“I am willing to bet you, you will never have a better opportunity presented to you than what this business offers. I will guarantee that. This is the best opportunity that’s going to come across in your lifetime.”
– Republican gubernatorial candidate and former Amway president Dick DeVos, speaking to an Amway group in 1998.
- Angela Cesere
“I’ve heard rumors that Amway is a cult. Is this true?”
– The FAQ section on www.amway.com.
Michigan’s economy is a mess, and Dick DeVos wants you to believe he’s the guy to fix it. Sure, he might not have any real experience in government, but what does that matter? DeVos, after all, is a Successful Businessman; he must have what it takes to lead the state.
Michigan Democrats don’t really know how to combat that claim, so they’ve focused on attacking DeVos for investing in China while cutting jobs in Michigan. DeVos might be able to defend his record on China as the sort of necessary actions any businessman would take in a competitive global economy. But where DeVos is far weaker – where he’s morally indefensible, in my mind – is in the specific variety of business he was involved in spreading across the globe.
The DeVos family fortune, for those unaware, comes from the Amway corporation. Amway is what’s known as a multilevel marketing company – its affiliates sell the company’s products and try to recruit others to start selling the products as well, enticed by the promise of a cut of their recruits’ profits.
Though the organization bears a striking resemblance to certain monuments in Egypt, I won’t say that Amway or Alticor, its parent company, profit by exploiting an illegal pyramid scheme. That would be factually inaccurate: After investigating Amway for years, the Federal Trade Commission ruled in 1979 that the company’s business plan is technically legal. Besides, I certainly wouldn’t want to slander the corporation in any way – judging by the number of Amway critics who say the company has tried to sue or subpoena them into silence, DeVos’s family firm doesn’t take criticism well. I’m a busy guy, and I’ve got better things to do than deal with Alticor’s lawyers.
But read over that quote at the beginning of this column again, and then read these numbers: Of those who sign on with Alticor, 72 percent quit within one year. Only 4 percent will remain after five years.
Either a lot of people are turning their backs on the best opportunity of their lifetimes, or something’s fishy at the DeVos family business.
The fact is that firms like Amway do a great job funneling wealth to those at the top of the pyram- I mean, heap. Indeed, many of the most successful participants make more money hawking promotional books and audio recordings to instruct those just starting out than they do selling Amway’s supposedly discounted products.
The overwhelming majority of people who get wrapped up in this scam, though, lose money. The company doesn’t even deny it; when a Detroit News reporter asked current Alticor chairman Steve Van Andel whether most Alticor distributors lose money, he said everyone who joins has different goals and suggested, “Some come in just to buy our products at a discount.”
Maybe some people really do join to buy products at a discount – but read that quote from your would-be governor yet again, and you tell me why you think people sign up. Though the FTC didn’t rule Amway’s business model illegal in 1979, it did order the company to stop making deceptive statements about how much people were likely to earn by becoming distributors. Now the fine print informs prospective “independent business owners” that they have a 1-in-500 shot at making $47,000 a year.
What we have here is an organization that enriches a few by exploiting the hopes (and the pocketbooks) of all those new recruits who leave before the end of their first year, or soon after. It’s legal, sure, but morally, I don’t see how it’s any different from the kind of fraud that gets you thrown in prison.
The man who wants to be our next governor certainly has business sense. He didn’t think up this scheme, but he did realize that the company had an image problem with the name “Amway.” So he retired that name here and in Canada and rolled out a “new” Internet business doing the same thing – it’s called Quixtar – to update the scam for the 21st century. Meanwhile, Amway lives on outside North America and continues, in more than 80 countries worldwide, turning people’s hopes into the DeVos and Van Andel families’ wealth.
Maybe explaining how the Republican candidate for governor got his money is too complicated for a 30-second TV spot, and that’s why we haven’t heard much about it. And certainly I wouldn’t want to incite class warfare by saying DeVos’s great wealth alone renders him unfit to be governor. But when a guy’s wealth comes from a company that has to fend off charges of being a pyramid scheme and needs to reassure potential victims that it’s not a cult – well, you’ve gotta wonder.
Zbrozek can be reached at zbrozek@michigandaily.com.