HIDDEN PERSUADERS, by Tony Thompson, Time Out, June 22 - 29 1994
(Amway says it can make you rich beyond your wildest dreams
with its multi-level marketing system; critics say it only
makes money for a very few at the top, and its techniques
are worryingly cult-like.  Tony Thompson asks if vulnerable
Londoners are being misled by this and other groups promising
to transform your life.)

It was two days after he had been seen on national television,
helping a young girl break away from a religious sect, that
the call came through to Graham Baldwin's office.

The former university chaplin who now runs Catalyst, a 
counselling and therapy service for those affected by cults,
listened carefully as the man explained how the group he had
joined a year earlier was slowly taking over his life.

There were the huge monthly meetings at venues like Wembley
Conference Centre where he and thousands of other followers
were worked into a passionate frenzy then told to go out and
find as many new recruits as possible; the powerful doctrine
that frowned on television, newspapers and other 'negative'
influences; there was the strict dress code and the advice on 
how to bring up children and relate to loved ones; there was
the fear that to quit would mean giving up hope of a happy

However, having seen the television show featuring Baldwin,
the man now alleged that he was being subjected to mind
control techniques and being manipulated by those above
him.  He wanted advice on making a possible break.  Baldwin
asked which cult the man was in.

"It's not a cult.  It's not a religion.  It's something
called Amway".

At first glance, the Amway Corporation, one of the largest
direct-sales companies in the world, couldn't be less cult-like.
Founded by two school-friends in a basement in Michigan in 
the US in 1959 with a single soap product, the company has
grown into a $4.5 billion-a-year manufacturing and sales
network employing some 11,000 workers in more than 50 countries
across the world.  Its founders, Jay Van Andel and 
Richard DeVos, are said to be worth at least $3bn each.

Amway currently manufactures thousands of products from
cosmetics and cookware to household cleaners and vitamins.
None of these is available in the shops - instead they are
sold direct to the public, person-to-person, by a multi-level
marketing network of two million independent distributors who
earn a commission on everything they sell.

Amway came to the UK in 1973 and now has 73,000 British
distributors, who sell mostly to friends and family in their
spare time, on a self-employed basis.  The company is highly
respected in business circles - at a recent motivational
seminar for distributors, former Chancellor Norman Lamont
delivered a keynote speech.  In the last financial year the
British operation turned over œ50 million, an increase of
56 per cent on the previous year.  Projected turnover for
1993-94 is œ70 million.

This phenomenal growth is not solely due to the company's
products but more down to the fact that it offers virtually
anyone and everyone a deal which many, especially those
bitten by recession, find hard to resist.  Join us, say
Amway's distributors, and within two to five years you could
be rich beyond your wildest dreams and spend your days
'walking the beaches of the world'.

A recruitment video, presented by Michael Aspel, features
couples who live in enormous detached houses and have luxury
cars, talking about how much freedom and independence the
Amway opportunity has given them.  The narrative tells how
the company is built on 'ethics and integrity' and how it
has helped 'thousands improve the quality of their lives'.

However, a major investigation by Time Out has uncovered
evidence that:

* Far from boosting their incomes, the vast majority of those
  who become Amway distributors, particularly those in 'the
  system', are likely to end up losing money.

* Support groups headed by senior distributors within the
  Amway organization are adopting cult-style tactics to
  recruit and motivate those below them.  Help groups such as
  Catalyst, teh Cult Information Centre and Family Action
  Information and Rescue (FAIR) are increasingly receiving
  calls from worried Amway distributors and their families,
  concerned about the techniques being used to keep them in
  the organization.

* The majority of the wealth of the tiny number of top-ranked
  distributors in this country comes not just from the sale
  of Amway products but from selling motivational materials
  and organizing seminars and rallies for the people below

The basic principle of the multi-level marketing which Amway
uses is that it is far easier to make a living by taking 1 per
cent of the sales efforts of 100 people than it is to rely on
100 per cent of your own efforts.

Thus Amway distributors only spend a fraction of their time
dealing with their customers - most of whom are friends and
family.  Instead, the majority of their time is spent trying
to recruit others into the network.  The basic scenario goes
something like this:  you recruit or 'sponsor' six friends 
into the organization.  They in turn each sponsor three 
friends who in turn each sponsor two more friends.  You then
have a 'downline' of 60 people.  If each one sells say a mere
œ140 worth of products each month, you earn a commission of
œ1000.  The more people in your downline, the bigger your

Furthermore, as the sales volume of your group grows, you can
earn bonuses on top of your commission.  Each new bonus level
is given a title.  Those on the bottom level of 'leadership'
are known as 'direct' distributors while those above them -
the 'upline' - are known in ascending order as Pearls,
Emeralds, and Diamonds.  Typically these 'jewels' have
thousands in their downlines and the most successful are
said to be millionaires.

Finding sponsors is known as 'showing the plan' and the keenest
recruits will devote four or five evenings a week to building
their networks.  As rejection is common, recruits are urged to
join the 'system' which helps to boost confidence, hone people
skills and top up motivation.  Those who are fed a near constant
diet of positive mental attitude books, inspiring motivational
audio tapes and invited along to regular training meetings and
seminars all of which they are told will make their business
grow faster and bring financial freedom all the nearer.

But in reality, few distributors go on to achieve their goals.
The drop-out rate is around 50 per cent and even for those who
remain, the dreams go unfulfilled.  Colin, a former Amway
direct distributor from Hackney, decided to quit after becoming
disillusioned.  He has since received help from the Cult
Information Centre to help him get over the experience.

"When you go out showing the plan, it's less asbout explaining
the business and more about finding out what the person really
wants out of life, then showing how Amway can help them achieve
it.  You tell people this can help their dreams come true.  You
explain that they are caught in a rut.  That they will work 40
years and once they hit 65, they will be either be broke,
dead or dead broke.

"If they are not money-minded, you put the emphasis on how much
the money can help others - "you can give to charities and make
a real difference; you can pay your parents back for all the
work they put into bringing you up."  Otherwise you just play on
their greed.  "You can have that big house in the country, the
BMW, you can buy your daughter that pony for Christmas, you can
take that two-week holiday in the Far East"."

Colin and his wife would go out showing the plan four or five
nights a week, often driving hundreds of miles to see potential
prospects.  Although their network and sales volume grew, they
still found they were spending far more on petrol, telephone
calls and other expenses that they were making.

Then there was the cost of the 'system' itself.  "We'd get a tape
each week and a book each month.  Then we'd be expected to attend
weekly training meetings and monthly rallies and seminars.  
Although it was only a few pounds at a time, it really did start
to add up."

Although he was losing money, Colin stuck with the system, mainly
because of the encouragement of his tremendously wealthy upline
Diamond.  After two-and-a-half years, Colin eventually reached
the direct level and found that, after expenses, he and his wife
were making around œ400 a month for a job that seemed to be taking
up virtually all their spare time.

"My Diamond kept saying that one day I'd see how the business
worked.  Once I did, I realised I couldn't stay in it any more."

Colin's Diamond explained that his real wealth came from selling
books and tapes and from organizing the meetings.  "I'd always been
told to ensure my entire downline were completely plugged into the
system and that they went to every meeting.  You're told that books
and tapes are the tools you need to build a successful business but
in fact we were just lying to people to line the pockets of the
jewels above us.  I didn't feel right about joining in with that so
I left".

One problem is that the 'system' itself is nothing to do with Amway.
It is run by top-level jewel distributors who, once they have enough
people in their downline, branch out.  They become known as 'black
hats' and all the wealth that comes out of the books and tapes goes
straight to them, not the corporation.

In 1985, Don Gregory, a former speechwriter for Amway co-founder
Jay Van Andel, told Forbes magazine:  "Recruits are brainwashed
into spending a fortune on peripherals while consuming Amway
products.  They either lose their shirts or begin making money
by egtting enough people underneath to do the same".  In the same
issue a major Amway black hat, Dexter Yeager, whose downline includes
the majority of Britain's distributors, admits that two-thirds of
his income came from tapes and books.

The individual cost of training materials may be low - a mere
œ3.40 for a tape for example.  But if the tape itself costs only
œ1 to produce and you have 7,000 in your downline as Colin's
Diamond does, and they buy one a week, then that's a clear
profit of œ16,800 per week.  œ873,600 a year.  The Yeager downline
is believed to be in excess of 150,000.

In 1985, Amway, Yeager and another black hat, Bill Britt, were
taken to court by two former distributors who alleged they had
been brainwashed into buying books and tapes.  The case was
settled out of court in 1988 with no admission of liability
from the corporation.

In order to benefit from the book, tape and seminar profits -
the hidden business within the Amway business - you first have
to reach at least the direct level and above, something that only
a tiny proportion of all those who join Amway actually achieve.
The company has admitted to Time Out that the number of directs and
above in Britain is between 1 and 2 per cent of the total number
of distributors.  At the most, this amounts to between 700 and
1,400 people out of the 73,000 currently signed to Amway.
According to Amway's hypothetical models of how a distributor's
network would grow, a direct distributor would earn a minimum of
œ1000 per month.

However, even reaching the direct level is no guarantee of 
financial freedom.  In 1982, the Amway Corporation was taken to
court by the State of Wisconsin on a charge of deceptive business
practice.  Assistant Attorney Bruce Craig had examined the tax
records ofg the 20,000 Amway distributors in the state to see how
many were actually making the money they joined for.

He too found the number of direct distributors was around 1 per
cent but far more startling was the revelation that within that
1 per cent, the average direct distributor was, after the deduction
of business expenses, making a net income of _minus_ $918 per
year, despite a personal Amway turnover of $14,000 per year.

As a result of the subsequent court case, Amway is now obliged to
disclose details of average gross incomes - though only in America.

Internal Amway documents obtained by Time Out show the average
distributor income last year was just $65 per month gross, a figure
that has actually dropped from an average of $76 three years ago.

Time Out put its questions about the chances of making money, the
suggestion of cult-style tactics and the wealth being generated
by book and tape sales to Amway which wrote back at length with
descriptions of its philosophies.

It did, however, admit that it intends to begin monitoring all
books and tapes issued by independent distributors in the near
future.  It denied being cult-like (though Time Out's question
refers not to the corporation but to the techniques employed by
the black hat groups), stating that because the company rewards
individual achievement, its concept is the opposite of a cult.

As is the case with virtually all multi-level marketing companies,
at least half of all Amway distributors will quit in any given
year but they are more than replaced by eager new recruits, keen
to make their dreams come true.  But for those who fail to strike
it rich, there is often a feeling of disillusionment.  "They are
constantly told that anyone can succeed with Amway, if they do not,
they can only feel downtrodden", says a spokeswoman at FAIR.  "They
don't realise they have been in a group which is cultic, they blame
themselves for failing".

And for those distributors who remain loyal to the company whether
they make money or not, one of the most popular in-jokes must ring
painfully true:  "Hear the one about the woman who was married to
an Amway distributor for 15 years but was still a virgin?  All he
did was sit at the end of the bed and talk about how great it was 
going to be".