Amway MLM Review: Legit or Pyramid Scheme?

Amway is a multilevel marketing company that's been around since 1979. You might know them for their home products and for their victory against pyramid schemes. 

Forbes has ranked Amway as the 44th largest privately held company in the United States by revenue. They've also been featured in Direct Selling News' "Top 100 List" for multiple years in a row. 

Now, here's the big question: Is Amway a legit MLM or a pyramid scheme? We'll get into that. And hey, we'll also fill you in on a better way to make money from home.

Who am I?

What is Amway? 

Amway, short for "American Way," is a big player in the multi-level marketing industry. 

Founded in 1959 by Jay Van Andel and Richard DeVos, Amway started as a company that sold products directly to customers, like health supplements and household items. 

Over the years, Amway has grown and now offers a wide range of products, from health and beauty to home care. They make a whopping $8.9 billion in sales every year, which is $3 billion more than both Avon and Herbalife. Back in the day, it felt like there were Amway distributors on every street corner. 

Nowadays, the company has over 17,000 employees in 100 countries. Though there are no official numbers, it's estimated that Amway has three to four million distributors worldwide.

 Amway's headquarters is massive, spanning over one mile and including 80 buildings that total 3.5 million square feet. And if that wasn't enough, the company even owns the Amway Grand Plaza Hotel in Grand Rapids.

Is Amway An MLM? 

Yes, it’s an MLM. Amway offers you the opportunity to become an "independent business owner" (IBO) and sell their products directly to customers. 

As an Amway IBO, you can make money by selling their products and recruiting new members to become IBOs under you. You'll earn a commission on the sales generated by you and your downline, which includes the IBOs you've sponsored. 

However, here's the thing. While it's true that you can make money selling Amway products, most IBOs cannot make a full-time income just by doing that. The real success lies in recruiting more people to join your downline. 

In an MLM company, the more people you recruit, the more money you'll make. And, it's not just about recruiting new IBOs, but also about getting them to recruit others under them. This creates a complex network of people, which is why it's called "multi-level". 

To explain it better, let's think of it as a triangle. You're at the top of the triangle, and everyone in your downline is below you. You earn commissions from the sales made by everyone in this triangle, including the new members recruited by the people you've sponsored. 

Most people in an MLM company would rather earn passive income by recruiting others than just selling products, even if the company offers a wide range of products. This means that those at the top of the triangle are likely to make the most money, while those at the bottom might struggle to make a good income. 

To be successful in Amway, you need to have a large and active downline. That's the key to making serious money in this business.

Is Amway a Pyramid Scheme? 

While Amway has faced investigations in the past, it is not a pyramid scheme. It's a multi-level marketing (MLM) company that offers opportunities for its members to make money by selling skincare and beauty products. You don't have to make money just by recruiting others. 

A pyramid scheme, on the other hand, promises commissions to members who recruit other members. This model is unsustainable and often a scam. Participants are required to pay a membership fee to the company, which then shares a portion of the money collected from each additional member recruited. 

The scheme is only profitable for the directors at the top of the pyramid who can receive a portion of the payments from each newly recruited member. The system can only continue as long as members recruit new members and funnel money to the top. 

Eventually, the pyramid will collapse once there are no new recruits or other sources of revenue, leaving most members at the bottom with lost money. 

Though Amway is a legit MLM company, it has faced scrutiny in several countries and from institutions like the Federal Trade Commission (FTC) for alleged pyramid scheme practices. 

However, despite paying tens of millions of dollars to settle these cases, Amway has never been found guilty. 

In fact, in 1979, the Federal Trade Commission judged that Amway didn't meet the definition of a pyramid scheme because its distributors weren't paid for recruiting members, it didn't require distributors to purchase a large inventory of goods, and it required distributors to make retail sales. 

Although Amway is not classified as a pyramid scheme, Harvard Business School has observed that it operates with an intricate, pyramid-like distribution system. Independent distributors receive a percentage of the goods they sell and also a percentage of the sales made by distributors they have recruited.

Learn more: Pyramid Scheme vs. MLM: What’s the Difference?

Are Amway Products Any Good? 

Amway offers a diverse array of products, ranging from dietary supplements to skincare and cleaning solutions. The quality of these products has been a topic of debate for years. 

Some customers swear by Amway's products, lauding their effectiveness and quality, while others find them overpriced compared to similar products available in the market. 

One hallmark of Amway is its commitment to rigorous testing and research. They invest significantly in scientific research to develop their products, which they claim sets them apart from competitors. 

Whether you'll find Amway products to be worth their price ultimately depends on your personal preferences and budget.

How Much Does It Cost to Join Amway? 

It's completely free to join Amway. There is no upfront registration fee. However, to get started, you'll need to invest in some products. There are various starter kits available, or you can pick products of your choice to create your own starter kit. You should budget around $100 for your initial product purchase.

Amway Compensation Plan Like most MLM companies, Amway's compensation plan is complicated. 

Here's a simplified breakdown: 

1. Retail Profits: IBOs can earn a margin by selling Amway products at retail prices. 

2. Performance Bonuses: Achieving certain sales and recruitment milestones can unlock performance bonuses.

3. Leadership Bonuses: As you progress within the organization and build a team, you may qualify for leadership bonuses based on your group's sales. 

4. Growth Incentives: Amway offers incentives to encourage growth within your downline, including cash awards and international trips. 

5. Other Income Streams: Amway provides additional income streams, such as a Monthly Performance Bonus and educational bonuses. 

However, it's important to note that while product sales are a viable source of income, the real emphasis in MLMs like Amway often lies in recruiting. The larger and more active your downline, the greater your potential earnings. 

This recruitment-heavy model is the hallmark of MLMs and can be both a boon and a bane, depending on your perspective and success in building a team.

How Much Money Can You Make With Amway? 

Let's take a look at the numbers from the 2017 income disclosure for the UK and Ireland. Unfortunately, we can't examine the income disclosure for the United States since Amway doesn't prepare them. 

At the end of August 2017, Amway had 17,205 registered retail consultants. Out of those, only 4,735 received reimbursements from Amway. That means 72.5% of individuals, or 12,470 people, earned nothing. The 27.5% who did work had an average monthly salary of £41.82, which equates to an annual income of £501.84 before expenses. 

If you're a business consultant, which is at the top of Amway's pyramid-shaped earnings chart, things may look better. However, in 2016-17, only 66 of them existed, and their average monthly income was £2,281 (£27,372 per year). Also, only 66 out of the 36,940 Amway members in the UK and Republic of Ireland earned more than £110 per month on average that year. 

But even if you're a top Amway rep, remember that you still have to deduct your expenses from your income. This means that your "profits" are significantly reduced, if not completely eliminated. 

According to the FTC research, the average net income (after expenses) of the 200 top Amway distributors in Wisconsin was about minus $900. Moreover, based on their tax returns, the top Amway distributors in Wisconsin lost money on average. These details come 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. So, it's essential to weigh the risks and rewards before deciding if Amway is a good investment for you.

Pros and Cons of Amway MLM 

The Pros 

• Amway boasts a long history and a global presence. Its longevity can be seen as a sign of stability. 

• Amway offers a broad selection of products, potentially appealing to a wide customer base. 

• Amway provides training and support to its IBOs, including marketing materials and business tools. 

• If you manage to build a robust downline, you can potentially earn residual income as they generate sales. 

The Cons 

• Success in Amway heavily relies on recruitment. If you're uncomfortable with recruiting or have a limited network, it can be challenging to build a sizable downline. 

• Amway products are often criticized for being overpriced compared to similar items in the market. 

• Amway's compensation plan can be complex to understand. 

• Amway has a high turnover rate. There is a significant risk of financial loss for those who fail to recruit and build a profitable downline. 

• Amway overstates its income potential, making it sound like a lucrative business opportunity. 

• Amway has a cult-like corporate culture. 

• Statistics show that between 72.5 percent to 99.9 percent of MLM members lose money. 

• Amway events are often mandatory, and if you don't attend, your upline may withhold support and mentoring. On top of the ticket cost, you'll need to pay for travel, lodging, and meals, which can add up quickly. 

• Amway has faced class-action lawsuits, including accusations of extortion, violating "endless chain" laws, and committing wire and mail fraud.

Is Amway a Scam? 

Amway is not a scam. According to the Oxford Living Dictionary, a scam is defined as “a dishonest scheme; a fraud”. While there have been fraud cases involving Amway in the past, it's generally not considered a scam. 

Having said that, Amway has faced legal issues and criticism, primarily due to aggressive marketing tactics, allegations of inflated income claims, and lawsuits in various countries. 

In a significant 1979 ruling, the Federal Trade Commission (FTC) examined Amway's operations. They concluded that Amway was not a pyramid scheme for several reasons:

1. No Recruitment Payments: Distributors weren't primarily paid for recruiting others. 

2. No Excessive Inventory Requirement: Amway didn't force distributors to buy large, unsellable stocks of products. 

3. Retail Sales Requirement: Distributors had to maintain at least ten retail sales per month. 

4. Excess Inventory Returns: The company and distributors had to accept returns of surplus inventory from down-level distributors. 

However, the FTC did find Amway guilty of certain practices. They were accused of price-fixing and exaggerating income claims. As a result, Amway was required to stop retail price fixing and misrepresenting potential earnings. They had to disclose actual earnings per distributor, highlighting that over half made no money, with the average distributor earning less than $100 per month. 

According to a report from the FTC, 99% of MLM participants, including Amway, end up losing money. The Skeptic's Dictionary notes that in the United States, Amway products must carry a message stating that 54% of Amway recruits make nothing, with the rest averaging $65 per month. 

So, while Amway isn't deemed a pyramid scheme, it has faced criticism and legal actions, with a significant number of participants experiencing financial losses. Its recruitment-heavy business model and controversies surrounding it have earned it nicknames like "Scamway."

Is Amway Banned? 

Well, in the U.S., Amway is perfectly legal and operates without any issues. 

However, in the UK, it's a different story - Amway's operations in the U.K. and Ireland were suspended in 2007 following an investigation by the U.K. Department of Trade and Industry. It's been found that Amway generates more revenue from selling to distributors rather than customers directly. 

The investigation accused Amway of engaging in misleading marketing, providing inflated profit estimates, and misleading distributors into buying counterfeit "motivational and training products." 

In India, the investigation by the ED also revealed that Amway has been promoting a pyramid scheme under the guise of direct selling.

Should You Join Amway? 

So, I've finally reached the end of my Amway review, and I have to say, I wouldn't recommend it if you're looking to make money. Why? Well, for starters, finding new clients and recruiters can be tough in the beginning. And if that wasn't bad enough, you'll end up having to ask your family and friends to join your Amway business opportunity, which is never fun. 

To make matters worse, your upline will be constantly contacting you to buy more business support material, even when you're struggling to recruit people to your downline. 

The reality is that you'll likely end up losing more money, and according to a case study on the FTC's website, 99% of people who join an MLM go broke or lose money. No wonder people drop out of these MLM-like companies feeling pressured to succeed. 

If you're looking for a better way to earn money and have a flexible schedule, why not consider starting your own online business? This way, you can choose what you want to promote rather than having someone tell you what you must promote. Plus, it's 100% legit and sustainable - unlike MLM models.

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