Amway

Amway (American Way, in English the American way) is a multi-level marketing company founded in 1959 in the United States by Jay Van Andel and Rich DeVos, who had the idea of creating what they called "an innovative business opportunity based on the training of independent entrepreneurs." Its products are aimed at health, beauty and home care.

Amway has been investigated in several countries and by institutions such as the United States Federal Trade Commission (FTC) for alleged pyramid scheme practices, but has never been found guilty, although it has paid tens of millions of dollars in settlements.

History

Jay Van Andel and Richard DeVos, childhood friends from school, had been business partners in various courses, including a hamburger stand, charter flight service, and a boating business. In 1949 they were introduced by Neil Maaskant (Van Andel's second cousin) to the Nutrilite company. Nutrilite is a California-based direct selling company founded by Carl Rhenborg, developer of one of the first multivitamin complexes marketed in the United States. In August 1949, DeVos and Van Andel signed to become distributors of Nutrilite dietary supplements.

After the results they obtained, they decided to start developing more distributors, offering them commission on product sales and on the sales of new distributors introduced to the company by existing distributors, something known today as multilevel marketing. or network marketing. By 1958, DeVos and Van Andel had built an organization of more than 5,000 distributors. However, following concerns about the stability of Nutrilite, in April 1959, they formed the American Way Association to represent distributors and seek other products for the market.

Their first product was called Frisk, a concentrated organic cleaner developed in Ohio, the rights to which were purchased by DeVos and Van Andel to manufacture and distribute Frisk, later changing its name to LOC (liquid organic cleaner). It was later formed Amway Sales Corporation to acquire inventory products and to handle the sales and marketing plan, and Amway Services Corporation for insurance and other benefits for Amway distributors (it is an abbreviation of "American Way"). 1960 purchased a 50% interest 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 a single entity, Amway Corporation. Amway purchased control of Nutrilite in 1972 and full ownership in 1995.

Amway Global

In 1999 the founders of the Amway corporation established a new ownership, called Alticor, and launched three new companies: a sister (and separate) Internet-focused company called Quixtar, Access Business Group, and Pyxis Innovations.. Pyxis was later replaced by Fulton Innovation for research and development and Access Business Group handles manufacturing and logistics for Amway and external products, Quixtar and third-party customers.

The Amway name continued to be used in the rest of the world. After 2001 Alticor chose to close Amway North America, to be called Quixtar, ^[Why?] so virtually all Amway distributors in North America switched to Quixtar. In June 2007 it was announced that the Quixtar brand would be phased out over a period of 18 to 24 months in favor of a unified Amway brand called Amway Global worldwide.

World markets

Amway expanded overseas to Australia in 1971, to Europe in 1973, to some 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 the Scandinavian countries in 1998, to Russia in 2005, to Vietnam in 2008, and to Bulgaria in 2014.^{[citation needed]}

According to Amway's website, as of 2014 the company operates in more than 110 countries and territories, organized regional markets: the Americas, Europe, China, Japan and Korea, and Southeast Asia/Australia. ^{[citation required]}

In 2008, Alticor announced that two-thirds of the company's 58 markets saw sales growth, including strong growth in the China, Russia and India markets.

Together, it has about three million distributors around the world, and had an average annual growth of 7% towards the year 2009.

Latin America

Amway opened its first subsidiary in Latin America in 1985 in Panama, expanding to Guatemala, Mexico, Brazil, Argentina, Honduras, Dominican Republic, El Salvador, Chile, Uruguay, Costa Rica, Colombia in 1996 and Venezuela in 1998.

In Colombia it has had profits for 2009 of more than US$50 million. In the Dominican Republic there are more than 24,000 distributors associated with Amway.

Direct sales

Amway combines direct sales with a multi-level marketing strategy. Amway distributors, known as 'independent business owners', can market products directly to potential customers and can also sponsor and mentor others to become distributors. Participants can earn income from both the retail margin of any products they personally sell, plus a performance bonus based on the sales volume they and their downline have generated. Harvard Business School, which described Amway as &# 34;one of the most profitable direct selling companies in the world,' noted that Amway founders Van Andel and DeVos "achieved their success by using an elaborate network 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 the contracted distributors.

Legal problems

Canada

In 1982, Amway co-founders Richard M. DeVos and Jay Van Andel, along with Amway executive vice president of corporate services William J. Mr. Discher Jr., were indicted in Canada on several criminal charges, including allegations that he failed to report the value of goods brought into the country and defrauded the Canadian government of more than $28 million between 1965 and 1980. The charges were dropped in 1983 after Amway and its Canadian subsidiary declared guilty of criminal charges of customs fraud. The companies paid a fine of $25 million CAD, the largest fine ever imposed in Canada at the time. In 1989, the company settled outstanding customs duties for $45 million. In a 1994 article written by DeVos, he stated that the guilty plea was entered for technical reasons, despite believing they were innocent of the charges, and that he believed the case had been motivated by 'political reasons'. # 3. 4;.

United States

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 in training videos &# 34;highly profitable". Amway denied acting in bad faith, blaming the case on a misunderstanding on the part of distributors, and settled the case out of court for $9 million. In a related lawsuit brought by the distributors involved, the Court established that Mahaleel Lee Luster, who had been hired to make the video songs, had infringed the copyrights without the knowledge of three of the five distributors.

United Kingdom

In 2007, Amway's operations were stopped in the United Kingdom and Ireland after a year-long investigation by the United Kingdom's Department of Trade and Industry, which decided to ban Amway on the basis that the company had employed marketing misleading, presenting inflated profit estimates, and enticing distributors to purchase bogus 'motivation and training' tools. In 2008, a U.K. judge dismissed government claims against Amway's operations, saying Major reforms the previous year (including a ban on non-Amway-approved motivational materials and events) had fixed company flaws that favored the sale of training materials over bogus products and profits. However, the judge also expressed his belief that Amway allowed "misrepresentations" of its business by independent sellers in past years and failed to act decisively against misrepresentations.

Vietnam

In January 2017, Vietnam's Ministry of Industry and Trade determined that Amway Vietnam had violated federal regulations by engaging in unauthorized multi-level marketing.

Recognitions

• 1989 - Award for the achievements of the United Nations Environment Programme.
• 1992 - United Nations TRANSPOLAR UNESCO Medal for Joint Work in Educational, Scientific and Cultural Areas (UNESCO)
• 1992 - Amway Global Recycling Company Award
• 1997 - Rainforest Alliance Award for dedication, innovation and commitment to the global environment.
• 1998 - International Film and Video Festival Awards 1998 - Amway Corporation: "AMWAY FOOD STORAGE"- GOLD CAMERA

Charities

Amway has the "One by One" where she has collaborated with UNICEF since 2003 and has donated more than 140 million dollars and more than 2.5 million hours of volunteer work, benefiting more than 7 million children in different parts of the world. The company provided more than $1 million in donations from Amway business owners, employees and customers to Haiti; along with 10,000 personal hygiene kits and using the company's planes to transport personnel and medical supplies.

Pyramid scheme accusations

Robert Carroll of The Skeptic's Dictionary described Amway as a "legal pyramid scheme," and has said that the quasi-religious devotion on the part of its affiliates is used by the company to overshadow the poor performance generated by its distributors.

FTC investigation

In a 1979 ruling, the Federal Trade Commission found that Amway did not fit the definition of a pyramid scheme because: distributors were not paid to recruit people, it did not require distributors to purchase a significant amount of inventory, distributors were required to maintain retail sales (at least 10 per month), and both the company and the distributors were required to receive excessive inventories from smaller distributors.

On the other hand, the FTC found Amway "guilty of price fixing and exaggerating distributors' final income statements," the company was ordered to stop fixing prices to distributors and assign customers among distributors and was prohibited from exaggerating the amount of profits or sales his distributors could make from the business. Amway was ordered to accompany those statements with actual averages per distributor, noting that more than half of distributors make no money, and the average distributor makes less than $100 per month. The ordinance was violated in a 1986 advertising campaign, resulting in a fine of USD 100,000.

Studies by independent consumer monitoring agencies have shown that between 990 and 999 of every 1,000 participants in Multi-Level Marketing companies who use Amway-type payment plans, in fact, lose money. According to The Skeptic's Dictionary, "in the United States, the Federal Trade Commission requires Amway to label its products with the message that 54% of Amway recruits earn nothing and the rest earn an average of $65 a month,".