Amway/Quixtar agrees to pay $56,000,000 to settle

by louabbott on November 3, 2010

Amway, also known as Quixtar for a number of years, settles a case alleging it operates a ‘pyramid scheme’

In what may well prove to have far reaching effects on the whole MLM or Network Marketing industry, Amway agreed today to settle the class action described below alleging that the company and some of their top distributors were operating an illegal pyramid scheme.

ADA TOWNSHIP — Amway this morning announced a deal to pay $34 million in cash and provide $22 million worth of products to settle a 2007 class-action suit alleging it the company and some of its top-level distributors operate an illegal pyramid scheme.

The case was filed in California by former distributors for Quixtar, the name Amway used for its U.S.-based operation at the time.

The proposed settlement would cover former Amway/Quixtar distributors from 2003 until the day the settlement is approved.

The plaintiffs said the company used unfair and illegal business practices that mislead distributors about their ability to make money and how much it would cost to be part of the business.

The settlement with the former distributors, or Independent Business Owners as Amway calls them, does not constitute an admission of guilt. But the company “stipulates that certain reforms in its business instituted after the filing of this action have been motivated” by the case.

The deal was announced in a brief press release and an e-mail to Amway employees this morning.

“The suit contains strong and disagreeable allegations and language that we categorically reject,” the letter from Chairman Steve Van Andel and President Doug DeVos read. “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.”

The proposed settlement, which still must be approved by San Francisco U.S. District Court Judge Samuel Conti, provides up to $20 million to pay plaintiffs’ attorneys from the $34 million cash fund.

Up to $5 million could be used to refund registration fees by people who did not continue with Quixtar after their first year.

People who lost more than $2,500 as part of their experience with Quixtar could apply for cash payments of up to $15,000 to cover their losses.

Former distributors also could apply to receive up to $100 worth of Amway products, with shipping costs for those products coming from the cash settlement pool.

In its letter to employees [below], DeVos and Van Andel said Amway has addressed many of the concerns raised by those who filed the case and others who have criticized the business as being too heavily weighted toward finding new recruits and the sale of so-called “tools” or “business support materials” like motivational tapes, books and seminars.

Among actions the company says it has taken for the Independent Business Owners:

“We think the issues presented by that case are old problems. We’re viewing this as a chance to go forward in the U.S. business with a clean slate without litigation like this hanging over our heads anymore.”

Those interested in the balance of the MLive.com article can find it here.

Editor’s Note: Enemies of Network Marketing may try to say that this action shows that MLM really is an illegal pyramid.  Nothing could be further from the truth.  This case was about “the sale of so-called “tools” or “business support materials” like motivational tapes, books and seminars.” Also at issue was misrepresentation of how much it costs to be an IBO and how much one can earn.  Many companies have never used such strategies.

Network Marketing done well, is not only legal, but also brilliant, moral, and honorable.

ADA TOWNSHIP — Amway this morning announced a deal to pay $34 million in cash and provide $22 million worth of products to settle a 2007 class-action suit alleging it the company and some of its top-level distributors operate an illegal pyramid scheme.

The case was filed in California by former distributors for Quixtar, the name Amway used for its U.S.-based operation at the time.

The proposed settlement would cover former Amway/Quixtar distributors from 2003 until the day the settlement is approved.

The plaintiffs said the company used unfair and illegal business practices that mislead distributors about their ability to make money and how much it would cost to be part of the business.

The settlement with the former distributors, or Independent Business Owners as Amway calls them, does not constitute an admission of guilt. But the company “stipulates that certain reforms in its business instituted after the filing of this action have been motivated” by the case.

The deal was announced in a brief press release and an e-mail to Amway employees this morning.

“The suit contains strong and disagreeable allegations and language that we categorically reject,” the letter from Chairman Steve Van Andel and President Doug DeVos read. “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.”

The proposed settlement, which still must be approved by San Francisco U.S. District Court Judge Samuel Conti, provides up to $20 million to pay plaintiffs’ attorneys from the $34 million cash fund.

Up to $5 million could be used to refund registration fees by people who did not continue with Quixtar after their first year.

People who lost more than $2,500 as part of their experience with Quixtar could apply for cash payments of up to $15,000 to cover their losses.

Former distributors also could apply to receive up to $100 worth of Amway products, with shipping costs for those products coming from the cash settlement pool.

In its letter to employees [below], DeVos and Van Andel said Amway has addressed many of the concerns raised by those who filed the case and others who have criticized the business as being too heavily weighted toward finding new recruits and the sale of so-called “tools” or “business support materials” like motivational tapes, books and seminars.

Among actions the company says it has taken for the Independent Business Owners:

• Tripling investment in IBO education programs;

• Expanding a 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 teaching best business practices across the country;

• Consumer advertising, improved websites and other efforts to support the business opportunity, enhance IBO success rates and protect consumers from misrepresentation; and

• Revised pricing strategies to enhance its competitive position.

“This settlement is our way of attempting to close this chapter,” said Rob Zeiger, Amway spokesman.

“We think the issues presented by that case are old problems. We’re viewing this as a chance to go forward in the U.S. business with a clean slate without litigation like this hanging over our heads anymore.”

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{ 10 comments… read them below or add one }

Christine dutt August 30, 2013 at 1:02 pm Thumb up 0 Thumb down 0

Hi my name is Christine dutt, I’m a I B O member since 1999… And I filled out my form for my settlement since January 2013. I did not get any respond. Please let me know what the situation. Thank you

Reply

Ray Santillan September 20, 2012 at 1:02 pm Thumb up 0 Thumb down 0

Quickstar and the prosecutors are stupid. How can you put a deadline of August 17th when you send the information late! Where’s the 3 year Statute of Limitations! A bunch of idiots! All of them!!

Reply

SARIHN BELIOSO PERCY CELESTIN August 16, 2012 at 10:03 pm Thumb up 2 Thumb down 0

i get a cardletter at my house,about :Important Notice About Quixtar (Amway) Settlement A F003 000445 CLAIMANT ID NUMBER: 0028882534 to submit a claim to get benefits.if i am an Amway/Quixtar Distributor between January1,2003 and February21,2012,you could get benefits from a Settlement . what is this?

Reply

Bert March 18, 2013 at 6:05 pm Thumb up 0 Thumb down 0

I am part of this but lost the contact info! CAN ANYBODY HELP ME CONTACT SOMEBODY REGARDING THIS!?

Reply

David Currie June 18, 2012 at 2:49 am Thumb up 0 Thumb down 2

Hi all,
MLM is the training ground for life itself. It takes sincerity, commitment, patience, understanding, empathy for others, as well as a love for what you are doing. Learning about your love, and then sharing it with others. Suprisingly, with that recipe, you will be rewarded not with just money, but also inner happiness and satisfaction that you are making a difference not just to your life but others as well.

Regards,
davidc

Reply

Ejaz Latib November 5, 2010 at 1:30 pm Thumb up 0 Thumb down 1

I use to be an Amway distributor in the past and struggled to earn anything out of it although I did climb high into the percentage ranks until I heard about the binary system and eventually found a company that worked with that system and now I am so much more successfull.I firmly believe in network marketing and categorically deny that it is a pyramid.If someone is looking at a pyramid chances are they probably in a job which is a pyramid in shape.I have come across pyramid schemes any they are motivated by greed however network marketing has a product behind them..If anyone is interested in a opportunity they should do their due deligence and review the company before making any blanket statements.

I suggest to people if you do not like it then stop.Do what you love because if you love what you do then you will never work a day n your life however if you dont love it then quit.

Reply

Duduzani Mpala November 5, 2010 at 6:04 am Thumb up 2 Thumb down 0

I want to be an Amway distributor, how do i do it.

Reply

Ruslan Ikajev December 6, 2010 at 5:37 am Thumb up 0 Thumb down 0

Ask Eric Scheibeler!

“The merchants of deception” is an e-book highly recommended to read BEFORE joining Amway.

Reply

Avi April 20, 2011 at 7:59 am Thumb up 0 Thumb down 0

Do your homework before making a decision. Look at a lot of companies. Look for these things:

1. Integrity of the company

2. Monthly reorder rate

3. Compensation Plan-does it have breakaways, etc.

4. Is there is a side-business selling motivational tools, seminars, etc. in which the distributors make money

You can consult with me anytime. I’d like to know your results.

Reply

Mary June 14, 2012 at 11:20 am Thumb up 0 Thumb down 1

I would like more information on the law firm handling the 2011 case. I was a VICTIM of the books, tapes and rally scheme and lost thousands of dollars when I threw away approximately 5,000 tapes before leaving the company. I was with Amway/Quickstar for many years and found them to be a VERY CREDIBLE company. However, they allowed high ranking distributors to play on the fears of lower ranking distributors that they would not be able to succeed without this system. If someone could get more information to me I would appreciate it.

Reply

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