Is Amway Legal? The Truth Revealed!

About 25 years ago a friend tried to recruit me into joining Amway as an Independent Business Owner (IBO). He made it sound so easy to make money. All I had to do was to redirect the money I was currently spending on everyday products to buying the same or similar products from Amway.

I was led to believe these products included the things I spent for groceries. We established that this amount was about $200 a month. Hence, If I joined Amway I could spend the same amount essentially buying from my store.

When recruiting my family and friends to do the same, I would earn great commissions. And when we train them to duplicate what I was doing they would also earn money and I would earn even more.

I was super excited. Did I join or didn’t I? I shall reveal that later.

But right now I’m going to share the following details with you to help answer the question, Is Amway Legal?

  • The Company Details
  • What is the business about
  • How does their business work
  • Pros & Cons
  • Is This Right For You?

The Company Details

  • Founders: Jay Van Andel and Richard De Vos
  • Year Founded: 1959
  • Headquarters: Ada, Michigan
  • Business Model: MLM
  • Sales: $8.4 Billion in 2019, as reported by Amway
  • Countries operational on All 5 Continents in 100 Countries and Territories.

What Is The Business About

  • Amway originally started out marketing cleaning products. It currently markets products in the following categories: Nutrition, Beauty, Home, Energy and Sports.
  • Target Market: Personal Care, Home and Fitness. Essentially Amway’s target market is anybody.

Over the years other brands were added to the fold. A new holding company for all the brands in their operation was created in 2007 called Alticor.

How Does It Work

Amway markets its products using the Multilevel Marketing (MLM) system through a network of Independent Business Owners worldwide. They were one of the first organizations to use this method in a massive way. The MLM industry often considers Amway the granddaddy of MLM.

Harvard Business School described Amway as, “one of the most profitable direct selling companies in the world.”

Independent Business Owners earned income and benefits in five ways, typical of most MLM models.

  1. They purchase products at wholesale prices and sell them personally at retail. They keep the profit.
  2. They recruit others into the business as customers who can purchase the products at wholesale, The sponsoring IBO receives a percentage of these sales
  3. Some of these recruits may become IBO’s themselves and generate sales through their network. Their sponsor receives override commissions on the sales of products in their network.
  4. They also receive bonuses from meeting sales quotas and competitions.
  5. IBO’s can also earn company paid trips to celebrate success

Check this video that explains the Compensation Plan

Pros & Cons

Pros & Cons

Like in anything in life there are pros and cons. I am going to tell you what I feel are the pros and cons. You may have some different views and that is OK. My objective is to help you think this through yourself before you decide to join Amway.

Pros

There is a lot to like about Amway. Sales are made using a network of Independent Business Owners (IBO) instead of conventional stores. Instead of the need to personally generate a lot of sales you can earn income in several ways as I stated above. The most important one being you earn money not only from your own efforts but also from the efforts of others.

You get paid from sales produced through the network of other IBO’s you have recruited into your network over time. It takes a lot of hard work and working smart to achieve this. When you do, you definitely deserve your rewards.

When done successfully, this can lead to residual income. For example, once the network you worked hard to build starts to earn a growing stream of residual income, you could take off for a long vacation and you will continue to earn an income.

Cons

It is uncanny that the very concept that is a positive, also can be a negative.

This is not a job. You do not get paid for the hours you put in. In the beginning you will be working very hard to recruit other IBO’s into your network.

Amway has extensive training methods and programs and materials to keep their IBO’s motivated to do what it takes to succeed. You can promote the products alone and recruit customers. When they buy, you earn commissions from their purchases. It is not possible to purchase the Amway products in stores.

The only way is as a retail customer to an IBO. Or to become an IBO yourself just so you can have the benefit of purchasing at wholesale prices from essentially from yourself.

That $8 Billion in sales are all generated within the Amway family. The prices are fixed and for some may be too high. Amway is like any other MLM company where the majority of the income is earned by a relatively small percentage of IBO’s. According to Amway, 48% of its IBO’s are not active. When all the earnings are added up from the remaining 52%, the average earnings is about $200 a month.

The problem as I see it is not that most of the income is earned by the top 20% of the IBO’s. It’s the perception that anyone can make it to the top is promoted as achievable. This is not the case with the majority of its members.

Many of the top IBO’s in Amway earn a significant amount of their income by developing and selling their own business building systems to their team. They could easily use the company’s tools. Amway allows the top income earners to increase their income further in this way. I don’t think this is best for the new recruits as they are strongly persuaded to buy these courses.

OK, Is Amway Legal?

Conventional Corporation Model

Corporation Structure

In big business the CEO’s income is derived from profits the company makes through the efforts of all the employees below him. Various departments’ are created to support the running of the business.

The heads of these departments’ income is higher than their subordinates. Their income is derived from the value added to the department and the company from those who work for them.

Right at the bottom is the worker, who earns the least. Nobody reports to them. The only way an employee can get more income is through a raise in pay, or through a promotion to a higher paying level.

Let me ask you, doesn’t a conventional corporation sound like a pyramid structure? It is. And it is totally legal as everyone has a function that directly or indirectly results in sales of products or services.

MLM Model

Networking

In the MLM model, every person can work hard to become the CEO of their own sales organization they build. This is accomplished through recruiting and training of the IBO’s they bring into their network. Each person has control over what they can earn. Any of their IBO’s can build a network.

If they generate more sales than their upline, it is possible for them to earn more than those above them in the pyramid structure. This us rarely possible in a conventional corporation.

An MLM organization is shaped like a pyramid. Just like a conventional corporation. As long as the income people earn is generated through sales of real products and services, it is totally legal. The cost to become an IBO is relatively low and is meant to offset the costs of setting up the new IBO in business.

Amway has been in business for a very long time It has overcome many lawsuits accusing it of being a pyramid scheme. Since its IBO’s get paid only from the sales they and their network generates and not from high recruiting fees, it is not an illegal pyramid scheme.

What Is A Pyramid Scheme?

Pyramid Scheme

In this model, the majority of commissions generated are from the fee members pay to join the company. Of course there will be some products involved to give the semblance of a legal corporation. However, the products are usually low cost items. The sales generated from them could not pay the income members earn.

When analyzed further, it will be clear that the vast majority of income is generated through recruiting. When the recruiting stops, the company will collapse. As there will be no income coming in to pay people.

Sadly, legitimate MLM companies are often referred to as Pyramid Schemes. That designation is wrong.

Most MLM companies are not like this, And neither is Amway.

Hence, I can categorically state that:

Amway Is Legal!

:Legal

Is Amway Right For You?

No It Is Not

If you think you can replace the income you earn from your day job in a matter of a year or two, then you will become disillusioned and quit.

Because in MLM your income is earned by leveraging the efforts of others it is easy to get the false opinion that all it takes is to recruit a few people and you’re off to the races. This will only work if those you recruit work and do what I stated above.

If you think you know it all and want to build your business your own way instead of using the system that the leaders in the company teach, you’re in for a big surprise. MLM success comes from its members duplicating a proven system. As a new member your main task is to invite people to look into the business and to let more experienced members in your upline do the presentations and help you close the sale. That is how you learn.

If either of the above is what you believe, then Amway is not for you. You will fail. Guaranteed. I concluded that Amway was not right for me.

Yes It Is

When you look at the Amway opportunity you see the possibilities. But you also are keenly aware you have a lot to learn. You are prepared to use the system that you were brought into the company. In other words, you re open to duplicating the system even though the approach may appear boring to you.

You are willing to work hard and get trained by the leaders in your upline. When you are given advice on what to do, you follow it blindly. The purpose is for anyone to be able to do what it takes to recruit new members.

All businesses take years before they become truly successful. You are willing to not only work hard, but work smart and have a lot of patience.

The pathway to success is also filled with a lot of rejection and failure. You must accept this as part of doing business.

Once again if you believe the above then Amway is right for you.

Conclusion & My Recommendations

Conclusion

Conclusions

It takes someone with the right mindset and a thick skin, to persevere through all the initial negative responses until they succeed. Success is achieved by creating a team of like-minded individuals who will work hard, not only at recruiting and to market the products, but also to train others to the same.

You need to be a leader. Leadership can be learned. And that leader must not only train their recruits to do what they do, they also have to train the recruits to train others they recruit into the business.

It goes beyond that. They have to train IBO’s several layers down to become good at recruiting, selling and training. And this is the secret that makes a five and six figures a month earner.

How quickly you achieve your income goals will depend on how well you plan your actions and execute them consistently.

It takes years to achieve that level of success. Most want success early and give up easily when that doesn’t happen.

My Recommendation

Recommendations

One of the most challenging tasks in an MLM business is to share the program with others. This has become such a jaded industry. So many people have tried and failed. If you approach them expect to get the cold shoulder treatment.

What if there was a way for you to build your business entirely online? I am happy to say there is. It is a 5 step process.

  1. You use the Internet to market the products and connect with customers
  2. When you do #1, you collect the Email addresses of your customers using an opt in method
  3. Use an Email campaign to find out how your customers are doing
  4. Ask them in your campaign if they would like to learn how to build an online business.
  5. Enroll them in your Online Marketing system.

You can even offer them to check out #5 for free. I tell you how to do all the above in my blog post

MLM Online Secrets – Your Upline Doesn’t Want You To Know!

Click this link to get to my post.

Note that the method uses your personal website. Amway does not allow websites other than their own to use eCommerce techniques, However, as you will learn in the above article, your website will use blogging techniques where you talk about a product and help your visitor to make a buying decision.

You do this by using a link to take them to your Amway dashboard where they can find out more details and purchase the products directly through Amway.

In this way your customers will always have current information and prices about the Amway products. It is highly recommended that you use a dedicated website to conduct your Amway business online.

Once you get trained how to use the Internet to market products, you have more options than just MLM to build an online business. And for many of them you do not need to recruit anyone else to earn a significant income.

Summary

  • Founders: Jay Van Andel and Richard De Vos
  • Year Founded: 1959
  • Headquarters: Ada, Michigan
  • Business model: MLM
  • Sales: $8.4 Billion in 2019, as reported by Amway
  • Countries operational on All 5 Continents in 100 Countries and Territories.

And I answered the question Is Amway Legal. Yes, it is!

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This website has affiliate links. When purchases are made through an affiliate link I will receive a small commission. The cost to you will be no different if you went directly to the vendors website. I appreciate your business. 

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6 thoughts on “Is Amway Legal? The Truth Revealed!

  1. Geri Reply

    Apparently Amway is a success as it has been around since 1959. The first time I heard of Amway was when I was a teenager and my sister and brother-in-law joined and I would help them do makeup demonstrations with Amway products. In the end, they stopped the Amway business. Any MLM takes total commitment and drive and charisma. There is a certain type of individual that can become successful in MLMs and there aren’t many built for it. If you start at the beginning and you recruit dynamic team members then it can work for you.

    I do remember using some of the Amway products at home and they are actually pretty good quality. They have created a brand and have learned to market quite successfully over the years.

    • Edwin Bernard Post authorReply

      Great response Geri! Just the kind I expected. What did you think about earning money with Amway by just marketing the products instead of recruiting people using the Affiliate Marketing model? 

      Edwin

  2. Anna Reply

    Hi Edwin, 

    I have always wondered if something like Amway is legal or not. Thanks for clearing this up! But you are right, it is functioning pretty well compared to other corporations.

    My biggest issue with MLMs is finding customers or recruits. It has potential if you have an existing network or willing to grow one, which would take time. 

    However, for the average person, it seems like it would be hard to find enough people willing to purchase from you or sell the product themselves. Maybe their training is really good though! 

    Thanks for the great post!

    Anna

    • Edwin Bernard Post authorReply

      Hi Anna,

      Amway has had to deal with a lot of lawsuits in their early days to prove they were legal. They paved the way for future MLM companies.

      I agree with you that it is hard to build a successful MLM business. Did you read my whole article where I went into the reasons why? Also did you notice a section where I discussed an option of treating MLM’s like an affiliate marketing company? 

      I’m not sure you read the whole article. If you return, I’d appreciate if if you read the whole article. 

      Thanks for your comments regardless. I wish you well in your business venturres.

      Edwin

  3. Baraka Reply

    This is really a great review. It has come at the right time. A week ago a colleague shared Amway with me as an additional way of making money claiming that people are making a lot out of Amway. 

    I was still doing research to get to know Amway in detail, so thanks for this review.  It is certainly not an easy task to succeed through MLM. Amway is one of the MLM companies that I can no longer join as I have bad experience with MLM companies. Thank you for sharing.

    Baraka

    • Edwin Bernard Post authorReply

      Hi Baraka,

      I am glad you found my article helpful in your research of Amway. Your honesty stating you had bad experiences with MLM programs is not surprising. 

      Did you read my whole article where I suggested you can use affiliate marketing techniques to build an MLM business? What do you think about that?

      Thanks for your comments.

      Edwin

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