subject: A Monster Mlm Lawsuit Settlement [print this page] In 2007 a class-action court case was filed against Amway/Quixtar by some people who used to be distributors in California. Quixtar was the name Amway used in the US at the time. The suit contended that Amway/Quixtar and some of its top distributors were operating an illegal pyramid scheme. The plaintiffs said they were lied to about the amount of money it would cost to be part of the business, among other things.
The settlement ended up being $56,000,000. $34 million was cash, and the company will provide $22 million in products. The plaintiff's lawyers will get up to $20 million of the settlement cash.
The settlement does not mean an admission of guilt on Amways part. In a press release, Chairman Steve Van Andel and President Doug DeVoss said, 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.
In the letter, Van Andel and DeVoss talked about concerns brought up by the plaintiffs that Amway/Quixtar was too heavily weighted toward the sale of tools and business support materials such as motivational tapes, books, and seminars. The company has taken several steps to repair the situation, including more consumer advertising, better websites, expanded money-back guarantees, and better IBO (Independent Business Owner) training.
Included in the final settlement was an amended complaint. The amended complaint does not mention an illegal pyramid scheme. The amended complaint will also keep the plaintiffs from accusing the company of running an illegal scheme or racketeering.
This was a monster settlement. This would put most Network Marketing companies out of business. This whole thing was about the sale of motivational tapes, books, and seminars and an issue about earnings potential and the cost to be an Amway IBO. It wasnt about the company being an illegal pyramid.
Here is the lesson: MLM done right is legal and moral. Individuals considering MLM need to ask questions when talking to someone about joining one. Finding the right product and MLM company is very important. But finding the right person to learn from is even more important.
