6/28/2002

AMWAY terminates Three Diamond Distributors

Old news now, I know, but here's some new insights. Here's the short version of the story: a support group within Amway/Quixtar made up of several Diamond distributors wanted to clean up the controversial tools business. Allegedly, some top leaders make more $$$ from selling tapes and tools than from their downline overrides. These guys wanted to "spread the wealth" by multilevel marketing the tools. They claim Amway corporate was in support of their efforts... Amway claims they gave them plenty of warning that, in fact, what they were attempting to do was in violation of Amway policy and would result in termination if employed. The Diamonds went ahead with the concept as planned. Amway terminated them, as planned.

I've read the public statements from both sides, and I've watched a video of the actual kick off of the MLM tools concept. I paid close attention to exactly what the Diamonds were attempting to do and how they were going to do it. Basically, they were going to MLM the tools using a unilevel plan. This would be a huge legal red flag right there since paying commissions on an MLM basis on stuff only distributors would buy has been the catalyst to virtually every pyramid related legal attack in MLM history. But it gets worse. They were also going to charge a fee to join the program and bonus that out using a binary plan! Clearly, that would have been flat out paying for recruitment.

So, regardless of who said who could do what when, Amway could have NEVER allowed such a scheme to operate and were, in my opinion, absolutely right in taking what ever steps were necessary to prevent it.

Having said that, I'm also convinced that the Diamonds who were behind this were not attempting to deliberately scam anybody. In fact, I suspect they were totally oblivious to the legal ramifications of their concept. When reviewing their side of the story I read their claim that they had an experienced MLM attorney review and approve their concept. I knew who that attorney was several paragraphs before they named him (there's only one MLM attorney in the world who would have thought this was all okay). Had they sought a second opinion from just about ANY other MLM attorney this whole fiasco would very likely have been avoided. Furthermore, they also noted that they hired a professional compensation plan expert. While a comp plan consultant certainly shouldn't be giving legal advice, I believe (having been a comp plan consultant for many years) that such a professional should be versed enough in MLM law to know when something is this blatantly illegal and advise their client to get a second opinion from a competent legal professional.

Their "compensation plan expert" was never named in their public statement. I'd love to know who it was and get their side of the story.

What is even more unfortunate is that twelve other Diamond distributors have resigned in protest over this.

Len Clements
MarketWave, Inc.


 

  Since 1989, Leonard Clements has concentrated his full-time efforts on researching and analyzing all aspects of Network Marketing. He is a professional speaker and trainer, and currently conducts "Inside Network Marketing" seminars throughout the world. Len is the author of the controversial book "Inside Network Marketing" (Random House) and the best selling cassette tapes "Case Closed! The Whole Truth About Network Marketing" and "The Coming Network Marketing Boom." He is a court recognized expert in the field of network marketing.

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