Taking Responsibility
Editor’s Note: This blog post originally appeared on the Amway Answers blog.
The following statement comes from Amway chairman Steve Van Andel and president Doug DeVos:
To The Amway Community,
Today we are announcing settlement terms in a class action lawsuit filed several years ago by three former Quixtar independent business owners (IBOs).
The suit focused on allegations that in past years, our North American business did not always train and support IBOs well enough, and as a result, best business practices were not always followed when promoting the business.
The suit contains strong and disagreeable allegations and language that we categorically reject. They are sensationalist claims that remain unproven and that we expect will be dismissed by the court.
Nevertheless, the company and its IBO leaders take responsibility for all past issues, and we take responsibility for fixing them. We regret that the experiences of some IBOs fell short of the high standards that have allowed us to help many people, from all walks of life, start successful businesses for more than 50 years.
We have not only addressed the issues raised in this case, we have also gone further than settlements and safeguards. In the past few years, we have invested more than $300 million in additional business initiatives to help our IBOs succeed – including many investments that began before this case was filed. We have fundamentally transformed our North American business to offer our IBOs the best possible opportunity to succeed. Some of these efforts include:
- Tripling our company’s investment in IBO education programs;
- Expanding our 100% money-back guarantee to include all products and training materials purchased by IBOs in their first 90 days;
- More than doubling the number of professional trainers we employ to teach best business practices across the country;
- Consumer advertising, improved websites and other efforts to support our business opportunity, enhance IBO success rates and protect consumers from misrepresentation; and
- Revised pricing strategies to enhance our competitive position.
This means that IBOs can launch their businesses with minimal, refundable start-up costs, receive excellent business and sales training, and be safeguarded by a robust satisfaction guarantee and return policy.
Still, we agreed to settle and to compensate the claimants in both money and equivalent product value, as we are confident that we have taken the necessary steps to address these past issues. We want to focus on helping IBOs build healthy businesses for the future, not a long court fight over allegations from the past.
Our founders had a simple philosophy: we start every day determined to make the business better than it was the day before. And in keeping that promise, we can confidently and proudly focus all our attention on offering an excellent business opportunity that is open to all.
Steve Van Andel
Chairman
Doug DeVos
President
I understand the Plaintiffs claimed they were misled regarding how much it was going to cost to build an Amway (Quixtar) distributorship. Since you only have to pay $60 a year to keep your Amway distributorship open for business in the U.S., clearly the Plaintiffs were investing significant amounts in business support materials from third party companies. The Quixtar application (which all IBOs must sign) clearly stated that these third party tools and seminars existed, were optional, and that some IBOs made money off them. I’m wondering why those documents in the application to become an IBO weren’t sufficient enough to “vaccinate” Amway against silly and embarrassing lawsuits like this?
Thank you for your question, Aron. Not being a lawyer myself, I forwarded your question onto a few folks in Legal to get your answer.
In the meantime, what do you think of this blog? Any other you care to see us cover?
Mr. Baskovic, thanks for the communication. Two issues, auditing and messaging:
1. Is three some sort of oversight or audit system within Amway to make sure that new IBOs are being briefed on at least a few key issues? There are rules but it’s surprising how many don’t know of the basic rules. Policies are pointless if they’re not followed.
2. I’d like to see Amway being more proactive on the messaging and communication side of things. Third parties and lines of sponsorship can handle the team building, motivation, and business skills aspects, but I think in the past the lack of direct messaging from the corporation itself can be self-defeating. Too many IBOs and customers confuse third parties for the Amway corporation itself (that’s the very reason this lawsuit happened). I’m glad you’re going on TV and magazines now.
To recap, I’d like to hear if Amway has any plans to continue tweaking it’s communication/messaging and also whether there’s some type of internal quality control.
Thanks Dino. I think the blog is great. There’s a vibrant discussion happening on the “Unwelcome Words” article. Probably another good topic to cover is rules regarding working an Amway business in the Internet environment. These days many people have Facebook pages, blogs, commerce sites, etc. Based on discussions we’ve had on Amway-related forums, there’s some confusion regarding how an IBO can promote his or her business on the web. It also appears that Amway isn’t consistent on enforcing it’s own rules regarding this matter. To be more specific, I’ve been thinking of creating a blog that has a link to my Amway shopping site. Is that allowed?
Aron: Cindy sees a lot of comments coming into that particular post, which in turn are inspiring future blog posts. And we have all of you to thank for that!
By the way, here’s the deal from Legal: Yes, we informed our IBOs that business support materials (BSMs) are optional, but the lawsuit claimed that IBOs needed even more information, and there were other allegations that had nothing to do with disclosures. We don’t agree that we did anything wrong, but we see this as an opportunity to provide even more information to our IBOs about BSMs, and even more safeguards to ensure that the optional BSMs available to IBOs all meet Amway’s high standards.
Also, disclosures alone can’t “vaccinate” any company against lawsuits. There isn’t a major company in this country that doesn’t get sued regularly, and Amway is no different. But there are changes we can make, and are making, that will improve the business climate for IBOs.
And, as for your question about how social media and the web can support your business? Well, I take a personal interest in this as does our entire blog team. I’ll chalk up another blog post (we’re going to be busy around here!) though I can assure you communications are already in the works that address the “hows” in the near future.
Oh, and yes you are very much allowed to use a simple text hyperlink from your blog to link over to your shopping site—provided, of course, you represent yourself, your business and Amway well on your blog. Again, look for more specifics to come.
IBO in MD: Policies are there for a reason, agreed. Part of the big picture here is to ensure that IBOs new and old clearly understand and follow the rules, the vast majority of which already were already onboard. It’s simply smart business.
Communications is a fascinating thing. The way we as people send and receive signals, words, messages… it’s an evolving landscape. IBOs ultimately want to know how they can better run their businesses, and us relying solely on the few channels of the past is no longer sufficient. We as a company are constantly educating ourselves, listening to our IBOs (and employees, and consumers) to become better about what and how we communicate. It’s part of the reason why we started this, and this is just the beginning. IBO in MD, rest assured that we tweaking, retweaking and then some—with plenty more to come.
If uplines are telling IBO’s that events are sold out and they aren’t, what’s the corporations’s stance on that?
In short, if uplines appear to be lying to IBO’s and profiting from it, what will the corp do?
rocket: We will work together with IBOs to keep our standands high is what we will do.
Steve and Doug make this very clear in the above blog post. Accepting responsibilty for these issues and fixing them. Implementing safeguards. Making visible and tangible investments. Transforming the business, and so forth. These aren’t new initiatives, but rather ones that have been ongoing for years.
Here is an example of communication and messaging: How many rank-n-file IBOs even know that this blog and resource exists? I suspect it’s very few. Too few for a great resource like this to be as effective as it could be.
Blogs like this, and the opportunity zone before it in which the corporation is engaging should be announced to IBOs–and not just diamonds.
A site like this should be e-mailed to IBOs or showcased on Amway’s home page prominently.
Great feedback, IBO in MD. I mean that. We’ve recently launched Amway Answers and we’re excited about it and its potential. Know that the process for making IBOs aware of this blog began last week. In fact, we welcome anybody interested in Amway for any reason to know about this blog. Getting the word out takes some doing, but we’re doing it.
Amway US alone has Opportunity Zone as you know, as well as a growing presence on Facebook and Twitter. Then we have our other blogs (e.g. Amway Insider, One by One, even our interns!) and an increasing number of social media channels for our brands in North America and around the world.
As for home page placement on Amway.com, I’m more than happy to pass along your suggestion.
When you are struck with a criminal case, there is no other go but to opt for out of court settlement.
Please see my blog under “Sold Out” to see what I’m referring to.
Is the upline being truthful here? I’ve never heard of a single function ever turning people away.
Seems weird that they’d sell out and have 3 in the span of less than a week.
Undoubtedly IBO’s have to pay to attend each and every one.
Is that an acceptable practice?
Shyam: We categorically reject any sensationalist claims made in the suit. A lengthy court battle over past allegations was not in the best interest of our IBOs building healthy businesses.
rocket: I’ll read your blog post. I may respond on your blog if that’s okay with you.
No problemo! Thanks for your interest, and I’m very curious to hear the corp’s take on this.
You will have a better idea as the corporation than I would as to whether or not there are enough people in (that market and LOA) to require 3 functions.
Three functions in 4 days is quite a few! Especially if it’s the same people going over and over. Not saying that’s what’s happening, but it wouldn’t surprise me if that were the case.
Looks like its sold out Dino. I wasn’t able to access the part of the website that could confirm that.
Thanks much for your time, but we seem to have an answer!
Basically, Amway is not truly involved in the recruitment and prospecting of new or potential IBOs. Thus it looks like this lawsuit should have been aimed at upline leaders. It sounds like Amway corporation is taking the hit for the unethical behavior of some upline leaders.
That being said, there is evidence on the web indicating that not much has changed from 12 years ago to now in terms of what some/most uplines are teaching their IBOs. If Amway doesn’t crack down on this, other similar lawsuits may emerge. What happens then?
Hi Dino,
Question: This statement is addressed to “The Amway Community.” Can you tell me to whom this statement was shared, and how (ie email)?
Employees? All IBOs? IBOs of a certain pin level?
Or is this more like a news release?
Thanks.
Joecool, Shaun, rocket: I’ve read the “Sold Out” and “It Really Is Sold Out!” posts on rocket’s personal blog. I’ve also read certain comments you’ve each submitted related to event specifics from a recent LOA event, and you may be wondering why I haven’t published them.
Based on the debates over attendance and such, it would appear that you are all primarily concerned about some basic communications issues. Now as we stated, Amway has fundamentally transformed the business. The company and IBO leaders are working diligently, hand in hand, to keep the promise that we made to IBOs. This means maintaining high standards of business excellence, including greater transparency.
You are always welcome to talk to us through our blogs and other traditional channels, because we are here for you. We will do our absolute best to answer any questions you have about the Amway business. Should your blog comments, for example, veer somewhat off track from the nature of the original post, we may choose to contact you offline, or we may start an entirely new blog post devoted to a topic that may be raised from your comments. And, if you will allow us, we may from time to time drop by your blogs and such to offer our own perspectives, even if to clarify things if asked.
So while you won’t see your last few comments published here, as they are very specific to a public conversation already ongoing and somewhat winding down on rocket’s blog, allow me to say that we are focused on the future of the Amway business. Everything Steve and Doug stated above is true and evident. We are taking responsibility for the Amway business, including its success, for all of you.
Bridgett: Steve and Doug’s statement was made available to IBOs, employees and many other audiences via multiple channels. And not to state the obvious, but pretty much everybody with an internet connection, by virtue of this blog post.
There was a news release but it was not the statement. Why do you ask?
Joecool: Clearly, it is in our best interest to maintain high standards. If you discover something that is contradictory to this, please bring it to our attention. Thank you.
“Why do you ask?”
Because I’ve seen the statement only via news sources (mlive.com), and this blog. So I was just wondering if any other forms of communication were used. One news story (the mlive.com one) indicated that the statement was emailed to Amway employees. I didn’t know if the statement was also emailed to high-ranking IBOs. So I guess I’m not clear who “The Amway Community” is that is being addressed in the statement.
Hmmm… I wish I had known of that lawsuit. I got sucked into a Quixtar (name of IBO removed) down-line leg and allowed me and my family to get raped royally with positive confession and assurances that I could build a business in a mere two to five hours a week. I left a good career, ended up in bankruptcy, and my upline deserted me when my late wife was diagnosed with cancer and we couldn’t make it to another ‘Free Enterprise’ weekend… I still feel like a failure to this day, and any way you look at it I let my family down.
Billy Davis, you now know about the lawsuit. I’m not interested in taking the time to understand the details of the settlement; therefore, I don’t know if you are eligible for compensation. I believe that Amway would have have been found “not guilty” of the charges in the lawsuit, had a court battle been fought. Amway took a hit for the team (the IBOs out in the field trying to build a business morally and ethically) on this one. I’m sorry that things fell apart in your life. I’m having pain too (about letting my family down), although probably not to the degree that you are experiencing. I hope you make a comeback.