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Monday, July 26, 2004

The Facts About Quixtar

The Facts About Quixtar

Ahh, the usual confusions about the FTC's 1979 ruling!!! How many people have actually read it? Sometimes I wonder if Scott has.

1. Sales-based compensation.,1607,7-164-17343_18163-44709--,00.html>Click here to read what the MIchigan Attorney General website actually says. You'll note that the site does have the quote Scott uses. The site also says -

"Avoid any program that focuses more on recruitment of new people rather than the sale of real products or services to end-user consumers."

This is where there is a deal of confusion throughout the modern networking market place. "end-user" is not the same as "retail client". Unfortunately even the Attorney General's seem to get confused about this. If one actually reads the original 1979 FTC ruling (
its here) you'll see the court talks abnout sales to consumers

Respondents have avoided the abuses of pyramid schemes by .... requiring that products be sold to consumers

Guess what??? IBO's are consumers too!!!

As for the 70% rule, this is where Scott really show's he hasn't got a clue how this business works .... the 70% applies to both wholesale and retail sales. That is, everything "sold" to downline counts in the 70% as well. These days the logistics are handled directly by Amway/Quixtar, but it's all still part of an IBO's sales ... just they are wholesale sales

2. No "headhunting fee."

Same misunderstanding Scott! If there are no sales then an IBO cañt make a profit. Wholesale sales are still sales!

3. No purchase requirements

Oh good grief. Of course IBO's are encouraged to buy stuff! Duh! Would you buy anything from someone who doesñt use it themselves? Frankly I think anyone who trys to sell something they wouldn't use themselves is being unethical.

As for the IBO training materials ... well yeah, going to lectures and buying books for college is optional too. Heck, I know. In my undergraduate degree I didn't take up that option and barely graduated. Later I was lucky enough to be invited for a postgraduate degree and I made a difference choice - I bought books, went to seminars, studied! Guess what? That time I was near the top of the class.

Still, learning the material was optional

4. Buyback rights

Amway has always given me or my downline a 100% refund when requested. As for BSM, my upline has personally guaranteed to refund 100% of any BSM upon request. I offer the same guarantee to my group.

More on the FTC case

As mentioned, Scott doesn't seem to understand the case at all. The only thing here of any validity is the 10 customer rule. Problem is, how to define a customer? If someone elects to register as an IBO to get the cheaper prices, are they a customer? Personally I think yes, if I have to call someone up weekly or monthly and tell them about new offers, and encourage them to buy, ie market to them, then I consider them customers. My profit is in the volume rebate I get on their purchases. All I can say is that Network 21 teaches people to have 10 customers because it makes business sense. it's not even an Amway rule in the countries in which I operate.

To summarise Scott's misunderstanding, he says -

"the FTC found at that time that Amway had and enforced rules that encouraged retail sales, including the 70% rule."

no no no no no!!! It's all about sales to consumers and wholesale sales to downline not just retail sales! The FTC was quite rightly concerned about people buying stuff just to qualify at different levels and ending up with a garage full of soap powder. That's what the rules are designed to stop!

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