Time For Truth!

March 9, 2006

Do you remember the short story The Picture of Dorian Gray by Oscar Wilde?

The story goes that Dorian has been able to hide the sins of his life because he has been spared the changing countenance that comes with evil. In his case a painting given to him has been absorbing the cost of Dorian’s amoral and evil life, becoming increasingly marred with each evil step that Dorian takes, while he has been able to retain the beauty of his youth. Dorian discovers the painting in his attic one day after many years, and is horrified by the ugliness that it displays. He hides the painting once again, only to have it discovered by the painter not long afterwards. The painter is shocked and understands what has happened and remonstrates with him – using the words of the great prophet Isaiah – “It is never too late, Dorian. Let us kneel down and try if we cannot remember a prayer. Isn’t there a verse somewhere, ‘Though your sins be as scarlet, yet I will make them as white as snow’?” Dorian rejects his offer and kills him. In the end, Dorian bears the full brunt of his sins, and judgement comes.

This leads me to the core of what I want to say. “Is the Quixtar/Amway business legal?” Have you read what the Pyramid Scheme Alert said about this Anti-Pyramid Act? They called it a wolf in sheep’s clothing!

When you look at this Act, it is a unsettling piece of legislation!

I can hear some people asking “Isn’t this bill going to prevent people from being ripped off in a illegal pyramid?”

The answer is simply “yes!” And “no!”

“How’s that you say?”

To be brief, in some cases the bill will work where the abuse is easily detected, particularly in product loading systems. In these blatant cases of pyramids that are merely loading people up with product and continually recruiting more people to do the same, it will provide enforceable protection. Actually that protection is there already! Consider Equinox, Omnitrition and Skybiz as examples … All out of business because they were deemed to be pyramid marketing outfits! So one does wonder why we need further legislation!? Perhaps there is some other reason for the Bill’s existence!?

Let us consider for the moment that this Bill aside from strengthening a postion on pyramids is also introducing a significant change to the way that purchases made by distributors (for their own use) in Multilevel Marketing (MLM) companies will be viewed by those companies, legislative bodies and prospective distributors. Currently the products that are purchased by distributors for ‘self use’ in the organisation are not classified as ‘retail sales’ to clients. Considering the FTC agreement with Amway, one of the conditions that separates a legal marketing enterprise from a pyramid is the 70/30 rule. This rule says that 70% of any order placed by a distributor must be for products that have been sold to ‘retail’ clients.

Quixtar already states that less than 20% of its volume is retail sales, the rest being self consumption by distributors. This statement clearly shows that Quixtar is operating outside of the law – operating as a pyramid in fact. If Quixtar is, the chances are that most other companies are also. It is no wonder then that the DSA and its members have been lobbying to have this new Bill introduced.

This carefully worded document, has made room for ‘personal consumption’ …

… note the original text in the following paragraph which limits the defination of what is illegal. I have underlined it for you.

(b) LIMITATION- Nothing in this Act or in the rule to be promulgated pursuant to this section shall be construed to prohibit a plan or operation, or to define such plan or operation as a `pyramid promotional scheme’, based upon the fact that participants in the plan or operation give consideration in return for the right to receive compensation based upon purchases of goods, services, or intangible property by participants for personal use, consumption, or resale, and the plan or operation does not promote inventory loading and implements an appropriate inventory repurchase program.

You may ask what is the problem with the ‘personal use’ MLM? In particular Quixtar or Amway. Well just about everybody who joins those companies does so under the guise of owning their own business. So now we are at the heart of the deception. Join our business to make money – you don’t sell much, just use the products, and get others to do the same. Buy these CD’s and books for personal development and come to these meetings and functions to keep yourself motivated. There other costs for running cars, babysitters, hotel rooms and the like, but if you are in business this is normal practice. Where it deviates with Quixtar/Amway is that there is minimal product sales to the retail client, and so there is minimal gross profit to offset the expenses  incurred. Remember this is a business. When you see some of the statistics I think that you can begin to see the real problem. Just as with Skybiz which was classified as a pyramid, where evidenc showed that over 96 percent of recruits lost money, so it is with Amway/Quixtar.

The measure that one uses to ‘test’ a business model is the volume of sales made to consumers. In normal business there is margin that contributes to covering expenses, and hopefully providing a nett profit for the owners. The successful passage of this BIll would make legal the systematic abuse of recruits. Remember earlier we covered the point that this Bill would allow Amway/Quixtar to classify the ‘self consumption’ of products by all their recruits as retail sales, implying that there is margin generated to recruits. There is no margin on product sales to recruits. Only bonuses/rebates if you have a large enough business. It needs to be large enough to cover your expenses, which the figures show that doesn;t happen until after Platinum. A level that less than one percent of recruits achieve. The other ninety nine percent, well in nearly all cases they lose money all year round.

This abuse has been going on for years – at present it is illegal, but after HR1220 it will be deemed legal. So you see, instead of having the power to shut down some of these abusive businesses, now we would see an even greater proliferation of them. The end result is many more families will be affected badly by these insidious businesses.

Dorian Gray, started out as a young good looking man, but he had a flaw. He was amoral, and even though he was able to maintain his countenance, eventually his motivation to defend himself and his secrets led to his demise. So it will be with Amway/Quixtar. What started out as a great business idea in 1959, having your own business selling household products, eventually has become something evil and all consuming of people’s resources. In spite of outward appearances, scratch underneath the surface and you will see the evil heart. The pride of the business – ‘We don’t have to sell products’ has now become it’s downfall. It was Dorian Gray’s pride that killed him. So it is with Amway/Quixtar.

We live in interesting times, where we have legal/moral dilemmas every day of the week. It is Time for Truth! Even if this Bill does successfully come into law, making these practices legal, it still doesn’t make it moral! We may lose some ground in the battle for what is right, but in the long run, these parasitic businesses that are hiding the truth in the dungeon will be confronted with the reality of what they have become. In that moment like they shall fade like grass in the noonday sun, and we shall look for them in the years to come and they will be gone.

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The following sites have some useful information on them about this problem.

Assistant Attorney General for Wisconsin
Utah Legislature Defeats Product Pyramid Bill
GovTrack: H.R. 1220[108]: Anti-Pyramid Promotional Scheme Act
Be Aware The DSA

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