Amway Ada-tudes: A View from the Top : What Makes Quixtar Legal

What Makes Quixtar Legal

Friday, August 31, 2007 by Gary VanderVen
Category: Transparency, Rules, Amway Philosophy

I’m Quixtar’s Director of Business Conduct and Rules and, while I’ve followed the spirited dialog on the Opportunity Zone and other Quixtar-related blogs for some time, I haven’t yet been compelled to jump into the conversation.

Until now.

There has been, of course, a tremendous amount of talk about Quixtar lately, both online and offline. Some have questioned the very legality of the Quixtar business opportunity and have even accused us of being a pyramid scheme.

While no one associated with Quixtar – especially me – likes to hear such allegations, there is value in discussing them because it gives us the opportunity to point out why they’re patently false.

Pyramid schemes are illegal – let’s get that straight right off the bat. There is no such thing as a legal pyramid scheme. So anytime you refer to Quixtar or any other business as a pyramid scheme or as “like a pyramid,” you’re implying that it’s illegal.

Neither Quixtar nor any other legal and legitimate business opportunity should be confused with pyramid schemes. Quixtar Independent Business Owners (IBOs) earn income based on the same sales and marketing plan that has been legally and successfully used by its sister company, Amway Corp., for the past 45 years.

Using Quixtar’s Independent Business Owner Compensation Plan, each IBO sets his own goals and decides how much time and effort to invest. In fact, a key advantage of the Quixtar Plan is that every IBO has the opportunity to reach levels equal to or greater than his sponsoring IBO. Success is as individual as each Independent Business Owner.

There are four key elements that make the Quixtar Plan legal and a model of integrity:

1. Sales-based compensation. Compensation in the Quixtar Plan is based on sales of products and services to consumers. An IBO who sponsors other IBOs earns income based on his own sales and on sales made by the IBOs he sponsors. Quixtar has various rules to assure that compensation is based on product sales.

2. No “headhunting fee.” An IBO is never compensated for merely sponsoring another IBO.

3. No purchase requirements. There are absolutely no minimum product purchases that an IBO must make.

4. Buyback rights. If an IBO wishes to discontinue his business, any currently marketable and unused inventory will be bought back, upon request, by either the sponsoring IBO or Quixtar.

This plan has been cited in many Federal and State courts and agencies as the legal and viable way to operate a business with a tiered compensation plan. With Quixtar, entrepreneurs can feel confident they’re partnering with a credible, successful business organization.

Comments

jthompson said: August 31, 2007 5:14 PM | #

Gary,

With all due respect. You have obviously not been to freetheibo website or read their lawsuit "Woodward, etc.. Vs. Quixtar"

Orrin is a tremendous Leader, just ask him, and if he says its an illegal pyramid - then dah!! It IS!!!

Respectfully,

ibofightback said: August 31, 2007 5:28 PM | #

Thanks for the post, Gary. I think a key word here that needs to be highlighted is *consumers*. As the FTC has clearly pointed out on a number of occasions, IBOs themselves can be legitimate consumers. Problems can occur if IBOs are not buying products either as legitimate consumers or resale to legitimate consumers. A number of former TEAM IBOs are indicating on various sites (and indeed in the lawsuit) they were doing exactly that. As such, IMO they may indeed have been part of an illegal pyramid - but they were breaking Quixtar's rules in doing so.

Me, I've been buying Amway products for years because I love the products and think they're value for money. "burying them in the backyard" as I believe one TEAM leader suggested (hopefully jokingly) is not the basis of a sound business.

George said: August 31, 2007 5:42 PM | #

Very good write-up Gary!

Also, from a common sense standpoint, how/why would companies like Office Depot, Barnes and Nobel, Circuit City (or the many others) partner themselves with an illegal business model? The answer is that they wouldn't because it would cause a huge hit to their image and credibility as a company. They didn't blindly go into a partnership with Quixtar, it was a mutual partnership.

rocket said: August 31, 2007 5:44 PM | #

The problem that's run into is simply the fact that you say "Sales-based compensation. Compensation in the Quixtar Plan is based on sales of products and services to consumers."

Yet 3.4% of your products are purchased to non IBO's. Does that not tell you anything at all?

Legalities aside, because I understand IBOFB's point about IBO's being consumers, however, does it not make you think about your prices at all when 96.6% of the products moved is to distributors themselves, not customers?

You are not competitive. Spin it any way you want. You are not being honest with IBO's.

Beryl Nichols said: August 31, 2007 6:04 PM | #

Jthompson,

Surely you jest! Tongue in cheek I would hope.

Beryl Nichols said: August 31, 2007 6:13 PM | #

Thanks Gary,

The discussion never ends over this "pyramid scheme" allegation. I was under the impression that Amway spent millions of dollars over several years with the FTC allegations. We finally got their blessing and Amway was the "Poster Child Model" of what was legal.

Here we go again. Orrin rides his dark horse on the scene to try and change everything to his specs. I hope he doesn't think Quixtar will fund his foolishness with a settlement in the end.

Thanks for your insight into the issue.

MP Zildjian said: August 31, 2007 6:13 PM | #

Thanks Gary,

But I think some of us won't be totally satisfied with your attempted explanation of things.. You say:

"Compensation in the Quixtar Plan is based on sales of products and services to consumers. An IBO who sponsors other IBOs earns income based on his own sales and on sales made by the IBOs he sponsors. Quixtar has various rules to assure that compensation is based on product sales."

*Then...

1. Why has Doug Devos himself stated at IBOAI meetings that "Quixtar is an internal consumption company," not a retail sales company. (LINE 96..Woodward et al. v. Quixtar Complaint.

Have you guys sat down and had a chat lately?

MP Zildjian said: August 31, 2007 6:54 PM | #

ibofightback,

What about the "gray" area.. where most IBO's fall..

They've registered into the business because of the "money-making" opportunity and end up buying products because generating PV is the game.

Financial common sense would tell us this isn't sensible, but now that we're supposed to be "thinking like a business owner" and not a "consumer", we continue to purchase. And what do we purchase? Products with the highest PV/BV ratio. Why? Not because they are any more quality, but because we are in fact "buying to stay in the game for future commissions" which Peter Vander Nat, the FTC economist that you quoted in your article linked above regarding the "definition" of a "retail" sale...

“If people are buying because they want to use a company’s products, those sales can count as “retail.”

BUT -

If they are buying to stay in the game for future commissions, those sales wouldn’t qualify, he said.

Hmmm.. not so black and white.. it's a little deeper than that.

Ben said: August 31, 2007 6:57 PM | #

jthonpson, you obviously did not read the definition of what an illegal pyramid is. Also, just because a lawsuit has been filed doesn't mean its true. Finally, it's very naive of you to say that just because Orrin says its true it must be.

Jeremy said: August 31, 2007 7:48 PM | #

"Orrin is a tremendous Leader, just ask him, and if he says its an illegal pyramid - then dah!! It IS!!!"

Oh, how I snickered at that one. Wonder if that could hold water anywhere but the internet ; p

Comicbook guy from Simpsons might say something like, "Worst argument ever"

Not to mention, you can operate a profitable business without ever sponsoring ANYONE. Now, that won't make you free or a diamond but come on, that's just awesome don't you think?

Chillin77 said: August 31, 2007 8:29 PM | #

JT - Get a clue and move on.

Gary, thank you for continuing to clarify the foundational truths about this business model. I know that Quixtar/Alticor has been more than gracious to TEAM and other ibo's who continue to break the rules of engagement and allow for continued restoration. It's now time to take a stand. And as you can see, those who have been involved with abusing this business are coming out of the woodwork. STAY THE COURSE!! The sifting process is hard and painful, but the future is so very bright.

TEAM and others continue to prove themselves self-absorbed and fail to realize that there are other ibo's who believe in what this model represents and provides.

Ros said: August 31, 2007 9:02 PM | #

Thanks Gary,

I appreciate your straight forward manner in clarifying the differences between an illegal pyramid scheme and legitimate businesses like Quixtar and Amway.

Like so many other urban legends that have been circulated about our business and others, we all need to be reminded from time to time just how important it is to make sure we conduct our businesses in a professional manner, within specific guidelines.

Which also includes a balanced business. While ibofightback makes a good point about “consumers” which I agree with him in principle, I also recognize the importance of having non-IBO retail customers who I service, and following the Quixtar Customer Reporting rules.

While I’ve always serviced customers, (I had 3 retail customers within 2 weeks of starting my business), as a result of all the increased attention on retailing, I have begun looking at my “personal business circle“ which includes my personal purchases as well as those sales I make to my retail customers. (A side note, from day 1, I’ve always sold to my customers at retail, usually at sug. retail but occasionally above or below it).

I realized I wasn’t focusing enough attention in that area, yes I do have some regular customers (between 8 - 10), but I really need to set a better example. Although I’ve always talked about how important it is to have customers, my main focus was on sponsoring and building my group.

Now, in addition to my goals of building my group through sponsoring, I’ve made a personal commitment to add an additional 20 new retail customers by October 30th, and teach my group to do the same.

I believe this will do two things, first – add more profitability to myself and my group, and 2nd - increase belief and confidence for everyone.

Thanks again Gary.

Ros

shedsomelight said: August 31, 2007 9:07 PM | #

After 20 years of being in this business it is such a shame to see the integrity of this company stoop so low. All the name calling and accusations now make this company look like all the others in which we all took such pride in not being. If you were who you say you are you wouldn't have to keep trying to defend yourself. This looks like the government and is becoming top heavy. I see too much pride here and you know what comes after pride. I hope you do well but there is no way that I would stay with this business after seeing such antics as I have seen in the past month. What if, just what if what TEAM is saying is true? What next? Looks to me like you are going the route of Avon. If our cosmetic line is so good why did you buy another to compete with IBO's? The real killer was going back to Amway. Good luck! It will interstesting to see if this gets posted.

Ros said: August 31, 2007 9:15 PM | #

Hi jthompson,

Woodward obviously got some very bad advice to have included in his lawsuit that he believed Quixtar to be an "…illegal pyramid recruitment scheme…"

It doesn't appear to be a solid platform from which to stand if that is what he truly believed and yet at the same time, he was still promoting it.

Ros

Nick said: August 31, 2007 9:33 PM | #

We have the retail sales rule and the 70% rule. I'm not sure how the 70% rule works (is it 70% of business of your group or your personal wholesale purchases). Anyway, I digress even before I've said what I wanted to say.

In order for Q/A to stay legal, aggressive enforcement of the retail rule is required. If I know beyond a shadow of a doubt that Quixtar will find out that I haven't sold anything to a non-IBO (consumer in the general public) and will take away my downline volume, the temptation will always be to "buy from myself and teach others to buy from themselves".

How will Q/A ensure this rule is enforced? Leaving it in the hands of upline is sure to lead to abuses.

I recently did an experiment. I created a customer for myself with me as my IBO. I made purchases using the same credit card, shipping address, and name and the website automatically recorded my own "customer" order as a retail sale for the retail sales rule.

First tell people what you expect, then inspect what you expect. I believe enforcement of the retail sales rule will go a long way to prevent Q/A from being accused as being an illegal pyramid company.

concernedparent said: September 1, 2007 12:00 AM | #

Gary, you've been feeding IBOs that nonsense for years. When you say, "Compensation in the Quixtar Plan is based on sales of products and services to consumers," you're fudging the facts. sales. You consider IBOs consumers. People like IBOfightback always wave around Jim Kohn's letter as proof that it's ok to gouge distributors. When you read the letter closely, James Kohn states, "Commission's recent cases demonstrate that the sale of goods and services alone does not render a mlm legitimate. Modern pyramid schemes do not blatantly base commissions on the outright payment of fees, but instead try to disguise these payments to appear as if they're based on the sale of goods and services." In addition to this, the FTC clearly stated in one of their cases that sales to consumers does not include purchases made by people that participate in the scheme. And Gary, why'd you site the fact that the Amway business is the model for other mlms. Come on, Gary! Amway is the biggest violator of the FTC order that was rendered in 1979. Amway survived back then because the products were marketable. The soaps were concentrated, unique and competitively priced, which is why they were able to be sold. Also, you guys actually enforced the rules back then. Gary, honestly, do you seriously enforce the retail sales rule? Be honest. When people self report that they sold over 50 points in product, do you ask them to provide any kind of receipt? The answer is NO! You know that no one can sell your $80 vitamins, so you turn a blind eye to the problem. As long as IBOs buy the products, and recruit other people to do the same, you don't care. Simply having the Rule doesn't absolve you from guilt. I'm sure Germany had laws against murder during WWII, but they couldn't point to those laws as proof of innocence after the dust settled. Gary, if I were you, I'd be cleaning up my resume. The tide has turned. You can no longer plead ignorance. Is it true that only 3.4% of Quixtar's total volume is from customer sales? If that's the case, don't quote your rule that requires retail sales, because obviously, it ain't happenin.

Herb Chao said: September 1, 2007 1:12 AM | #

I stand by the Quixtar company.

jthompson said: September 1, 2007 1:37 AM | #

Ros, thanks for being on here...

I have a weblink to Orrins website that is VERY applicable to this post by adatudes. http://www.orrinwoodward.com/articles/An_Attorneys_Perspective.html

This article is by a TEAM ibo who is a lawyer named Abraham. Published in 2004. Read it and you will draw some similar conclusions as me possibly.

Observations

1. Orrin obviously could identify an illegal pyramind in 2004. a Lawyer on Orrins team saying that their mlm business (Quixtar) is Legal.

2. Is this an example of how TEAM hides the name Quixtar/Amway from their Quixtar/Amway business?

3. From reading TEAM ibo blog comments and reading Orrins blogs, and freetheibo language…. Did Orrin disguise his Quixtar business so well that he didn’t believe he had a Quixtar business?

My conclusion is that Orrins Lawsuit of Quixtar being an "illegal pyramid" is absolute poop. I Know that Orrin does not believe deep down that Quixtar is an illegal pyramid - he wants out and to take quixtar ibos with him... and this is his exit strategy.

Orrins has build a mlm empire, but it appears he built it on foundation of deception so his empire is gone now.

putting it positively "Orrin outgrew being a distributor/ibo of a mlm Company, he wanted to run the Company his way and there was no compromise in him"

The Quixtar Opportunity and his origional uplines/training was Orrins Launching pad into Quixtar/mlm success and Orrin seems to have forgot this.

I have NOTHING against Orrin. Its the UNFAIR "enemy" that deceives great men and women of God like Orrin that I hate.

Amen and Amen,

Jesus

Truth

jthompson said: September 1, 2007 1:40 AM | #

"....just ask him..."

Yes I was just kidding. Read comment one again, this time laugh! I couldn't survive on these blogs if I didn't have fun once in a while.

Colin M Fitzgerald said: September 1, 2007 6:36 AM | #

jthompson

Sad isn't it that we become so "knee-jerk" in our reactions that we miss sarcasm ?

I, for one, appreciated you comment !

Tex said: September 1, 2007 8:36 AM | #

Gary,

You listed the issues that make Quixtar legal, but what you listed is theory. Isn't the question of legality determined by what actually happens, not the theoretical rules of what should happen?

1. I discussed retail sales with my Quixtar sales manager, telling him we were literally taught how to fake out the computer into thinking we had retail sales by our upline Platinum, and got no response. I asked him if there were going to be any changes to ensure retail sales actually take place, and determined the answer was "no".

2. While there is no "headhunter" fee, the 3 months of free shipping if you buy a starter pack gets closer to this issue, an an enticement. Starter packs are already postured as a normal "how to get started" and not explicitly positioned as optional. Both of these will result in money being paid to the sponsor, although blunted by the movement of products. What is your position on not being clear about the optional nature of buying products when getting started?

3. True, but see #2.

4. I think you are in the best shape here, I have had outstanding service with returns, and wouldn't expect it to be any different if someone decided to quit.

Number 4 is the only one that normally occurs without involvement of the upline. This should be a message as to the source of our problems. It isn't the corp, it's the upline.

Also, you talk about the "model of integrity", but most Emeralds and above make a lot more from tools than Quixtar. In TEAM, this is apparently true at the Platinum level.

How can you consider this a "model of integrity", especially after Rich DeVos complained about this issue in 1983, and we have asked whether the corp more recently told the upline not to disclose the level of tool profit to their groups?

The upline refers to us as "teammates" and "business partners", yet we can't be aware of where they make most of their money (according to Andy Andrews on an older youtube video, and more recently Ron Simmons and Chuck Goetschel)?

All information from upline is they have their fantastic lifestyles from Quixtar, when it is mainly the tools.

Where is the integrity in not answering this question, which has been clearly on the table for over a week (and indirectly for years, because you have certainly been aware we have been demanding this information from our upline) and yet gone unanswered? If you think this question will die away or get lost in the multitude of blogs and threads, I assure you I and others won't let this happen, Gary.

ANSWER THE QUESTION. IBO'S DESERVE TRUTH AND HONESTY.

ibofightback said: September 1, 2007 9:39 AM | #

concernedparent - I suggest you read the post I linked to. It's not only James Kohm's letter, other FTC officials have stated the same thing. In a post just before the TEAM thing blew up, I also talk about how, if you like the products, you'd have to be an idiot not to register as an IBO. Why pay more than you have to?

The simple fact is that if IBOs are purchasing products for legitimate use, then they are legitimate consumers. Why shouldn't they be?

If they're buying them for the reasons MP Zildjian says they are buying them, then they're potentially running an illegal pyramid.

MP Zildjian, I don't buy products for my personal use for the PV. I buy them cause I like them, want them, and use them. My LOA teaches it's better to miss a PV bracket than to purchase for illegitimate reasons. That's what we do and how we run our business.

If you run yours differently, then I humbly suggest you might want to reconsider.

Beryl Nichols said: September 1, 2007 12:47 PM | #

Shedsomelight: Are you so "proud" that you can't use your name. Gosh, we won't even know who left and what good you did while you were here.

Beryl Nichols said: September 1, 2007 1:12 PM | #

Concernedparent, First, I can't figure out why you guys that have everything all figured out, don't use your name. Is it because you have "fears" that someone may check which way YOU play the game. You sound like some legal beagle talking about something that is none of your business and none of Quixtar's business. All Quixtar knows is how much product I bought last year and that I say I serviced the required amount of customers according to the rules. They issue me a 1099 and that is that. You want Quixtar to demand "receipts as PROOF of sales" on each customer. Now you are acting like an IRS knucklehead, as if it was Quixtar's business in the first place, how much my retail sales were. Are you saying that Amway is the biggest violator of the FTC ruling in 1979? I say what are you smoking and why are you STILL here talking to hear your head rattle? You are surely part of the problem, evidenced by your name.

Chris said: September 1, 2007 1:40 PM | #

Gary, It must make you feel proud to be the director of Business CONDUCT and RULES the way i see it, there are a lot of post out there some which are very unprofessional, that stands to reason. The IBO's really don't have any info and they are seeking to get truthfull info, however the company you work for is a multi billion dollor compay CONDUCTing themselvs as if they are 5th graders, I would expect to see post like the ones Quixtar is putting out there from someone that is learning how to CONDUCT themselvs in the business world...You guys on the other hand have been in buinsess for quite some time. you know other corporations have employees, partners, vendors ect seperate in a hostile enviroment and the press release if any is one of saying we are not doing business with them, but Quixtar has chosen to mudsling, and i know the argument is "well they are doing it too" but lets get real, who should conduct themselves better the 6.5 billion dollar company or the mult-million dollar company, the 6.5 billion dollar company or the ibo that just spent $100 to get in. I would think you should get a handle on your dept. and clean up the mud quixtar has put out there.

Emet said: September 1, 2007 1:59 PM | #

In some ways, I agree with the critics that the tool business, as it is presently conducted, is detrimental to the business because it creates the illusion that the upline make their money on CDs, books and functions, and not on the sales of products to IBOs and their customers.

I believe that we should be telling people what the costs are at different levels, and what income -- if any -- is netted on tools.

I remember when we started in the business, we dragged our portable reel-to-reel recorder with us to functions, and we'd make copies by playing the tape on one machine and copying it on another. It was time-consuming, to say the least, and I was grateful when the upline took over the responsibilities for making copies, for which they charged a nominal price -- freeing my time to spend on my job, with my family, and drawing circles.

Same thing with books. Sure, I could buy them cheaper from the publisher, by buying in bulk, but then I had to lay out the money to buy 30 copies, and find room in my basement to store whatever I didn't sell or give away. I was more than happy to let the upline deal with that, while I bought several copies for my own use from the discounters. Which reminds me -- I wonder how many books are sold at the retail prices on their covers? How many cars are sold at the sticker price? How many watches are sold at the price on the label? My dad used to carry watches and jewelry and they came with several different price tags so that you could always be discounting from the marked price. Everyone loves a sale.

Functions -- I used to run these locally for my sponsor, so I know what we took in and what we spent. It may come as news to some people, but hotels do not provide meeting rooms for free. When I was hosting functions, if we didn't have a lot of people sleeping over, they didn't comp us on sleeping rooms either. We gave the speakers an honorarium appropriate to their pin and the size of their organization to compensate them for taking time from their business to speak to us. We set ticket prices at the estimated break-even point. Too high, and we'd lose people; too low, and we'd lose money. Since we had an association -- I hesitate to use the word "Team" -- if our function made money, our surplus could offset the monies lost in a function at another location. If someone was getting rich off the functions -- in those days -- it wasn't us nor, I believe, our upline Diamond.

This discussion reminds me of the teaching and consulting work that I was doing when we first joined the business. I was teaching several courses in economics, and I was doing consulting for the US Small Business Administration. And I was amazed at the ignorance of my students who thought that the mark-up of a business was its profit, ignoring all of the other expenses that came out of the mark-up including labor, rent and utilities, taxes, etc. They thought that the average business made a 50% profit, while real businesses did well to earn 10%. And their ignorance was matched by business start-ups who also confused gross revenue with net profit.

Oh -- the average class I taught had around fifty students, and in many cases more than eighty. The tuition paid for that class by four students paid my salary. And they call colleges non-profit.

I wonder where all the other money went?

While asking for transparency on monies made on tools by the upline, we should also insist on the same from our colleges and universities and other "non-profits", as well as our newspapers, our radio and TV broadcasters, and the book and magazine publishers, the motion picture studios, and the professional sports teams -- not to mention P&G and our other competitors.

And I mean transparency in detail, not in broad aggregates. After all, isn't that what the critics are demanding from Quixtar/Amway and our upline.

George said: September 1, 2007 3:54 PM | #

I have read the claims on www.freetheibo.com and I find it really interesting. In the FAQ statements it says that they have been communicating with Quixtar/Amway for 30 years on the structure of the business (that it’s a pyramid). It also says that they had deemed the products not sellable since 1997.

Wow, that is interesting. What that tells me is that TEAM has been engaged and soliciting people into a supposed “pyramid” for the last 30 years. It also tells me that they can’t or don’t care if people sell products (they are not sellable).

So, where is the source of their income if they aren’t selling products? Ahh… I almost forgot about the tool profits they have been making for those last 30 years. Over the last three decades, they have been creating a huge subscriber base of IBOs to overlay their true money making product… tools. Based on their accusations on the www.freetheibo.com site, the only reason for them to stick around (Woodward et al.) is because of the income they were generating from the sales of tools to their loyal following. If that is the kind of leader you want to follow, one that takes advantage of you by making money hand over fist with tool profits while you make none, then by all means follow them. But don’t come out here and tell us that they are leaders with integrity. That makes no sense.

concernedparent said: September 1, 2007 4:11 PM | #

ibofightback...so you're saying it's a pyramid. If there's no likelihood that retail sales can be had, it's just a disguised pyramid scheme, which is exactly what Kohn was talking about. If the Quixtar products have such great value, why do so many people quit. In Chuck Goetschel's post, he said, "Out of 10,000 people that register in this business, only 833 will remain after three years. That is, 91.6% of people will be gone within 36 months of registering." If the products are marketable, why don't more people stay involved as IBOs and continue buying the products. Guy, adatudes, Quixtar executives, you keep wanting to blame IBOs, but the stats don't lie. The products aren't marketable. Ibofightback, you say that intent is important when IBOs buy the product. I agree. When Quixtar only pulls in 3.4% of their total volume from customers, clearly, the only reason IBOs buy the stuff is to participate in the scam. Look at that stat that Chuck quoted again. 91% of people quit within 3 years! So when they're buying the stuff from Quixtar, odds are, they're NOT buying it for the inherent value. Again, if they were buying it for the value, they wouldn't quit.

Beryl Nichols, what do you mean it's none of my business? This issue is as much my business as it is yours. Why have blogs at all if people can't hop on and debate the issues. And you said it would be unreasonable for Quixtar to require receipts of customer sales. You're wrong. They used to require receipts before giving out bonuses back in the day, which was part of the reason why they were deemed legal when the FTC investigated them in the 70s. Before the amway distributors could get their bonus, they had to turn in their "pink slips" (receipts) to collect. With the internet, you just need to "check the box." If the products are so marketable, why not require the IBOs to submit their receipts. If they required the IBOs to submit their receipts, Amway would have clean hands. There would never be a chance for people to say they're a pyramid because retail sales would actually occur. But really, Beryl, I'll tell you why Quixtar doesn't enforce its retail sales rule. It's very simple. If they did, they wouldn't have a business, because very few people can sell their products, which means very few people would collect their bonus checks, which means everyone would quit. Wake up. The California lawsuit hit the bullseye. Did you see Quixtar acting this way after the Pokorney lawsuit was filed in California? Not hardly.

BillyBob said: September 1, 2007 7:11 PM | #

I am just begininig my Ibo business with the Ribbon Gift Program.I have received the Ad-1600 Kit and The new Cd. I am very confused how this program is supposed to work .Is it against the rules of Quixtar to ask any IBO's If and how they are working this program? Is there a way that explains if you do'nt have a computer to take along with you how can the program be presented? The slipcase books do'nt give the description and mfg.What got me started with this program , i was shown a catalog of the previous year and it was great because it explained the mfg. and description of the item.

HELP!!!

Thank you

Nick Kobelja said: September 1, 2007 8:03 PM | #

Am I missing something here?

There is the question of the legality of the Quixtar opportunity and the perception of the legality of the Quixtar opportunity.

The CSV rules are easily circumvented. It is obvious - at least it is the obvious perception - that Quixtar sells almost all its products to people who are buying them as a business opportunity. It doesn't matter that it is not a smart thing to do. It doesn't matter how it happens. As long as the CSV rules can be ignored, the PERCEPTION is that Quixtar is operating as an illegal pyramid scheme and, as history shows, leads to other abuses of the opportunity.

Quixtar seems to me to be cleaning up. I notice that the first action is about illegal stacking. Not illegal in a court but illegal as far as Quixtar's rules are concerned. What does stacking have to do with making Quixtar not appear to be an illegal pyramid? Nothing, it seems to me. Why cannot Quixtar take it upon itself to police IBOs when it comes to CSV, the area that is closer to the heart of legality?

I am a new IBO. Perhaps it's not my place to question things. I was sponsored into TEAM and I told my upline to keep their BSM and that I was going to learn how to make retail sales on my own if I had to (thanks Quixtar for QU).

I want everyone - the FTC, the internet critics, my potential downliners, and my customers - to all feel that Quixtar is a legal, upstanding company with legal, upstanding opportunites for those who want them. Enforcement of the CSV would allow the newly transparent Quixtar to proudly publish statistics in this area.

I don't know if I'm good at sales. I don't know if I'll be successful at Quixtar. I am asking Quixtar to monitor my CSV (at least monitor the IBOs who monitor my CSV) even if it means that I miss out on monthly rebates. Why? Because it's good for Quixtar corp and for all of us IBOs.

MP Zildjian said: September 1, 2007 10:16 PM | #

Oh I'm sorry ibofightback..

My misunderstanding. Your last comment cleared things up for me...

"I don't buy products for my personal use for the PV.. (i assume you meant..for my personal use OR the PV)..I buy them cause I like them, want them, and use them."

*I didn't realize that you viewed your "business" as a a "wholesale" buying club*

Thanks for clarifying this. I'll be sure not to direct any further comments to you regarding actual "business-building" principles/mindsets etc.

David Whyte said: September 2, 2007 4:52 AM | #

Gary

Great to see some openness and clear communication on these issues. Do you know as an IBO for 10+ years I have never figured out why Amway was not a pryamind, until know...

A couple of comments about our experience in the business.

"1. Sales-based compensation..... Compensation ... based on sales of products and services to consumers. " For the majority of our time in the business when we plugging into a system it was all personal consumption.... no focus on sales. This is starting to change... but like any large ship it takes time to turn it around.

"3. No purchase requirements. There are absolutely no minimum product purchases that an IBO must make." - true in theory, however heavy pressure from upline to purchase products (PV), and tools. Basicly without putting a to finer point on it, it went like this, do you want your dream ? "yes" then purchase these products and tools. So in essence (3) this may be true, but spirit is not always obeyed

4. Buyback rights. Yes the Amway Corp is great at this. Totally awesome, however what about tools? There does not appear to be the same transparency around these....

I think that thing that was most annoying is if you questioned anything - your upline told you not to be negative, and have faith. Thats why I appreciate your post so much and with the net transparency will finally come into the business.

I may suggest that the reason that you'll haven't heard more about this in the past is that people who get into Amway it in a big way, and drift away, find they go through a season where there self esteem takes a hit cause they were not good enough to go diamond, and when they do make peace with it they are not vengeful as the system as taught them to focus on the good bits.

Would be fascinated if you interviewed IBO's who had been active in the business for 5 or more years (aka enough to get a handle on the business) who were no longer active, (so would be honest with you, and not repeat the mantra's) as to there experiences with the above 4 "rules"

K. Devore said: September 2, 2007 9:36 AM | #

Tailing in on this conversation, I 1st want to thank Quixtar for it's efforts of cleaning up the messes that others have been creating over the years. Although many organizations make money on tools, there are others that don't. Yes-there are organizations out there that are not commisioned on tools and functions.

Although tools are extremely important to the success of each and everyones business, certain organizations offer these at very low cost to the IBO's to help them build a profitable business based solely around Quixtar and it's products. I highly commend these organizations and they know who they are. I think more organiztaions should follow the same formats then we wouldn't have all these concerns.

As far as product sales, we have a really good Gift and Incentive business. I don't see how this product can be deemed as overpriced. There is a lot of money to be made here. The quality and cost of other products is really 2nd to none vs the competition. My question is who or what is everyones target market? Most haven't been able to establish that I'm sure. Wal-marts doesn't attract everyone either.

Just a suggestion to the critics, do your research on the coreline products and compare them to the competition they are meant to be compared to. I think you'll actually find a lot of benefits. Afterall, the competition is still in business and I don't see people complaining about their pricing when ours (yours) are just as competitive (price and quality) as theirs if not better.

Thanks again Quixtar for working to clean up.

Beryl Nichols said: September 2, 2007 10:17 AM | #

Concernedparent,

Man, you are a true gloom and doom piece of work. You spout percentages like you know what you are talking about. Blowing smoke up peoples skirt expounding on your own inabilities.

Why do people quit? People quit everything, even marriages. Why? Because the average person will not under ANY circumstances take full responsibility for their actions. It always has been "easier" to quit!

That is an attitude that has nothing to do with Amway or its products. It is just human nature and a tool to stick in peoples' eye when you try to destroy them.

I've owned several business in my life and I never had a manufacturer ask me how much I charged for their product. I paid "dealer net" to them and that is all they cared about, other than me paying my bill. It was up to me what I charged. They had no concern whether or not I made ANY profit...Why? Because I am the business owner and my profits are my personal business and none of theirs. Bye the way, in all my businesses more people quit than stayed. That's how business is done in the U.S., Concernedparent. What do your Concernedkids think of your medling concerns?

And another thing, it takes absolutely NO TALENT to file a lawsuit, especially in Caliphoneyia. Usually, the guilty dog barks first....(that is legal jargon). A person gets caught lieing, cheating and stealing from people and the wagons are circleing. He figures if he is the first to file a petty lawsuit maybe it will take suspicion off his actions. Then he ends up getting on the internet and begs people for money to pay his legal fees, because the poor guy lost everything.

Beryl Nichols said: September 2, 2007 10:27 AM | #

George,

You have proven one thing for sure. You have 20/20 vision!!

I saw Kevin Trudeau on TV yesterday. Yes, he is out of jail and back doing the same ole song and dance. In Texas it was Billy Sol Estes. According to Tom Hopkins, "the best sales people usually end up in jail", because they can't quit cheating people.

Woodward and his cohorts have made alot of money teaching people how sell unsaleable products. Pshaw~!

Beryl Nichols said: September 2, 2007 10:37 AM | #

Emet,

Thanks for bringing some "business knowledge" to the discussion. You really hit the nail on the head. I just wonder what some of these people will "carp" about when they get the transparency they want. They relish in fact that they have "found the secret". The fact is, normal business practices escape those folks that think somebody owes them something for their presence. Their "something for nothing" attitude just drives me nuts!!!! Who works for nothing? A FOOL!!!

Emet said: September 2, 2007 10:59 AM | #

Reading some of the postings here -- which I'd like to believe are made in good faith -- I am struck by the lack of understanding about Quixtar rules, and about business in general.

Moderator -- please feel free to correct any errors in my comments.

First, the ten customer rule relates to collecting a bonus on the activity of your downline, not on volume that you personally generate either through your own use or through sales to customers or, for that matter, for products that you give away to your family or your church or as samples.

Second, to avoid loading inventory, or buying a pin, the seventy percent rule, as I understand it, requires that you sell seventy percent of what you buy in order to earn a bonus.

Third, unless the rules have changed, to qualify as a Platinum and above, you must submit a profitability statement showing that you are in compliance, and you must attach receipts confirming the sales to ten or more customers.

Now, regarding receipts -- here we are discussing receipts for our SALES, not our purchases. These are receipts that WE generate. If someone wants to cheat, how would you stop them? The receipts submitted are signed by the customers. Are they? Should we require that the signatures be notarized? Should Quixtar contact the customer and confirm that the signature is bona fide? Should it limit this follow up to pin qualifiers, or should it be done for every IBO qualifying for a bonus?

How many IBOs would be concerned that the company is preparing to steal their customers? We can see that now, with less direct involvement by Quixtar.

Also, at what point would we start to feel that we are being treated more like employees than like Independent Business Owners? At what point would the IRS conclude that that level of control shifts our status to our being considered employees, subject to withholding taxes and social security contributions, not to mention all of the myriad other rules that would apply.

Would we have to comply with EEO rules. Would we be required to set different criteria for going Platinum, or Diamond, or Crown in order to meet the "goals" so that depending upon race or sex, for example, some people would have to do less than 7500PV while other would be required to do more?

The point is that the issues here are complex and for some people there is nothing that can be done which will ever eliminate their cynicism.

I may not always agree with the company -- for example, I believe that it was a mistake to deemphasize cleaning products which are easily demonstrated and which can readily be shown to be cost-effective. It is much harder to do that where the benefits of the products are more subjective, and therefore it is more difficult to prove that the superiority of our products is worth their higher prices.

On the other hand, I have seen demonstrations of the company's integrity over and over during the 35 years I've been in the business.

One example. In the "old days" the bonuses were received from your upline, not from the company, until you qualified as a Direct Distributor. When we were in qualification, our checks were substantial -- thousands of dollars -- and when our sponsors messed up their finances and their check bounced, it created a real hardship for us to pay bonuses to our downline.

When the next check was due, they disappeared, still owing us money from the first check.

My wife wrote the company, attached copies of the paperwork, and two weeks later we received an Amway check for all the monies that were owed to us -- despite the company having already paid out this money to someone else.

I guarantee that this would never happen on my job! We'd have to hire a lawyer, file a lien, and take many months or years before we would be made "whole" -- net the expenses and the time value of money.

So to the skeptics -- would you have us prohibit customers from joining the business to save money?

We got into the business to buy the products at Distributor Cost. As I've noted elsewhere, two or our three personal directs in 1980 were customers first.

We still have customers. And our friends in the business have customers.

By the way, I'm not looking to fight with anyone. I'm writing about my experiences, and I recognize that others have had more negative experiences than I've had. Like divorce, some people leave relationships embittered by the experience and even more by the loss of what might have been.

Which is really too bad, since this is a terrific business.

God bless!

ibofightback said: September 2, 2007 3:04 PM | #

ConcernedParent - I'd suggest that many of them quit because they joined for the wrong reasons. I see lots of reports of folk targeting college students. Wrong market for the products - they generally can't afford them. I see reports of TEAM IBOs buying stuff for the PV, not for the products. Again - wrong reason for buying.

I'm not saying these things don't happen. What I'm saying is they are not an inherent part of Quixtar or the business model. TEAM seems to have been very clear in their lawsuit that *they* were probably operating *their* Quixtar businesses as an illegal pyramid. What's more they admit breaking Quixtar rules to do so.

I have many folk in my business that simply buy products. They don't pretend to run a business and don't get bonuses. Some of them used to be active, some of them didn't.

If you read older reports you'll see the Amway renewal rate used to be much higher. It seems to have dropped quite a lot lately - not surprising if you're getting people to buy the products for the PV instead of because they want and like them.

Donald Weekes said: September 2, 2007 3:46 PM | #

Gary,

I agree with the full intent of the four elements you provided.

People should have a customer base. We had a base of customers 10-20, which we maintain. Unfortunately, this is not what a LOS/LOA is promoting. 90%+ of the promotion is for sponsoring and building a large network of consumer IBOs, not retail customers. A agree with the rule as stated (#1), but it is the actual promotion from the field that would deviate from the intention of the law.

#2. Again the upline had promoted a starter-pack of products in order to register in the business. We had recently been affiliated with TEAM in the last few months and this product 'kit' was more of a requirement than an option, plus there was a firm promotion of XS & Trim products in the ditto at the signup, whether the person needed the products or not. Again, it is the slant of the promotion or pitch more so than what was written on the registration paper. On paper it was clean, everything was totally optional, but in reality the LOS/LOA had a hard mandate which made it a violation or your statement #2.

#3. The "manditory' or go somewhere else approach for a ditto of 100PV of XS & Trim only (DOT1 STEP) in practice is also a bit shaky. Again, the paperwork states it is optional, but the directive of Platinums and above on the issue was that is was "manditory", or we should not register the person. I have an issue with this practice. It could be considered inventory loading and it garentees volume for the upline, but at the expense of the new IBO who is purchasing much more product that would be required as a typical consumer.

#4. Quixtar is fine with this in my books. I have had customer returns and they were always handled without issue.

Thanks.

William said: September 2, 2007 5:24 PM | #

"3. No purchase requirements. There are absolutely no minimum product purchases that an IBO must make."

Many leaders teach MANDATORY purchases of start-up tool kits on sign-up. If someone doesn't have $300 to start don't sponsor them. Now I know that is not Quixtar rules, but if you let IBOs run business like that you can't expect to not get labelled.

Are measures targeted at this, and other ways of clarifying Business Rules & Conduct part of the Transformations process?

ibofightback said: September 3, 2007 4:06 AM | #

MP Zildjian - I explicitly said "personal use" because I was only talking about the motivation for products products I buy for personal use. I have MANY customers and I would assume my motivation for purchasing products for their use is clear. Nevertheless, a "wholesale buying club" is in no way illegal or an illegal pyramid. It is however against Quixtar rules, and IMO not particularly smart business, or at least not particularly profitable.

Emet - nice to read some posts from someone who actually seems to understand the rules and the business! Keep it up!

rocket said: September 3, 2007 11:46 AM | #

Any truth to the rumor that Quixtar has shadow customers set up across the country in order to make it appear as though actual retailing is going on?

Or is that just another myth?

I would be curious to hear what your official response is.

I would be even more curious (curiouser in leaderspeak) to hear the truth.

Bridgett said: September 3, 2007 7:06 PM | #

IBOFB,

I don't know if this option is available in your country..here in the States, you can check a box on your Customer List and offer IBO cost to them. They can go online and order themselves, and they see and get charged the IBO cost.

About a year ago, I encouraged all IBOs who were strictly consumers, to not renew and become what they truly were--Customers. Because our LOA was a test group for free shipping, most, even at full retail, saved money b/c they no longer were paying shipping PLUS they were not paying the $50 renewal fee.

There were a few (very close friends and family) to whom I offered the IBO cost.

I did all this, because I didn't want to decieve myself in to thinking I had more "true" IBOs than I really did. If someone is not interested in sellling a product or sponsoring people, I no longer sponsor them.

I no longer sell the business opportunity as a way to "save money".

If they are a great customer, then I give them free product (new stuff they haven't tried yet) and thank-yous (sometimes the Ribbon Gift Albums), rather than giving them my discount.

Just a thought. No right or wrong. Just something I've done that seems to be working well.

Bridgett said: September 3, 2007 10:12 PM | #

Hi Rocket (Sept 3, 11:46 AM)

I read your question regarding "shadow" customers at your blog.

Maybe this will help answer the question, if you know how prospective customers, who contact Quixtar (via their website or their 800 number) are "serviced".

If I contact the Corp (as a customer wannabe) and want to order products, the Corp will not take my order. They will first assign me a "servicing" IBO. They will give me a Platinum IBO# in my area based on zip code.

So now I'm given a Customer ID# and it is linked to the IBO#. As a Customer, when I sign up (even if I DO know my IBO and their IBO# who referred me to Quixtar), I have the option of being anonymous.

As an IBO, I've also "inherited" customers when downline IBOs don't renew. And it's a bummer to inherit anonymous ones.

I respect people's privacy. But I gotta tell you, from experience, it's really annoying to have anonymous customers. Sure the surprise PV/BV and Retail Profit is nice. But, how the heck am I supposed to follow up to see if they liked their products? How can I introduce them to new products and new product lines?

They might have had some history with a pushy IBO--either with products or forcing the biz opportunity on them. So again, I respect their privacy. Some of them, though, I think just uncheck the "share my information" box 'cause that's default in most people's brains.

Quixtar Customer Service are SERIOUS gatekeepers, and even though they see all the person's info, right there in from of them on their screen, they will not share the info with me--or any IBO.

Wondering if Quixtar has anything in place for these customers so that they don't just drop of the face of the earth.

Anyway, I didn't really answer your question, but I hope my comment helped.

Nick Kobelja said: September 4, 2007 1:43 PM | #

Emet,

It may very well be that many of us don't understand the Quixtar rules. I'm not detecting in this discussion that people feel that Quixtar does not have rules in place to make Quixtar a valid MLM and not a pyramid. But there seems to be little evidence that Quixtar is enforcing the rules (that make Quixtar a valid MLM and not a pyramid). What good is a rule that is not enforced? Why even have the rule?

It seems to me that the CSV rule is the most important rule as far as this is concerned. But what good is a rule that is not enforced? Also, the rule applies to IBOs and yet who is ensuring that the CSV rule is being followed? As I understand it, the IBOs are ensuring this rule is complied with.

Does this mean that Quixtar corp can wash its hands? Perhaps. Does this mean that there aren't a great many PDs who aren't enforcing this rule? I don't know. From my experience and from what I've seen 12 years ago (the first time I took this opportunity) and now (the second time), this rule is easily circumvented and not enforced. This, along with the unverified claim as to the percentage of retail sales, leads people to suspect that Quixtar is a pyramid scheme.

What is Quixtar offering? Is it a retail sales opportunity (with the ability to offer others the same opportunity) or is it a "business opportunity" (and if you have 2 minutes between showing the plan, ask your grandmother if she needs LOC - but don't spend much time on it).

If Quixtar is offering the second choice, then Quixtar is hiding sales as business opportunities. Signing people up is increased market for tools. The products aren't seen as marketable goods.

It seems to me that tools abuse and the perception of illegal pyramiding is a natural result of not enforcing the CSV. If we are a network of retailers, then enforcing the CSV would put more emphasis on retail sales. If we are a network of business opportunity brokers, then not enforcing the CSV would put more emphasis on brokering more business opportunities.

I'm not opposed to providing people an opportunity and I am planning sponsoring others as I gain more confidence in the retailing side of things. Also, I know that both times I've been sponsored, there was very little support for retailing and huge emphasis on sponsoring. In fact, the second time I was sponsored, retailing is discourage. I know that my view is very biased.

If you (and anyone else) see anything wrong with my reasoning, please respond. I'm young (well....), impressionable, and learned about the business in less-than-adequate circumstances. Reading these posts have been very helpful to me and I'm sure they are helpful to others like me.

Nick Kobelja said: September 4, 2007 2:12 PM | #

Emet,

Sorry about two posts.

If we are a network of "opportunity brokers" then this mindset leads to self-consumption of products.

I believe that enforcing CSV is win-win-win. Win for corp. Win for IBOs. And win for customers.

Beryl Nichols said: September 4, 2007 4:07 PM | #

I think a lot of time is wasted talking to prospective IBO's about the Amway/Quixtar business and skirting the "sales" aspect. Well, folks, sales is a respected and honorable profession. Amway/Quixtar are both respected members of the Direct Selling Association, and always have been. Why lie about it? Teach people how we sell and the ones that want to give it a try will often love it. I did and still do.

When you try to recruit people into a "selling atmosphere", such as ours, by telling them that no selling is required....you lied to them and you know it, and what's worse.....they know it!! You just branded yourself a bonafide liar and they spend all their time wondering what this business is all about and why you said what you did.

jthompson said: September 5, 2007 1:57 PM | #

Who are you going to believe? Who is more credible? Devos/VanAndel or Woodward/Brady???

I think I am going to side with:

US Chamber of Commerce

Dun & Bradstreet

Better Business Bureau

Barney & Friends

US Chamber of commerce... who cares if they twice elected Amway Chairmans to be their head hancho that is the #1 Business Promoter in the world.... BBB... who cares.... D&B... ah! Dave & Busters would be better..... But hey! Barney & Friends.. who can argue? if they think Quixtar is a legette business, who can argue? http://www.uschamber.com/press/releases/2001/june/01-103.htm

Wednesday, June 13, 2001

Alticor Chairman Van Andel Elected Chair of U.S. Chamber of Commerce

WASHINGTON, D.C. -- The United States Chamber of Commerce board of directors today named Steve Van Andel as its Chairman for 2001-2002. Van Andel is chairman of Alticor, Inc., the parent company of Amway Corp., Quixtar Inc. and other businesses......

The U.S. Chamber of Commerce is the world’s largest business federation, representing more than three million businesses of every size, sector and region.

jthompson said: September 5, 2007 1:57 PM | #

-summary of TEAM vs Quixtar in 3rd grade language-

"TEAM smelled/farted and tried to blame Amway for it before anyone could smell it and know that TEAM was the one with the stinky diaper"

Tex said: September 6, 2007 12:58 AM | #

The reason the upline pushes sponsoring over retail is simple. They make much more money on an IBO buying tools than an IBO selling products. It is a simple bait and switch operation. Quixtar needs to answer the question whether they told upline not to disclose tool profits, as Ron Simmons and Chuck Goetschel said they did, because the law enforcement authorities will be notified if the answer is not provided SOON, for conspiracy in a bait and switch operation.

Nick Kobelja said: September 6, 2007 10:15 AM | #

Tex,

Believe me, I'm on your side when it comes to the Tools Issue.

But I also believe that fixing the tools issue is only fixing a symptom and the root cause is still lying around - lack of retail sales (in reference to the spirited definition discussion I read on another blog, I define retail sale as a sale to a non-IBO).

The tools issue would have been mitigated in 1983 ("Directly Speaking") if the Amway Police Department would have taken charge of enforcing the CSV rule. Why? Well, people who sponsor and don't sell wouldn't make any money. They wouldn't spend all that energy and time sponsoring for very long. At the minimum, the tools being offered would have had a greater emphasis on how to retail. This would have made more IBOs profitable earlier.

I believe that Quixtar is being smart about how they are trying to increase retail sales. They are providing the training and the monetary incentives to make retailing more attractive to existing and new IBOs. Strictly enforcing the CSV without proper training (there hasn't been any for me) would be a recipe for a disaster for the company.

But incentives and training is only half the story. When people are having a hard time selling products they would naturally tend towards hiding those sales as business opportunities. People, especially desparate people, will buy products if they think it will make them money. Folks at the top of the tools business profit from this because they can't sell to people who aren't IBOs.

I applaud Quixtar for the direction they are taking - very smart. But not enforcing the CSV will mean they will always have the same problems that have been plaguing them since 1983 and earlier.

So while I agree with you on the tools issue, it's almost immaterial to me that we tar and feather the culprits AS LONG AS QUIXTAR FIXES THE CAUSE OF THE PROBLEM.

Again, I invite folks to point out where my reasoning is faulty.

jthompson said: September 6, 2007 3:29 PM | #

Amway and Tool/system Critics,

Thank you for you persistent blogging. You make this business a Challenge. You make is so that wimps don't go diamond in this business (unless you hide Quixtar/Amway name and call them "just a supplier"). You present a Challenge that brings out the best in Winners.

You also say something true once in a while, we/Amway correct/improve it, and the business keeps getting better and better.

Thank You,

Sincerely,

jthompson

Jeffrey said: September 7, 2007 4:02 PM | #

Nick, they are enforcing the CVR now because self-reporting is gone. You cannot make out a receipt without registering the customer if you want to report the volume.

Nick Kobelja said: September 7, 2007 4:43 PM | #

Jeffrey,

Yes, imagine my embarrassment when I found out (after I posted 23,000 comments).

I guess I'm overreacting to demons that no longer exist :)

Bridgett said: September 8, 2007 10:58 AM | #

Hi Jeffrey, Are you sure self-reporting is gone? I just did it. Go to Build & Manage By Business>Customer Volume Reporting (on the left side of the screen). I was able to input the numbers. And you can update (add/subtract) throughout the month.

Jeffrey said: September 10, 2007 6:46 AM | #

You can still self report, but if you want to give them a Quixtar-generated receipt, they have to be a registered customer. It will not let you create a receipt without a customer number. I guess the only thing you can do if they don't want to be registered is to print the pdf customer receipt and fill it out by hand, except that doesn't look as professional. I still look for self-reporting to be totally gone in the not too distant future. I think the self-reported sales are the ones that the company is going to randomly verify. I think the company is dead serious to raise the 3.4% retail sales percentage.

Bridgett, I'm with you about inactive IBOs becoming customers. I've been working this past week on all my downline's order history. I'm taking out samples all this week to my group and the ones that are not builders, never have and most likely never will be, I'm going to encourage them to become a customer and let their IBOship lapse. That way they can possibly get the free shipping and I get the volume towards my CVR.

Nick, I agree with everything you said.

Nick Kobelja said: September 11, 2007 6:29 PM | #

Now that I've soap-boxed CSV, it's time to make it work. How scary. Anyone want to volunteer as a short-term mentor until my upline figures out what they're going to do?

Ben said: September 11, 2007 10:56 PM | #

jthompson, sorry about my response to your August 31 post. I really missed the sarcasm in that one! Thanks for the positive messages!

Michael Hart said: September 14, 2007 9:41 PM | #

Hello everyone!

Just a few thoughts......

I agree with the Corporation's move to more strongly emphasize retail sales. After all, one is probably much more likely to find someone who wants to be a customer of a store than someone who wants to make the effort to run a store. Furthermore, it relieves any perceived pressure from the IBOs to do personal use. It can also be a great source of short-term income useable for either paying off bills or investing more into a business.

Nonetheless, I think that people are overly paranoid of pyramid schemes. We should all look more carefully at business concepts to see if they are both legal and ethical, rather than making snap judgments made on the basis of inflammatory statements or buzzwords that are not backed up by logical concepts. (By the way, obviously, legal and ethical are two different things.) As applied to Quixtar, what's so insidious about the concept, "Buy your own stuff and tell people about it, and if someone wants to buy something along the way, sell it to them?" I understand that there are laws in place that we all must follow, but what thought process are these laws based on? Sometimes I wonder if these laws are made by people who do not--or refuse to--understand network marketing.

Even if 100% percent of Quixtar’s products were being moved only by the IBOs themselves, what would be wrong with that? People could still buy only the products they want. As far as people “buying products only to participate in the scheme,” I don’t see how that would apply to Quixtar in any circumstance. As it stands right now, if a person only does personal use in his/her personal circle, all he/she gets essentially is a rebate check—money that had already been spent. The only way to really make money is to get someone else to buy products--just like any other business, whether network marketing or not. The only real difference between a retail customer and an IBO is that the IBO has financial incentive to be a loyal customer and get more customers.

Consider even the scenario of people “buying over” to get to the next PV bracket: it would qualify them for a larger rebate on personal use and a larger differential on downline volume. Nonetheless, the person would really only make money-not just get money back-by the purchases of other people. It’s not like people can personally purchase $250 worth of product one month and get a check in the mail for $400 next month; that would be a Ponzi scheme. There’s no profit from merely registering IBOs either—that would be the classic pyramid scheme. (Obviously, there are sample packs that people often get as part of their registration, but they are still products, and a person can opt not to get them.) Additionally, no one gets kicked out of Quixtar for not doing personal volume, or any other type of volume for that matter.

In my opinion, Quixtar is a wonderful, legal, and ethical business opportunity. Take care, everyone!

Michael

Beryl Nichols said: September 18, 2007 3:55 PM | #

It ALL revolves around PV/BV. No PV/BV on system tapes, books, meetings, seminars, travel seminars, just profits. As long as the BSM's teach how to build PV/BV with the products, what is the matter with that? Nothing!!! It's when we sell the "get excited" part with no "money part" and we still make money up-line, shame on you TEAM.

Tex said: September 22, 2007 10:27 PM | #

Beryl,

Good points, but TEAM is far from alone with these issues.

Eliza C said: September 26, 2007 1:55 PM | #

I totally agree with Michael.

Understand the marketing plan before you state any accusations. I have to be honest, I dont understand what is the right definition of a pyramid scheme, but to my knowledge, it is when the person whom you sponcer can never out do you. Basically, if you join first, you get more money no matter what.

Quixtar or Amway is not like that at all. If you understand the marketing plan fully, it's all about getting rewarded more if you put in more effort. You also learn that after you reach Platinum your sponcer is reward (by the company) 4% of your revenue, no more, no less.

No longer will your points be associated with their group. You are an individual group of your own. They cant even see detailed information anymore after one reaches Platinum.

And you can do better. You can be Diamond while you're sponcer is just Platinum. But because of Quixtar's marketing plan, they reward you for sponcering an successful IBO with 4%

Quixtar and Amway also have two guarantees. They have a 100% satisfaction guarantee depending on the product can go up to 180 days, even if the product's been used. Meaning you can return the products and the IBO is not losing any money.

And when all else fails, look at their history and how open they are about their business to IBO's and non-IBO's. If they really are a pyramid scheme, Amway would not have lasted for over 40 years.

anoyn said: September 28, 2007 12:10 PM | #

Can I return items once I've quit?

Nick Kobelja said: September 28, 2007 1:18 PM | #

Eliza and Michael, thanks for jumping in.

I know the initial blog wes about the "legality" of Quixtar. I am also reading some comments that suggest that Quixtar is not legal. I would like to make a point about the "ethical" part of how many IBOs have implemented the opportunity (from my personal experience and from comments here and other websites).

The Quixtar opportunity has always said that there are TWO ways to make money. Yet, when people sign up, they are STRONGLY encouraged to only work the second way. People have been STRONGLY encouraged to purchase their own PV bracket. At a 1:3(+) ratio between PV and IBO cost, that is $300(+) a month. It doesn't matter if these people want or need the products they are STRONGLY encouraged to purchase. The products are not being purchased by the new IBOs for their intrinsic value but because they are a means to financial freedom. In short, when you, as a sponsoring IBO, conduct yourself this way, you are disguising product sales as "business opportunities". This is IMHO unethical.

What's worse is that Quixtar has always (at least since 1983) allowed this. The CSV rule has been ignored by everyone - even Quixtar. Quixtar purposely not enforcing the CSV rule (to protect their sales?) while still saying that retail sales is "required" and is the "first way" to make money IMHO is unethical. It means that Quixtar is hiding product sales as "business opportunities". It may be that if the Quixtar opportunity has been judged legal in part because of the CSV rule and Quixtar doesn't enforce the CSV rule then the "legality" of the opportunity may be in question, too. I'll let the lawyers figure that one out -- my concern is ethics.

I'll let Tex jump in with other abuses that the lack of retail sales has caused. Again, these other abuses are at least unethical.

So, while the OPPORTUNITY may be legal, the way that opportunity has been implemented IMHO should be illegal. Many people have suffered because of it. Of course, those who have suffered may be wimps because they don't have what it takes to go Diamond -- that's when they really start to make money. I'll let Tex jump in and expand on that one.

I hope you don't feel that I'm arguing with you. I honestly believe that this opportunity is a good opportunity and as long as Quixtar stays on the course it's on now, I will always say that this is an ethical opportunity.

Nick Kobelja said: September 28, 2007 5:29 PM | #

I pushed the send button too soon. I realize that I didn't add anything new to the conversation. I just let my convictions rule my actions and I succumbed to the immature desire to have the last word.

Apologies everyone.

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