Amway India CEO arrested (again)
Following a complaint filed in August last year against Amway, its Indian CEO, William Pinckney, has once again been arrested.
The latest complaint was filed in the Indian state of Andrhra Pradesh, with
Kurnool Superintendent of Police Raghurami Reddy (saying) they had been collecting a lot of documentary evidence leading up to the arrest.
Pinckney and Amway have been charged with violating the Prize Chits and Money Circulation Act, and whereas Pinckney was granted bail the last time he was arrested (almost exactly a year ago in a different state), this time bail was denied.
The contents of the complaint against Pinckney (right) and Amway haven’t yet been made public, but Amway is claiming them to be “frivolous” and a “misleading representation” of the business.
Frivolous or not,
The Andhra Pradesh CID, under IPS officer V.C.Sajjanar had filed a chargesheet against Amway in 2006. They went to Andhra Pradesh High Court but a division bench ruled that the business model is illegal.
The company then filed a special leave petition in the Supreme Court in 2007 but the top court upheld the decision of the High Court.
The state government also issued a government order (GO) in 2008, saying advertising products of Amway is illegal.
I could sort of understand Amway labeling a case regarding advertising as frivolous, but then how that falls under the PCMC Act escapes me.
Meanwhile you’d certainly hope that Amway are paying Pinckney well…
In case, he has an extended stay in jail, Mr Pinckney will be shifted to Kadapa Central jail. But with cases pending against him in Khammam, Warangal and Hyderabad, it’s more likely that he will be on the move on transit remand, as each of these district police is likely to seek his custody.
Sounds like half of India wants a piece of that ass!
Pinckney’s been remanded to judicial custody till June 10th, at which point they’ll decide where to send him next.
Update 19th April 2022 – As at the time of this update William Pinckney’s current status is unknown.
Indian authorities are continuing to investigate Amway however, resulting in a $99 million asset seizure.
Interesting how the American media has been virtually silent on this issue, particularly the local Grand Rapids Amway sycophants – many of whom have “banned” me from making comments on their media outlets. LOL.
Several years ago, India forced Amway to put price limits on their tools (meetings, CDs, etc.). After doing the exchange, the prices are about 1/5 the U.S. prices, thereby removing removing more than 4/5 of the profit.
They have since slightly increased the maximum tool prices, I haven’t recalculated the ratio, but it isn’t much higher. However, the high Amway product prices make them virtually impossible to retail, just like the rest of the world. That’s why this world’s largest illegal pyramid and RICO fraud should be shut down.
Tex, evidently the US government disagrees.
Moses, WRONG. The US government has never gotten involved in this issue. That would be step 2. Step 1 is getting their attention.
It may be related to that you have some “Issues” with “the Amway tool”, and you won’t rest before it has become other people’s “issue” too? 🙂
flamewarriorsguide.com/
flamewarriorsguide.com/warriorshtm/issues.htm
No doubt it is related to that. It is also related to the fact that Grand Rapids would be a small, backwater town without Amway buying the town.
I won’t let this illegal pyramid and RICO fraud scam continue without doing everything I can legally do to stop it. If others would like to work with me, they are welcome to do so. If they want to sit on the sidelines and eat popcorn, that’s fine as well.
Being focused on scams is what this blog is all about, so I’m not sure what your point is.
It’s focused on factual information about MLM, “reviews, news and follow up stories”. The focus on pyramid and Ponzi schemes is simply a natural part of it, but not the main part.
Personal “issues” are about something different.
When searching for information on the internet, most people will already have decided, knowingly or unknowingly, what type of information they’re interested in finding. Factual info will have a much better chance of being accepted by a much wider range of people than any “issues” or any “propaganda”.
The current AmWay story was published because AmWay is an MLM company, not because AmWay is a scam. It’s a type of story where you can expect the company itself to either try to minimize it or pretend the problem doesn’t exist.
In addition, factual and balanced info will also be a great defense against lawsuits in many different ways.
Just that you tend to derail any conversation about any OTHER scam into Amway? 🙂
My blog is basesd on factual information, so what’s the problem again?
I don’t have any personal “issues,” I am educating others about Amway, and because most other MLMs operate very similar to Amway, about other MLMs as well.
In fact, many MLMs point to the 1979 court ruling about how Amway was found to be a legal entity and they’ve modeled their MLM after Amway and the Amway Decision. Plus, even YOU said this site is based on “reviews,” and I could easily describe my blog as an Amway review.
Do you think the Amway CEO in India was arrested for the second time in two years because the judge wants to buy some soap?
Of course Amway is trying to minimize the issue, that’s what I am here for, to give, as Paul Harvey used to say, “The rest of the story.”
I deal totally in facts and am the counterbalance to Amway’s propaganda and lies, therefore the info in it’s totality will be “balanced.”
K. Change,
I am not trying to derail any discussion, just point out that the typical MLM is based on the largest one on the planet. My theory is to chop down the trunk of the tree (Amway) rather than flail at the branches that have grown from that trunk.
Government agencies will clearly prefer factual information. It should preferrably be NEUTRAL and documented (not “evidence” type of documentation if you’re a third party source).
Step 1 = right view (e.g. identify the problem correctly).
Step 2 = right intentions
Step 3 = communicate it correctly
Right view can be about “how THEY see it, rather than how I see it”.
* New participants joining AmWay may potentially see a $10 CD as “inexpensive” or “acceptable”, they will first realise a problem when they have distanced themselves from the opportunity.
* A court or a regulator may see it in a similar way, as “inexpensive” and “acceptable”. They will probably need other types of information to see it differently.
Your Step 1 will fail in a situation like that. I can probably find examples on the internet where the combination of “wrong view” + “try to get their attention” only have led to disaster.
First one needs to present the FULL evidence, as I have described it on my blog:
Step one: It’s not just the $10 CDs, it’s also the various meetings, books, voice mail, etc.
Step 2: They pretend all of their lifestyle comes from Amway, but most of it comes from the Amway Tool Scam (ATS), as proven by numerous lawsuits, direct claims by the people making the ATS money, etc.
Step 3: Amway is aware of this scam, which makes it RICO fraud.
Amway’s own 2006 report showed a paltry 3.4% of the products are sold to non-distributors. Leaving out the fact that at least some of the 3.4% is false, this is an illegal pyramid.
How is this a “wrong view?”
I have presented these facts to numerous governmental (and media) entities. I believe, in descending order, the reasons government action hasn’t been taken are: incompetence, bureaucracy (which helps cover up incompetence), and political influences.
Amway India CEO bail plea rejected:
http://www.thehindu.com/news/national/amway-ceos-bail-plea-rejected/article6058649.ece?homepage=true
I tend to agree with Tex on this one. I’ve been pitched the Amway plan and participation in functions and the purchase of tools were always positioned “optional, but so is success”.
Political speak for get the tools and go to our functions. To fail to do so is to fail in your business.
Tex raises a hell of a good point and I’ve experienced myself. The guy trying to recruit me even offered to give me a list of babysitters. Not so I could go at night and show prospects the plan, oh no. So I could attend opportunity meetings.
As any carny can tell you-nothing draws a crowd like a crowd. Tex is right and the emulation of the clones make this obvious. Just my opinion of course.
I didn’t say that either. I said “I can probably find examples on the internet where the combination of “wrong view” + “try to get their attention” only have led to disaster.”
Or maybe it doesn’t look illegal as they see it? Maybe it looks “defendable” or “acceptable” from a regulatory point of view? “Full evidence” logic won’t work in that case.
You can probably post SOME factual information here about ATS, but this website isn’t primarily about scams or about bashing specific companies. It’s about “what ordinary people can be interested in if they’re searching for information, regardless of whether they want to join something or want to avoid something or whatever they want to do with the information”.
The topic you’re talking about seems to be about that people high up in the upline is offered additional income streams, by selling training material (and what else?) to people they have recruited.
The probably use CD to defend a price, rather than downloads to save people for unnecessary expences?
People usually want to “fit in” when they join something, “become a part of the group”. That makes them vulnerable to all types of offers. That was all I was able to identify.
On of the larges Red Flags for Amway is that Gerald Nehra was involved with them… it’s like certain death when his name is used to sanitize anything.
Tex, you have declared Amway illegal and me WRONG! I guess the capital letters mean you are raising your voice.
These are the facts: whether you like Amway or not the U.S. Government allows them to do business and therefore they do not consider them illegal. This is an irrefutable fact and therefore I am correct.
Listen to yourself. You sound obsessed and paranoid. Everyone is incompetent but you.
From what you have stated there are only two conclusions that can be drawn. (1)Either your facts are correct but you really suck at presenting them or (2)your facts really suck.
Like M_Norway evidently these other people did not deem your evidence valid. Alas, since M_Norway disagrees with you, I guess you consider him incompetent as well.
Let it go, life is too short to obsess over something like this.
Not wishing to debate with Tex here. We’re on the same side, albeit one’s a bit more to the extreme end than the other.
Amway has tried to clean up a lot of its image in the past decade. Whether it’s enough to avoid prosecution is a different matter altogether, and whether it has to pay for prior offenses is yet to be seen.
There are many people wondering has Amway really kept up with its bargain with the FTC since 1979? And is that enough in the modern age? That is a question you have to decide for yourself… AFTER you study the Amway Safeguard rules, the FTC “grand bargain” (that created Gerald Nehra), and the subsequent case precedents.
Notasheeple, I nearly fell out of my chair – someone who agrees with me! LOL
M_Norway, you STRONGLY implied I had the “wrong view.” Are you now saying I have the “right view?”
Do you know who Harry Markopolos is? Look him up, I submit the government’s reaction to my information is very similar.
You want SOME information here, but not too much? If I were a person looking for information, I would want as much as I could find, and information that balances (although with facts and not lies) the information coming from the other side.
I have no idea what this means, can you restate it using different words? “The probably use CD to defend a price, rather than downloads to save people for unnecessary expences?”
Wizzard7, I agree. I spoke with Nehra several years ago, it was few years after he stopped working at Amway.
He wouldn’t be specific, but said he didn’t like Amway. Over the past few years, I get the impression the feeling was mutual, although both are corrupt in their own ways.
Moses, the capital letters are for emphasis, but if you want to cry because I raised my written “voice,” go ahead and cry.
What you are WRONG (emphasis, not shouting, please don’t cry) about is the U.S. government doesn’t allow Amway to operate, the U.S. government hasn’t investigated Amway to shut them down. Just like they didn’t look at Madoff for decades.
This doesn’t mean the U.S. government approved of Madoff, they simply didn’t investigate him. That’s how the U.S. works, virtually everything is allowed until somebody points out the illegal activities.
If you truly listened to me by reading my blog, I sound thorough and informed.
Listen to yourself – Why do you attack me rather than my facts and logic? I never said everybody is incompetent except me, but I did say a LOT (emphasis, not shouting, please don’t cry) of people would rather sit in the stands and eat popcorn, instead of working together to bring more attention to Amway’s illegal pyramid and RICO fraud.
I suggest you read up on Markopolos as well, then read up on Joseph Isaacs. Different tactics, different outcomes. There are more than the two conclusions you offered. Guaranteed.
I think M_Norway is under-informed.
I will NEVER let go helping other people to not get scammed as I am millions of others have been. NEVER (that was a shout – LOL).
K. Chang, what has Amway done to clean up their “image?” And have these actions been substantive or window-dressing?
I don’t think that Amway was telling the truth about the level of retail sales in 1979, so they didn’t even live up to 1979, let alone after 1979. Also, the FTC didn’t even TOUCH the Amway Tool Scam in 1979.
Nice try Tex with the “cry” accusation. Usually when one lacks the ability to discuss things rationally he pulls the pejorative card as a cover.
If your statement had substance you wouldn’t need to capitalize your words for emphasis as your content would carry the day. Unfortunately you lack the ability to present substantive content and you lack the proper demeanor, therefore you need to capitalize your words.
My original comment was that the U.S. Government allows Amway to do business therefore they do not consider them illegal.
But you, a well known and reputable blogger possesses a jurisprudence that far exceeds those in our court system. Therefore when you declare guilt it must be so. LOLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL!
The LOL was me raising my voice in laughter. No actually it was a pejorative cheap shot. If you respond please don’t use these tired, old and overused forum tactics. They really are boring and childish.
The perception of whether Amway has REALLY tried to go legit or simply perpetuated its scheme is mostly in the eye of the beholder.
The “tool scam”, i.e. 2nd parallel pyramid of tools and training was subsequently pushed back down to “near cost” in the subsequent decades, IIRC. Wasn’t there a settlement not too long ago? Isn’t that the Pokorny Amway case?
You can calm down too, Moses. Stop getting so “personal” with Tex there. 😉
I’m not the one complaining about a single capitalized word, that would be YOU. Usually when one lacks the ability to discuss things rationally he pulls the pejorative “yelling” card as a cover. LOL
You used bold font in some of your words above, were YOU yelling? If your statement had substance you wouldn’t need to bold font your words for emphasis as your content would carry the day. Unfortunately you lack the ability to present substantive content and you lack the proper demeanor, therefore you need to bold font your words. LOL
I already addressed the U.S. government and the legality of Amway, and you just ignored it. LOL
I never claimed to possess jurisprudence or declare guilt, I am merely pointing out the facts for others to see and act upon, whether they be individuals or government agencies. LOLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
The LOL was me raising my voice in laughter. No actually it was a pejorative cheap shot. If you respond please don’t use these tired, old and overused forum tactics. They really are boring and childish. LOL
K. Chang, only in some countries, such as the UK and India, have prices been reduced. Pokorny did NOTHING in this regard, even though I wrote to judge Conti several times regarding this matter.
Pokorny was a slap on the wrist, and the Pokorny lawyers made a no risk, $15 million. Former IBOs got back literally pennies on the dollar.
Don’t worry about Moses, I’ve easily handled people like him before.
Hiring Gerald Nehra as a corporate lawyer wasn’t illegal in itself in 1984.
Selling a physical product (like a Compact Disc or DVD) may make a higher price look more legitimate. I assumed that some of the training tools would be in the form of physical products rather than as downloadable files.
If the main purpose had been training, downloadable files or online videos / audios would have done the job properly.
K. Chang, I can remember times when you got a little testy. 🙂
Tex, have fun with it. 🙂
M_Norway, a red flag doesn’t have to be illegal, and finding out about the nature of someone after the fact and then looking backwards is another good use of a red flag.
Amway has plenty of red flags without even considering Nehra, he’s just one more to add to the rather large pile.
M_Norway, thanks, and I agree about the physical object having more perceived value. It also introduces a “touch point” between the upline and downline, something to keep the relationships going.
Moses, I ALWAYS have fun with it. LOL
Interestingly, there has been little news coverage of the Amway India CEO in the U.S., and I couldn’t find ANY in the Grand Rapids area.
I think it’s related to the Herbalife stink in the air, Amway doesn’t want to attract any more attention to itself than they have to – I wonder what the jailed CEO thinks of this “dying on the vine” abandonment treatment?
Looks like MLive, the local Grand Rapids rag, finally got around to covering the story, at least 2 days after it was reported and Amway protested. However, we are in a battle to post comments, I’ve had one of mine removed already and posted a couple more, then saved the page.
If they remove the new comments, I’ll post the previous version with my scathing comments. Update: It happened, see the 5/29/2014 story here: stoptheamwaytoolscam.wordpress.com/mlive-exposes-amway-not
Looks like Pinckney is being passed around various police departments like a game of hot potato:
http://www.newindianexpress.com/cities/hyderabad/After-Kurnool-Cops-Khammam-Police-Arrest-Amway-CEO/2014/05/30/article2253516.ece LOL
Is this bizarro world or what? The largest MLM scam, Amway, is visiting the closest communist country, Cuba, while the largest democracy on the planet, India, has his CEO in jail. LOL:
http://www.cnn.com/2014/05/30/world/americas/cuba-us-delegation
Tex: You really dont like Amway do you? what happened? Try it and fail? It does require work you know. You cant be successful at Network Marketing by posting on blogs about Network Marketing.
the fact that Nehra doesnt like them is probably something that Amway should put on their website like an anti testimonial. Look! If Nehra doesnt like us we must be doing something right!
James, click on my name. It takes you right to my blog. Most people “fail” at network marketing, because it is made up of mostly illegal pyramids and RICO fraud tool scams.
I doubt Amway wants to attract any attention to themselves involving Nehra.
Amway was busy inviting sons of prominent Chinese leaders as “Amway Scholars” to the US on scholarships. 🙂
More potential charges against Amway: http://www.financialexpress.com/news/ed-verifying-if-amway-violated-foreign-exchange-laws/1255771
India justice / bureaucracy at work. There’s a lot of paperwork involved, and they rely on people making complaints (FIR, first incident report) for the police to act. However, Andra Pradash police seem to have a police chief who’s really tough on pyramid-type schemes, and esp. network marketing. I remember there’s a special interview of him a while back.
I’m sure CorporateFraudsWatch guy knows what I am talking about.
K. Chang, that is how Amway buys support and encourages foreign governments to look the other way.
No surprise. When I tried to repeat the news of Interrush busted in Hong Kong, ZERO Western media covered it. NONE. All I find are their sponsored drivers in various racing series.
I’ve approached several dozens, if not hundreds, of media outlets. Just because they won’t cover it doesn’t mean it’s legitimate. Only the facts prove whether it is legitimate or not. Keep pushing.
well, if there is no legal space defined for MLM , the courts have no choice but to prima facie find that MLM methodology falls ‘within’ the ‘mischief’ of PCMC banning act.
Courts are constrained by prevailing laws , their orders are restricted by the set boundaries of existing legal definitions.what else can the court do ?
All that the high court and supreme court allowed in the amway case was to alow investigation to continue as ‘prima facie’ the amway model appeared to fall under the PCMC banning act.
Contrary to the spurious reporting of the some media , the SC DID NOT agree with the high courts ‘prima facie’ finding of money circulation allegations against amway . ALL the supreme court said was let the state CID investigate and file its chargesheet within 6 months.
The supreme court also ordered that at trial, no cognizance be taken of the high court order which prima facie called amway a money circulation company .
there has been a charge sheet filed against amway in one of the initial FIRs around five years ago , but of course no trial has started, and none is hoped for on the medium term horizon. no court has found the allegations against amway either true or false, and no court has ordered them to halt their business.
meanwhile any citizen can join amway, and file a complaint the very next day , and get poor pinckney arrested for the third time! i see weird people all over the net celebrating this insane set of circumstances as a victory over evil MLM, but there’s no sane logic or law behind india’s treatment of MLM and amway.
so while tex can celebrate that amway is in trouble ,he should remember its not for the right reasons.
Amway getting negative publicity for ANY reason is good news, we’ll sort out the facts later.
And the facts include Amway being an illegal pyramid (high prices, which result in little to no retail sales) and RICO fraud (the tool scam). And note these issues have a LOT of overlap, as described on my blog by clicking on my name.
attaboy! just the kind of logic one would expect from vigilante justice seekers. kill first, talk later!
once india lays down guidelines for MLM, and pursuant to that, if an amway runs afoul of those guidelines, you can peddle the indian amway story as the great stake into the heart of MLM.
right now its just a bunch of policemen, under the influence of some crackpot activists [numbering barely 3/4 in number], who are using local police brawnery to book amway under a law which is not meant to be applied for MLM.
the indian corporate affairs ministry believes that MLM and direct selling should not fall under the PCMC banning act and new guidelines should be established for it. they haven’t gotten around to doing it, which is why ambitious officers use an old law to get their names in the local news papers and possibly a nice retirement fund.
also, there’s hardly any publicity of the amway arrest this time around. national TV and print is not mentioning it at all. this seems like a localized attack adjoining the offices of corporate frauds watch and his partners at the local police station!
what is happening to amway in india is due to absence of relevant law, it is most decidedly NOT a comment on the legality or viability of MLM, and should not be peddled that way around the net.
Negative publicity isn’t “vigilante justice.” Negative publicity brings attention to the issues, and then the legal system sorts out the issues.
I think Amway would fail any type of reasonable changes that address MLM scams, if/when verified.
I also wouldn’t be surprised that Amway would be the contributors to those police officers’ “nice retirement fund.”
I’ve seen numerous online stories in India, and even the the U.S. press is showing limited interest.
Most MLM companies are operating illegally, as most of them have little to no retail sales to non-distributors (illegal pyramid) and many of them have tools sold by the company and/or distributors that make them huge under the table money (RICO fraud). To suggest otherwise, one must ignore the facts.
a mindset that says ‘we’ll sort out the facts later’ is indicative of emotional vigilante justice seeking .please sort out the facts first , civilized society ought to behave that way. the fact is india currently has no protected space for MLM, which makes the industry open to attack. the indian govt has always indicated that it intends to remedy the situation .
while courts can ‘sort out the issues’, they are bound by whatever legislative reforms the govt will make. the current fluid situation around MLM in india,is very conducive to creating a ‘storm in a teacup’but except for some public embarrassment of ceo’s being unceremoniously bundled off to jail, will do little else.
ask yourself , why no trial has taken place in the amway cases of over 5 years ago ? the govt is not about to allow the courts to outlaw MLM on the basis of the PCMC banning act .before such a scenario occurs , new guidelines will be established and everyone will forget these cases.
i would’nt be surprised too .when companies are forced to work unprotected, due to govt inertia , some wheeling dealing is likely to occur .often FIR complainants are in it for a quick buck too .
this is an open debate and you appear to be on an extreme end of the spectrum. i do not believe that quantum of retail sales is the only yardstick by which to measure legality of an MLM.
herbalife should provide some answers on this subject. till then, we are each right in our own heads .
And neither have any other country [“protected space” for MLM]. All the normal commercial laws can probably be applied to MLM as well as to “brick and mortar” businesses.
You can’t blame the Indian government for failing to come up with laws to protect MLM. MLM is already protected through commercial laws / other laws, just like any other type of business.
Every trade related business can legally recruit a sales force, it only becomes illegal if that’s the primary function of the business and involves payments from the participants.
yes , true enough , but many other countries a least recognize MLM as an industry and have established guidelines for defining MLM as is acceptable to that country.
many countries have in place governing authorities established for regulating the industry. this is missing in india.
its hard for any corporate to work, if the police can break your door down at night, and arrest you on the basis of a single complaint. so, when i say, india needs to protect the MLM space, i mean set up guidelines, have a regulating body and follow some ‘civil’ civil processes before you start dumping people in jail. fair enough?
I ask the same questions about the lack of trials in the U.S., where the laws are better defined. I believe the laws of both countries are adequate to bring and win a lawsuit against illegal pyramids (lack of retail sales) and RICO fraud (hidden and massive tool profits).
Glad we agree Amway is corrupt, plus I’ve witnessed it personally.
Actually, I am in the moderate range, as I think if half the volume comes from customers, the MLM is acceptable. There are those who believe the number should be 70% (based on their misunderstanding of the inventory rule) or even 100% (distributor purchased items should not count for any payback).
We have enough answers from the FTC and SEC websites, as well as previous court cases – we don’t need to sit on our hands and wait for HLF to play out.
the lack of trials in the US , is because the FTC/SEC only go after egregious money circulation schemes where retail is close to zero. have you seen any case where the authorities have taken to court an MLM for having less than an exact 50% revenue from retail?
have the FTC/SEC ever announced that after thorough checking they have found that XYZ company clearly has over 50% retail? saying stuff on their website or setting some loose guidelines is one thing, dragging an MLM to court over it is another matter. which is why herbalife is worth waiting for, lets put some money where the mouth is!
uh, i dint say amway was corrupt. it may be victimized by a corrupt system, it may not be the perpetrator of said corruption. which is why regulation of MLM is necessary in india, to take the matter out of the hands of poorly paid policemen.
i think strictly quantifying retail in MLM may not be feasible or enforceable. if the product is retailable and such retail is plainly observable, i say leave it alone. there can be no end to hairsplitting, and its simply not practical.
i may be wrong, but the FTC and SEC appear to follow this commonsense approach.
I haven’t seen a case where 50% or more was retailed, and the FTC/SEC took them to court. But they could, for other reasons. Are you suggesting Amway India has anywhere close to 50% or more of retail?
I doubt the FTC/SEC would even start an investigation if it was clear there was significant retail (even greater than 25% would probably count as “significant”), much less announce it. Again, most MLMs have MUCH less than even 25% retail.
Herbalife has gone through all kinds of gyrations after Ackman started shining the light of truth on them for retail level and other issues.
Right, I said Amway is corrupt, and you said they would pay off the police. Same thing.
Of course quantifying retail is feasible, enforceable, and practical. Even more, it has been shown to be necessary. Have you ever heard of computers and audits?
The FTC/SEC follow anything but common sense.
You may meet one of those “believers” here. 🙂
M_Norway, these misguided souls are EVERYWHERE!
I’ll bet there are even some 100%ers here! LOL
You may potentially be interested in this “Kevin Thompson – BurnLounge decision comes out of Ninth Circuit Court” video, released 3-4 hours ago.
youtube.com/watch?v=WP1cz1gEhww
“Biggest event so far in the MLM industry”. “It’s about the motivation. If people are buying products for the right reasons, it should normally be OK to pay commissions on the sale”.
He also mentioned something about “purchase pattern”. In BurnLounge, more than 90% of the participants bought the most expensive package that promised most rewards, while external customers typically bought the inexpensive one.
He also mentioned “product value” as an important factor, and “Big day for the industry, big day for Herbalife”.
You can probably add some of those arguments to your “repertoir” of MLM arguments. 🙂
@Anjali
You may potentially be interested in the court document too, the “Ninth Circuit Decision”. It has a long section analysing “What defines retail sale?” and some similar topics.
cdn.ca9.uscourts.gov/datastore/opinions/2014/06/02/12-55926.pdf
A very clear indicator is generally about the emphasis of selling the opportunity itself to income opportunity seekers, rather than selling goods or services to consumers.
It will normally clearly be reflected in marketing statements and/or purchasing patterns. Income opportunity seekers will simply not have the correct type of purchasing pattern.
Note:
“Unrelated” doesn’t mean “completely unrelated”, that will be a misinterpretation of the law.
M_Norway, this is an Amway thread, not a Burnlounge thread. It is a double standard to disallow me to post on a non-Amway thread when I see something that is applicable to both Amway and another MLM, yet allow you to post on an Amway thread when you see something that is applicable to both Amway and another MLM. Stop hijacking my thread!
A decision in a pyramid scheme case should clearly be relevant for AmWay, too? The most normal place to post it would probably be in one of the Herbalife threads. Amway was a second choice, but it was currently a more active topic than Herbalife.
That decision didn’t contain much of interest, but I didn’t know that before I had browsed through most of it. Kevin Thompson described it as “A big day for MLM, a big day for Herbalife!”. At some point, he even described it as “One of the most important decisions in the history of MLM!”.
Hijack! Hijack! Hijack! You hijacked my Amway thread!
Thompson is a jerk. All he sees is more billable hours. I haven’t finished reading the decision, but have already seen several issues that he blew out of proportion and are actually contrary to his breathless video.
Tex if the Burnlounge decision is relevant to Amway then it’s permissable.
Your prior derail attempts went something like this:
There is a marked difference.
absolutely not . i am a firm believer than no MLM has over 50% retail, and i also believe that should not deem them illegal. you yourself capitulated from 50% retail to 25% retail within a couple of comments. so i guess even hardliners are not really hardhearted :).
MLM by its very structure is always going to be about consumption and sales rather than pure third party retail. either live with this or ban MLM. from what i observe, governments of the world are not pushing for banning MLM, some activist types are, but who cares about them.
Norway thanks for that burnlounge order. Thompson is right it does bode well for the MLM industry. Oz would do well to start a new thread on this order and put an end to the squabbles.
Give me a single example of one of my comments coming anywhere CLOSE to your “bottle” example.
I can’t. They were marked as spam and deleted.
Here’s where I decided enough was enough though: https://behindmlm.com/companies/telexfree/carlos-wanzeler-will-definitely-stay-in-brazil/#comment-292845
You’ve been mostly ontopic since then so let’s leave it at that.
I haven’t gone over the BurnLounge ruling yet, but from reading the comments – by any other name the court appears to have acknowledged what I otherwise refer to as defacto recruitment commissions.
At the end of the day you still need retail outside sales.
I certainly have never argued that affiliates purchasing a product are not end-users, but they are not retail.
Affiliates recruiting affiliates with no product or service involved is an obvious pyramid scheme (typically seen prior to the internet).
Affiliates recruiting affiliates with a product or service involved but negligible retail is a defacto pyramid scheme (the model used by every modern-day pyramid scheme and responsible for the “but we have a product” excuses).
From the sounds of it, the decision brings nothing new to the table. We already knew and accepted internal consumption on its own was not a problem. It’s when it’s all that is happening (in MLM) that problems arise.
(Ozedit: Please don’t waste my time.)
From my point of view, it wasn’t what I expected (after KT’s video). I found something on page 19, “BurnLounge is correct that when participants bought packages in part for internal consumption (to obtain the ability to sell music through BurnPages and to use the package merchandise), the participants were the “ultimate users” of the merchandise and that this internal sale alone does not make BurnLounge a pyramid scheme. BUT …”.
I also found something on page 18, “The FTC counters that “internal sales to other Moguls cannot be sales to ultimate users consistent with Koscot.” Neither of these arguments are supported by the case law”. “Neither of these arguments” was about BOTH BurnLounge and FTC.
Honestly, that decision doesn’t contain anything important. It can clearly be used to clarify SOME misunderstandings, but it doesn’t change much for MLM in general.
That decision isn’t worth a new article (other than for MLM lawyers). If you want to discuss it, I have posted one post about it in the second newest Herbalife thread (“FTC investigation”).
beg to differ, oz. the argument has never been about whether retail is necessary or not. in recent times, the argument has been about the quantum of retail to ‘ultimate users’and how much is enough, and who are these ultimate users.
in omnitrition a court order recorded that for the Koscot Test to have “any teeth” ultimate users cannot be participants in the pay plan.this sentence has created havoc in the MLM world ever since .many have believed this sentence to be the final dagger into the heart of MLM. even ackmans fight against herbalife has drawn heavily on this interpretation of ‘ultimate user’.
this latest burnlounge order just blows this definition of ultimate user out of the water :
the order clearly recognizes internal consumption for personal use as sale to an ‘ultimate user’.
court jargon tends to fly a bit over the head, but i cannot see any steadfast insistence of the court for particular amounts of retail being the yardstick to define the legality of an MLM.
The court goes rather gentle on retail and seems satisfied with ‘encouraging retail ‘, ‘effective rules for retail’ rather than using terminology like ‘primarily retail’.
the accent seems to be value of the products , with burnlounge not being able to satisfy the court on this account:
this appears to be nail number 1 in burnlounges coffin . nail number 2 is of course the monthly cash fee the moghuls paid to be part of the program , which is clearly unrelated to sale of any product .
Please go and read the latest SEC filings against TelexFree. The BurnLounge decision also emphasizes this.
https://behindmlm.com/companies/burnlounge-appeal-denied-still-a-pyramid-scheme/
Just because the BurnLounge appeal decision doesn’t spoonfeed to you the importance of retail, doesn’t mean it’s not right there in the decision.
You cannot have a company full of affiliates who are interested in the product and not the income opportunity, otherwise they’d be retail customers, not affiliates.
Affiliates can both be interested in the product and the income opportunity, but when a company has insignificant retail, the assertion by the FTC (and upheld by the appeals court) is that affiliates are only in it for the income opportunity.
As for encouraging retail, the lack of retail activity is a result of the compensation plan being heavily stacked towards affiliate recruitment. A compensation plan and retail sales are not unrelated.
In this instance they didn’t need to, as affiliate revenue was over 90% and obviously indicative of a pyramid scheme.
You can read that as 90% something percent being a benchmark, or that it simply wasn’t enough. Fact remains, had 50% or so of BurnLounge’s revenue come from retail sales, they wouldn’t be where they are now.
http://www.thehindubusinessline.com/companies/amway-seeks-modi-govts-help-to-release-india-head-pinckney/article6089326.ece
the impression we get , is that the narendra modi govt is here to work , and not just warm their chairs . hope IDSA pushes hard enough , and gets the job done !
http://www.newindianexpress.com/cities/hyderabad/Amway-Chief-Wants-Cases-Shifted-to-CID/2014/06/06/article2266166.ece
Result of petition? FLUSH! LOL
the hyderabad high court dismissed the petition by amway , as the CID had already taken over all the cases filed against amway in different cities , ie no more multiple investigations and arrests.
the court , further instructed the CID , to take the courts permission before making any more arrests .
all in all ,good deal for amway .
http://www.newindianexpress.com/states/telangana/HC-Disposes-of-Amway-CEOs-Plea/2014/06/11/article2274573.ece
more on the amway india drama :
the govt will have to DO something at this point .the parliament budget session starts on july 10 , 2014 . there are some whispers that MLM will be addressed in this session . but , the govt is new , so it’s just wait and watch .
corporatefraudswatch.blogspot.in/
the budget 2014/2015 released in the indian parliament on july 10,2014, has addressed the PCMC banning act , and hence the MLM industry:
http://indiabudget.nic.in/ub2014-15/bs/bs.pdf
If it means they can clamp down on scams like Speak Asia quicker, looks like a step in the right direction.
if it means a legal space for MLM to function without fear of prosecution, it’s a step in the right direction .
ever since the new govt took over , IDSA , amway , consumer activists have been on the heels of the concerned ministers, to act . it worked !
just goes to show , all you need is the will to act . the previous govt made lots of conciliatory noises but would not act,
so who rules ? narendra modi rules! [literally 🙂 ]
Well Speak Asia was a Ponzi scheme, so hopefully it means scams like that will get shut down sooner. And once caught out can’t play the courts like fools.
(Ozedit: If it means they can clamp down on scams like Speak Asia quicker, looks like a step in the right direction.)
twocircles.net/2014dec04/1417699891.html#.VIGgMtKUfTs
reliable information from some consumer bodies , whose representatives personally met with prime minister modi, says that he is fully supportive of the MLM industry.
he wants MLM companies to ‘manufacture’ their products locally, instead of just trading products.
Before the next budget session, regulations for direct selling industry appear to be confirmed, for now.
He may very well support the “MLM industry” but, he sure as h*** doesn’t and won’t support fraudulent schemes which disguise themselves as being part of the “MLM industry” like SpeakAsia and its’ defenders like Anjalitroll
I guess he deserved being arrested again! Can’t believe how someone can blow a second chance to live free.
and of course, it’s all been postponed indefinitely!
the govt is really too busy banning meat, and censoring the internet, and movies, to care about amending laws.
it’s not easy to rack up pressure on the govt to act on certain issues, and then they go and “has been put on hold for the time being” it, and everybody can go back to sleep again.
businessforhome.org/2015/08/india-puts-mlm-legislation-on-hold/
pinckney better be careful, he can get arrested over and over again, in different states, till the govt can find the time to address MLM regulation.
et tu narendra modi?
Many many years ago, (pre-CD, cassette tape era), I was invited to an Amway meeting by an “Emerald”.
After the meeting I was asked if I would be interested in joining AMWAY. I forget the Emeralds name, but he was an older gentleman, in his 50’d perhaps.
I asked him how one “really” makes money in Amway, as the prices for the products seemed absurdly high. I could not imagine me trying to convince someone that one tube of “Ampaste” toothpaste, was better than three tubes of Crest at three times the price.
This Emerald took me to a small office in his house and showed me wall-to-wall, floor-to-ceiling shelves stacked with cassette tapes. Hundreds if nt thousands of “training” and “motivational” tapes.
He told me that is where the money is, forcing your downline to purchase all these tapes.
He said it was manditory to purchase the tapes at ridiculous prices. If you did not purchase the tapes, then your business would never grow.
He said that I also had to force my downline to buy my tapes as well. He said the big money is in the training tools, not in the sale of product.
Interesing isn’t it? He also stared that he was paid very well to get up on stage and speak. Once you hit a certain level in Amway, you get paid to speak at functions.
Can you become wealthy at Amway? Sure, you just have to join the cult and drink the cool-aid.
LOL :^)
it appears that the indian govt is taking a ‘new approach’ to fix the ponzi/pyramid problem.
initially, the focus was on rephrasing the PCMC banning act, to exclude legitimate direct selling companies from the act.
now, the govt is proposing a ‘new’ law :
since the indian parliament is currently not in session, a parliamentary panel has submitted a report on this matter to the lok sabha speaker, and the proposal will be tabled for a vote in the next parliamentary session [winter session?].
since the PCMC banning act has a very broad range, which deems MLM and even MLM recruitment as money circulation, the govt is proposing narrower definitions of what is legal/illegal.
i think even india will adopt the ‘koscot’ definition of what describes an illegal pyramid scheme, as i have often heard and read indian expert commentators refer to koscot.
businessforhome.org/2015/10/indian-parliamentary-panel-proposes-model-central-law-to-curb-ponzis/
message to self: avoid knee jerk criticism of PM narendra modi’s leadership. it seems he likes to address problems from the bottom up, and create solutions based on solid new foundations.
finally, some government movement in regulating the direct selling space in india:
even though these guidelines will have no statutory backing for now, they will help prevent management and participants of MLM from getting arrested under the PCMC banning act.
mydigitalfc.com/industry/soon-guidelines-direct-selling-firms-156
amway has responded to the indian govt’s move to release guidelines for direct selling:
globalcosmeticsnews.com/asia-australasia/3014/new-indian-guidelines-protects-direct-sales-agents-from-amway-and-oriflame