamed Quixtar Brand.

Amway is currently the most famous multi-level marketing company in the world. At first glance, they seem to be a good way to achieve a wide reach.

Is Amway A Pyramid Scheme?

Amway is not a pyramid scheme. It is a reputable MLM company that allows its members to earn money by selling skincare and beauty products. As a member of Amway, you do not have to make money just by recruiting.

However, Amway has been investigated in several countries and by institutions such as the Federal Trade Commission (FTC) for alleged Ponzi scheme practices. Although the company paid tens of millions of dollars to settle these cases, it was never found guilty.

In a 1979 decision, the Federal Trade Commission found that Amway did not meet the definition of a Ponzi scheme because

  • (a) distributors were not paid for recruiting members
  • (b) it did not require distributors to purchase a large inventory of goods
  • (c) distributors were required to make retail sales (at least 10 per month)
  • (d) the company and all distributors were required to accept the return of excess goods from lower-tier distributors.

So what constitutes a Ponzi scheme? A Ponzi scheme is a fraudulent scheme in which valuable goods or services are almost never sold. The scam’s only source of revenue is recruiting new members and asking for more money from existing members.

In a pyramid scheme, members are recruited by promising them commissions in return for recruiting other members. It is unsustainable and often a scam because the members at the bottom are doomed to lose money.

Those who want to join must pay a membership fee to the company running the pyramid scheme. The company would share a portion of the money collected from each additional member recruited as a reward.

However, the scam is profitable only for the directors of the company, i.e. those at the top of the pyramid, as they can receive a portion of the payments from each newly recruited member. The system continues as long as members recruit and funnel money to the top of the pyramid.

A pyramid scheme would have to grow infinitely to earn money for all participants. This is impossible due to the finite population of the planet.

The scam will fail if there are no new recruits and other sources of revenue. Since most members are at the lowest level of the pyramid, most of them will lose their money.

Although Amway is not a Ponzi scheme, Harvard Business School noted that Amway “achieved its success through an elaborate, pyramid-like distribution system in which independent distributors of Amway products received a percentage of the goods they sold and also received a percentage of the goods sold by recruited distributors.”

Recommendation: Here’s The Best Alternative

Is Amway An MLM?

Amway is a reputable multi-level marketing (MLM) company. Amway distributors, known as “independent business owners” (IBOs), can market products directly to potential customers and recruit others to become IBOs.

IBOs can earn money from the retail markup on any products they personally sell, as well as a performance bonus based on the volume of sales generated by them and their downline (IBOs they have sponsored) 

However, most IBOs cannot make a good income selling Amway products. As with most MLM programs, their success depends on recruiting new members to work under them. IBOs receive a commission on the sales and new members generated by the people they recruit, once the new members start getting results.

This is complex on multiple levels (hence multi-level).

Let us introduce a triangle. Since everyone in this triangle is part of your direct downline (in an MLM, the people below you are called the “downline” and you are their “upline”), you receive commissions from everyone who made sales in this triangle.

If you can recruit more people, you will probably earn more commissions.

Most people in your MLM would rather earn passive income by recruiting others to work for them than a one-time commission by selling products, even if your MLM offers a wide range of products.

Because of the way the money flows, those at the top of the triangle have the most financial success, while those at the bottom have the least.

To be successful in a multi-level marketing company like Amway, you must have a large number of people in your “downline”.

Recommendation: Here’s The Best Alternative

How Much Money Can You Make With Amway?

We can find out by looking at the 2017 income disclosure for the UK and Ireland. Amway does not prepare income disclosure statements for the United States, so we cannot examine those.

At the end of August 2017, Amway had 17,205 registered retail consultants.

Only 4,735 of them received reimbursements from Amway. In other words, 12,470 individuals, or 72.5 percent, earned nothing.

In addition, the 27.5 percent who worked had an average monthly salary of £41.82, giving them an annual income of £501.84 before expenses.

Business consultants are at the top of Amway’s pyramid-shaped earnings chart. In 2016-17, there were only 66 of them, and their average monthly income was £2,281 (£27,372 per year).

Only 66 of the 36,940 Amway members in the UK and Republic of Ireland earned more than £110 per month on average that year.

It does not matter if you are an Amway top rep (remember, this represents only 0.17 percent of all members), because you still have to deduct your expenses from your income. In this case, your ‘profits” are significantly reduced, if not completely eliminated.

According to FTC research, the average net income (after expenses) of the 200 largest Amway distributors in Wisconsin was about minus $900.

According to their tax returns, the top Amway distributors in Wisconsin lost money on average.

This information comes from state tax returns obtained by the Wisconsin Attorney General’s Office in a 1980 lawsuit against Amway.

According to the same study, it is 286 times more likely to win a single spin of the roulette wheel in Las Vegas than to make a profit as an Amway representative.

Recommendation: Here’s The Best Alternative

Cons and Complaints of Amway

1. Very Few People Can Make Money With Amway

Success is difficult to achieve with an MLM company like Amway. An audit of tax records for the years 1979-1980 in the state of Wisconsin revealed that Amway direct sales distributors reported an average net loss of $918.

You can also take a look at the statistics that say 72.5 percent to 99.9 percent of MLM members lose money.

The reason for this is that MLMs have sales quotas that require members to continue selling products in order to stay active and be eligible for commissions.

They do not get paid if they do not meet the quota.

As a result, many MLM members lose a significant amount of money before they have even recruited a person to the company.

2. Losses From Amway MLM Program Are Reframed As Investments

Amway MLM uplines often portray their financial losses as ‘investments’ in their business in order to keep their representatives in the MLM system, and entice them with the prospect of future financial freedom 

In reality, however, they are not investments. You are unlikely to get the money back. And the return on the “investment” is negative in most cases. So the claim that it is an investment is a scam.

3. Amway is a Cult

Why do people continue to work for Amway when it seems so bad? Our investigation of MLMs revealed that they all have a cult-like corporate culture.

Critical thinking is actively discouraged among MLM representatives. They are chastised and even isolated if they ask questions that deviate from the ‘this company is awesome” mentality.

Amway resembles a Big Brother organization, with a paranoid attitude toward insiders who are critical of the organization, seminars and meetings that resemble religious revival meetings, and tremendous distributor commitment despite minimal revenue.

MLMs, like abusive affiliates, encourage you to isolate yourself from anyone who questions your involvement.

Those who leave an MLM are labeled as failures or bad people/influencers and reps are not allowed to contact them.

Rejection from people they once considered practically family is one of the most devastating losses former MLM reps experience.

MLMs often expect their reps to prioritize their events and their business over their personal lives, making them even more involved in the business while separating them from their family and friends.

4. You May Need to Purchase Amway Products Yourself

Unless you have a large network of friends, relatives, neighbors, etc., you may have to buy products yourself every month. This is a futile endeavor for everyone involved.

I think it’s pretty ridiculous if you have to buy the products you are trying to sell yourself. But that is quite normal for people who join MLMs like Amway. Therefore, you will lose a lot of money in the long run, not to mention that you will not make any money.

5. Amway Products are Overpriced

As with other MLMs, Amway offers overpriced products. There are many other brands that offer similar products but at lower prices.

Therefore, it may be difficult for you to sell Amway products because your potential customers can buy the same product elsewhere at a much lower price. This explains why most people who join an MLM only focus on recruitment instead of selling actual products.

6. Amway’s MLM Business Model Has a Bad Reputation

Some people have benefited financially by joining a network marketing/MLM company. Unfortunately, most people who join an MLM company are left with nothing but regrets and a lot of useless products they failed to sell.

MLM like Amway is flawed from the ground up. The distribution of commissions is skewed towards the top.

The majority of the top level members and pioneers make the most money, while the bottom level members do not even break even after a few months.

For this reason, many people do not consider Amway a serious business opportunity.

7. Exaggerated Claims Of Income

Like any other MLM company, Amway overstates its income, but in reality very few people make a living promoting Amway.

Amway’s low retention rate can also be discouraging, with less than 41% of distributors being active.

According to Amway’s payouts to distributors, over 99% of Amway distributors never make a profit.

8. Amway Is Like A Pyramid Scheme In Disguise

If you want to avoid losing money every month, MLM will actually encourage you to recruit people.

Any system that requires you to recruit people to make money will eventually look like this.

Amway is not a pyramid scheme in the traditional sense, because you can make money selling the products.

However, to make a living, you actually have to recruit others.

9. Recruiting is Required to Succeed

This is why I don’t recommend MLMs to people. MLMs like Amway go to great lengths to recruit. Eight out of ten ways to make money with Amway require recruiting. If you don’t recruit, you’ll lose money at the end of the day.

The #1 platform I recommend is different. You can make a 4, 5 or even 6 figure passive income by promoting and selling products you really like. You don’t have to recruit people, you’ve to recommend useful and great products. I’ll tell you more about this at the end of this Amway report.

10. Amway Representatives Have To Attend Expensive Events

The events that Amway representatives were required to attend appear to be the most expensive.

One former representative stated that his Amway upline would withhold mentoring if he did not attend the events.

Attendance at these events was not cheap. One former rep stated that the cheapest ticket for an evening event was $70, including dinner.

Weekend trips were also the most expensive, with tickets costing about $250 per person and including breakfast and lunch (you had to pay for dinner yourself).

For events, you also had to pay for travel and lodging. A flight across the United States could cost thousands of dollars. According to one representative, long-haul events cost between $4,500 and $5,000 each.

11. You Have to Pay Shipping Costs

You may not be aware as an Amway distributor that you are responsible for all shipping and service charges. As a result, you lose your commission.

To calculate your actual income, subtract your commissions from your shipping costs.

12. The FTC’s Ruling Does Amway No Favors

Amway has been the subject of numerous investigations into illegal Ponzi schemes over its many years in business.

Allegations include price fixing, overstating income, and deceptive business practices.

Amway is currently accused of operating an illegal Ponzi scheme, which is one of the most common allegations leveled against the company.

Some people have given Amway the nickname “Scamway” because of it

In 1998, the FTC (Federal Trade Commission) found that Amway needed to improve its business practices.

Although Amway is not a pyramid scheme, the FTC found that the company’s commission policy is similar.

13. Amway Faces Many Lawsuits

Amway has previously faced class-action lawsuits. Among the lawsuits filed against Amway are:

  • Extortion by Amway is a criminal offense
  • Amway is in violation of California’s “endless chain” law
  • Consumers are induced by Amway to sign up for the Ponzi scheme, resulting in financial loss to them
  • Amway commits wire fraud and mail fraud

Recommendation: Here’s The Best Alternative

Is Amway Banned?

In the U.S., Amway is not against the law. In the UK, however, it is against the law because it has been determined that Amway makes more money selling to its distributors than it does selling directly to customers.

Indian police are also scrutinising the business. It has even arrested some high-ranking representatives who were involved in an illegal Ponzi scheme.

Currently, Amway is struggling with legal difficulties everywhere to maintain operations in the United States. But as in India and the UK, it seems likely that Amway’s time in business is coming to an end.

How Much Does It Cost To Join Amway MLM Program?

You do not have to pay anything to join Amway, but you do have to buy a certain amount of products to get started.

These products are available in the form of starter kits. It is also possible to buy any items to create your own starter kit.

You will need to invest about $100 to get started.

Recommendation: Here’s The Best Alternative

Positive and Negative Feedback from Amway MLM Particpants

Pros

  • Amway has been around for years.
  • The startup package comes with a good money back guarantee.
  • They have agreements with companies like Lego and Microsoft.
  • You can request a refund of your registration fees if you decide not to become Amway IBO within 60-180 days.
  • In addition to Europe, China, Japan, Korea, Australia, Southeast Asia, and the Americas, Amway is present in over 100 other countries.
  • To help you succeed, Amway offers free courses, podcasts and presentations. The World Wide Dream Builders program is also available for an additional monthly fee.
  • Amway has a wide range of products in its catalog. The company offers weight management products, energy drinks, sports nutrition, household products, beauty products, and personal care products.
  • There are a number of training materials that Amway provides free of charge.

Cons

  • Amway has had a few run-ins with the law.
  • They were eventually forced to pay $56 million to settle a case in which they were accused of running a pyramid scheme.
  • Their compensation plans do not assist many people in making money.
  • Only about 3% of members earn enough money to support themselves.
  • Some people still believe Amway is a pyramid scheme.

Is Amway a Scam or Legit?

Amway is not a scam. It is a legit MLM company. A scam is defined as “a dishonest scheme; a fraud” by the Oxford Living Dictionary. 

That said, there have been fraud cases against Amway. 

In 2007, Amway’s operations in the U.K. and Ireland were suspended following a year-long investigation by the U.K. Department of Trade and Industry, which sought to ban Amway for engaging in misleading marketing, providing inflated profit estimates, and misleading distributors into buying counterfeit “motivational and training products.”

On November 3, 2010, Amway announced that it had agreed to pay millions of dollars to settle a class action lawsuit filed in Federal District Court in California in 2007. The class action lawsuit accused Quixtar and several of its top distributors of fraud and racketeering and operating an illegal Ponzi scheme.

In addition, the FTC found Amway “guilty of price-fixing and overstating income” Amway was ordered to disclose actual averages per distributor in income statements and to point out that more than half of its distributors make no money, with the average distributor earning less than $100 per month.

In a word, the majority of Amway distributors made no money. A few do make money, but only if you put in a lot of effort. And they usually make a lot of money with Amway by advertising aggressively.

Because Amway makes blatantly disingenuous and irresponsible marketing claims to recruit members, some people consider Amway MLM a scam and refer to it as “Scamway.”

My #1 recommended platform, however, has seen a lot of beginners earn four figures a month after joining it for a year.

I will tell more about my #1 recommended platform at the end of this review.

Recommendation: Here’s The Best Alternative

Amway Review: Final Verdict

Here comes the conclusion of my Amway MLM review. Overall, I do not recommend you to join Amway MLM to make money.

In the beginning, you will have a hard time looking for new clients and trying to find recruiters to top up your Amway commission.

The worst part is that you will practically have to ask your family and friends to join your Amway business opportunity. This is not fun.

Your upline is constantly contacting you to encourage you to buy more business support material while you struggle to recruit people to your downline.

The reality is that you will probably lose more money. Statistics confirm this as well. according to a case study on the FTC’s website, 99% of people who join an MLM go broke or lose money.

People who join these MLM-like companies often feel pressured to succeed, and that’s one of the main reasons they drop out.

Why not consider starting your own online business if you want to earn money and have a flexible schedule? 

Thus, you can choose what you want to promote rather than having someone tell you what you must promote.

Let me tell you how to build an online business in a legit way to make passive income online in the next section. This has allowed me to make a full-time income in a year. Most importantly, unlike MLM models, It’s 100% legit and sustainable.

Recommendation: Here’s The Best Alternative

Best Alternative To Amway MLM Program To Make Passive Income

If you’re beginning your online business journey, you deserve a program much better than Amway MLM program.

My #1 recommended platform is called Wealthy Affiliate.

Wealthy Affiliate is an all-in-one platform for building your affiliate marketing business from scratch.

When you join Wealthy Affiliate, you can get access to the first-class web hosting service, keyword research tools, community support, comprehensive training, writing tools, and other software to help you build an online business step-by-step.

You can register a free account with Wealthy Affiliate, which enables you to get started with affiliate marketing right away without paying a penny.

If you like the platform, you can then upgrade to the premium membership to get access to everything on the platform. There are no upsells afterwards.

But How Much Can You Earn with Wealthy Affiliate?

A 21-year old student from Wealthy Affiliate was able to earn $7,395 in just 1 week, which means he made more than $1k a day…all while applying what is taught inside Wealthy Affiliate.

Amway Review

Compared with Authority Hacker, Wealthy Affiliate has a much longer history, which has been established for 15 years and there are many success stories in the past decade. Actually, Wealthy Affiliate has more than a million members so far, so you can see how popular this platform is.

To give you more examples, here are some of the other inspiring success stories of Wealthy Affiliate members.

Where to Join Wealthy Affiliate?

Wealthy Affiliate has a very simple pricing scheme. It has a free and premium membership. The premium membership only costs $49/month or $395/year.

If you want to feel about Wealthy Affiliate, you can sign up for the free starter membership here (no credit card required). You can select to be a free member with no time limit.

And as a starter member, you can get instant access to the community, live chat, over 500 training modules, 2 classrooms, networking, commenting, 1 free website, access to the keyword tool.

You can enjoy all these values without paying a penny.

So I strongly recommend you to register a free account and see it yourself.

Recommendation: Here’s The Best Alternative

Amway MLM FAQs

1. Is Amway A Direct Selling Business?

Amway is both a direct selling business and an MLM with over a million distributors in over 100 countries.

2. Is Amway Worth Joining?

Here are a few questions to ask yourself:

  • Would you want to be a part of a company that causes you to practically ask family and friends to join it?
  • What do you think about Amway business owners making $200 a month on average?
  • Are you willing to throw away a lot of money?
  • Would you like to sell Amway forever?

If all four of these questions were answered no, Amway isn’t right for you.

3. What Makes Multi-Level Marketing Companies Like Scams?

Even though MLM companies aren’t technically scams, it’s highly unlikely that you’ll make as much money as you’re led to believe before joining.

Due to the many add-on sales that many multilevel marketing companies offer to “simplify your success”, you may end up making a loss.

This is all a marketing ploy by your upline to sell you Amway products.

4. How Do You Quit Amway?

You can leave Amway by calling the customer service number or sending an email notifying the company.

If you don’t want to deal with Amway support or reach out to them on social media, your best bet is to simply wait for your registration to expire at the end of the year.

5. What is the Federal Trade Commission’s Opinion About Amway?

The FTC didn’t say much. Only that Amway wasn’t technically a scam.

6. What Are The Signs Of An Amway Pitch?

What steps can you take to avoid being approached by an Amway representative? They practice the FORM conversation taught to them on the blog Married to an Ambot. If they steer the conversation in this direction, they may be setting you up for an MLM sales call.

FORM works as follows:

  • Ask about their family and whether or not they have enough time to spend with them.
  • Get to know their occupation and if they are looking for a change.
  • Find out how much time they would like to spend on their hobbies and what they do for fun.
  • Ask if they need more money for buying things, paying off debt, or funding dreams.

Recommendation: Here’s The Best Alternative

Leave a Comment