Quixtar, Amway, and why I hate pyramid schemes

mood:disgusted

My ex-housemate, who I lived with while I was in school, was convinced she would make her million dollars through an online scheme called Quixtar. She was fairly successful selling Tupperware, but abandoned that in favor of this Quixtar thing, and actually tried very hard to convince me to sign up for it.

Luckily I'm more skeptical than she is, I guess. Quixtar is an online "business", which is managed by its "IBO"s (Individual Business Operators). My housemate was an IBO. It works like this: Quixtar sells a variety of products, everything from paper products to jewelry to electronics. Each IBO sells the products (in the fashion of Tupperware parties or Pampered Chef parties). For every product sold, the IBO gets a percent of the profit. The IBO also tries to convince their friends and family to become IBOs. Then when their friend/family IBOs sell a product, the friend/family gets a percent of the profit AND the other IBO gets a percent of the profit.

Or, in the words of a distributor: "If I buy $200 of stuff from Amway this month, I'll get a 3% bonus check (3% of $200 = $6). If I share the opportunity with nine others, and we each buy $200 of stuff from Amway this month, they each were responsible for $200 and will get $6, but I'm responsible for $2000, moving me to the 12% level. I get $240. However, I'm responsible for paying the bonuses of the people right below me - $54 - so I keep $186. I make more because I did more, I found nine people who wanted to buy at a discount and get a bonus for doing it. After I reach the 25% bonus level there are other bonuses that kick in, but they're all based on the volume of product flow, not on signing people up or having lots of people "

I was suspicious of this from the first time my housemate explained it to me, because this sounds just like a pyramid scheme. Mathematically impossible and, in the US, illegal. Well, today I came across this story on ABCNEWS.com about pyramid schemes, which immediately made me think of Quixtar.

I googled Quixtar, and (not surprising) Quixtar is owned by the same company that owns Amway. For those who don't know Amway's history, well... it's complicated but basically they got into legal trouble for being a pyramid scheme too.

I discovered this Dateline NBC investigation into Quixtar, which tells the story of their theft better than I ever could. I also discovered that Quixtar is "technically" legal because they produce a product - that is, the people get a product in return for their money.

I think what makes me most angry about this whole thing is that Quixtar is doing all of this "in the name of Jesus, Amen". How dare they take my Lord's name in vain, abusing His name for their own profit! It's deceptive and it's wrong!