Thursday, August 11, 2005

How NOT to Get Screwed in Quixtar

Did you love my diatribe? Hate it? Not really care? Whatever the case, I am back to balance it out. If you'll notice, I didn't COMPLETELY condemn the business. The business model itself is sound... IF the Lines of Support preached it correctly. Unfortunately, many of the lines merely turn the legitimate business into a Ponzi scheme (a method where the bottom level pays money that reaches the top, and those who pay must find others below them to pay their dues). And, just a by-the-way, the FTC never EXPLICITLY found that Amway was a legitimate business in their 1979 ruling; they just found that it didn't violate the standard test for pyramid schemes... read the decision if you doubt me. You will not see them state word for word that they are satisfied with Amway's status as a business. Regardless of the legality of the business itself, I have for you, as told by successful IBOs, the three steps to survive Quixtar.

Step One: Avoid the tools! Many of the Lines of Support, all listed here (, require you to sign a contract upon entry, guaranteeing your purchase of a certain amount of motivational tools and tickets to functions. Notice the first, and arguably the most controversial, is BWW (Britt Worldwide). They require you to buy 2 tapes a week, 1 book a month, and attend 1 seminar a month. The tapes are $7.50 each. The required 2 tapes a week are $15.00, times 4 weeks a month is $60 a month. This is not including the book and the seminar, plus whatever you voluntarily spend. The next group, WWDB (World-Wide Dream Builders) has a formula so complicated I don't want to try to calculate it for you. Trust me, it's quite a bit (or calculate it yourself if you don't believe me). You could also look at Globalnet, which charges $70 a month for tools, not including whatever you voluntarily spend (or are coerced into buying). Basically, what I'm pointing out is that, no matter which group you join, you'll be shelling out the big bucks for useless crap. Check out the link to Standing Order Tapes ( to get the gist of what is in each tape. Like I pointed out in my earlier post, this is an unavoidable expense that ALL IBOs must shell out. The list goes on, and in every one you are shelling out some kind of money, far from the "one-time investment" that Quixtar supposedly offers. And because Quixtar won't hire you directly, you can't get around it.

So can do you do to avoid this? Don't join one of those groups! Or avoid buying the tools at all costs. Beware though, your upline will coerce you and (most likely) neglect you if you don't contribute. Or ask around for a group that doesn't have these tools, as they will most likely be an honest organization. The tools, as you see from the sidebar link, contain little of use. If you aren't feeling the "excitement" they say is required, with or without tapes, you need to get out. This business requires your devotion and fervor.

Step two: Don't Buy from Yourself! In the more controversial groups, the up-line encourages you to buy from yourself and tell your down-line to do the same. This is an unofficial Ponzi scheme, where you MUST have recruits to profit. They'll say at first "100-150 PV is enough to sustain the chain." So you buy that (a few hundred bucks a month), and you lose a little money. Then you start getting more down-line. They then say "step it up to 300 PV." So you buy and lose even more money. In order to make up for this loss, you will need many more recruits. That's one method of motivation: recruit or go broke.

How do you avoid this? Don't spend a dime on yourself! Not only is this the unethical way to establish a down-line, but it's dangerous as well. No one said you have to set an example for your down-line in this manner except your up-line, who most likely was sold on this method long ago. The worst part is that, if you do make money, it is not very much, and it is all at the expense of others who weren't so lucky. Once the market saturates, despite claims by up-lines that this would never happen (how many people do you really think will buy Amway when they have Sam's Club, Walmart, Kroger's, GNC, Walgreen's, etc.?), the people who joined late will be screwed. Do you want to get caught in or even support this trap? So the way to ETHICALLY AND LEGALLY run this business is to teach your down-line to buy only what they want and what they think they can sell. Or sign up clients and members who aren't business savvy and just want access to Amway products. You're not making the promised 250,000 a year this way, but you're not stepping on anyone or even taking a moderate risk to get to your level.

Step Three: Don't Quit Your Day Job! But don't take it from me; take it from the hundreds of thousands of people who got into Quixtar/Amway with the promise of easy money, then quit their jobs to make room for the 15/month STP, 4 functions a month, meetings twice a week, self-promoting, web-making... I can go on. Suffice it to say that the effort they originally promised, part-time work for full-time salary, is complete BS. Once you're in, they tell you that yes, you could work part-time if you want... part-time pay! They suggest full-time work to make more money, or even MORE THAN FULL-TIME to make the big bucks. So you put 50, 60, 70 hours a week into a business that has a low profit margin NO MATTER HOW MUCH YOU SELL. Selling the plan to strangers consumes every evening because your friends back off from your obsession. Eventually, after you mortgage your house twice and borrow against all your possessions, you MAY turn a profit. Calculate, based on the tools, the cost to keep a Standing Order of all your products, and your living expenses, all against how much you can borrow or save. 2-3 years is what it'll take before you break 5 figures a year, I guarantee. That's still only 10,000 dollars. Remember, any success stories you hear are from people who made their money from 2001 or earlier. The market is becoming saturated, whether your up-line admits it or not, and it's getting exponentially harder to turn a profit every year. Here's a number a Platinum IBO gave me. Less than 1%. That's the percent of IBOs that reach Platinum. Do you know what the average salary of a Platinum is? About $25,000. That's another number a Platinum IBO gave me. So over 99% of people never reach Platinum, where less than half at this level MIGHT make $25,000. Translation? Your chances of living off this business are slim-to-null. See above about your dwindling chances in a saturating market.

Update: I visited a site recommended to me by an IBO, ThisBizNow, a pro-Quixtar site with facts and quotes supporting the business. There I found the numbers from Quixtar itself for the number of Diamonds, Emeralds, and Q-12 Platinums (not to be confused with just Platinums, these are a higher level):
"*The following are approximate percentages of Direct Fulfillment IBOs of record in North America who achieved the illustrated levels of success in the calendar year ending December 31, 2004: Diamond .0176%; Emerald .0420%; Q-12 Platinum .2440%."
We'll crunch this a bit further. The average gross earnings of a Q-12 Platinum is $41,970, including all bonuses, cash payments, and earnings related to the business. It only includes expenses related to cost of product. It does not include other expenses such as advertising, support line expenses (tools, meetings, functions), or any "discretionary" business expenses. I've been insulted for my choice of a "job" over the Quixtar dream. If I get the job I'm aiming for, a professorship, do you know what the entry level salary is? $55,000. And I have a much, much better chance than 1 in 400 of making that. 1 in 400 is the chance of you or any other person becoming a Q-12 Platinum. Once I become tenured, a guarantee if I do even a decent job for several years, my salary would start at a mere $75,000, or $4,000 above the average earnings of an Emerald DD. The chance of you reaching Emerald is about 1 in 2400. And, of course, if I manage to make seniority or move to administration, I would break $100,000 and have many, many benefits at no additional cost, not to mention a complete retirement plan. So, sure, a Diamond would make $175,000, but they're paying everything out of their pocket. No stock options, no health insurance, the retirement plan is essentially how much they can save... and the chance of becoming a Diamond is about 1 in 6500. All these numbers are based off information from The odds are stacked against you, and certainty is anything but a part of this business.

How do you avoid this? If you want to keep this part-time, on the side of a real job, that's fine! I know of many people who set a goal of 500 a month, attain it, and maintain their down-line. That's a good amount of spending cash for little more than maintenance hours on your down-line. DO NOT expect to retire on this, or even live off of it. Just treat it as a source of cheap cash. Remember, this is if you conduct yourself ethically. If you break the system, make it to where you're selling tools, you will make a lot more, the amounts the big wigs promised. But those privileged few are maybe 1 in 10,000. Don't count on it happening to you.

So there you go. An honest look at the system. If you work your ass off, you might BARELY make enough to go paycheck to paycheck. And even then you depend mostly on your down-line to stay productive. Depending on this system has put many, many people in debt. A few have escaped with a decent living, but they all started well before now. If you've been in it less than a year, I wouldn't hope for enough cash to live. But it is your decision; I just researched your chances. This is all based on the advice of IBOs that have made money from the business ethically (and in the first couple years of this century, I might add), so I pulled nothing out of the air. Check my numbers, check my assertions, and prove me wrong if you believe I am.

Don't say I didn't warn you...

Sunday, August 07, 2005

How NOT to Achieve the American Dream

This weekend was supposed to be perfect: volleyball from Friday evening to Sunday afternoon, tossing back the High Life with friends, and a movie or two with the lady. Well, volleyball was rained out on Saturday and Sunday, and though the movie and the beer went as planned, an ugly monster reared its head. Sunday at lunch, 4 of my friends and I were out to lunch and discussing, among other things, money problems and financial plans. Two friends from Lynchburg eventually brought up their own plans for the future: Quixtar. If you don't know what Quixtar is, it is an MLM (multi-level marketing) scheme brought to you by the makers of the oft-questioned and unethical Amway.

The way the program works, and I've had it explained to me by several friends suckered in by the promise of "free money," is this: you sign up for one of 3 codes: client, member, or IBO (independent business owner). A client code allows you to buy their own generic and rather underwhelming line-up of name-brand knock-offs as well as select items from partner corporations like Circuit City. You pay full-price in what is more or less a 2nd-rate Wal-mart online. A member code is different. You pay a membership fee (like Sam's Club) and get access to specials and discounts on wholesale items. Finally, the bulk of the group contains the IBOs. These folks get a wholesale extravaganza, with deep discounts on a wide variety of products and a chance to sell them to make a decent profit. They also will receive commission based on how much they buy. Another perk that Quixtar tosses out is if one gets others to sign up under them as clients, members, or IBOs, anything the underlings buy/sell will also earn their "up-line" a commission. Anyone below them that signs up additional people will also earn the original seller a commission. Now, the company also promises certain perks based on how much merchandise is moved below IBOs and by IBOs, setting top-end goals of "Emerald" and "Diamond" sellers who earn massive cash bonuses every month. Sounds like a pyramid scheme, right? They also don't enforce the law that Amway skirted around, the "rules requiring distributors to sell to at least 10 retail customers per month and to sell 70% of the products to customers." A way around the law, as well, is that the sign-up fee does not go to the person above you; rather, it goes straight to the company, who pockets the fee and sets you on your merry way, attaching your fate to the person whose code you used to sign up. The name they give themselves is "multi-level marketers," diagrammed not as a pyramid but as a web. The discrepancy there is dubious... pyramids have levels, webs don't. Every time one of the IBOs has offered to take me under their wing, they cringed at the word "pyramid." They also were immediately set on the defensive, clutching at technicalities that distinguished Quixtar from a pyramid scheme, a strategy no doubt inflicted upon them by their superiors. They spout on about how they will invest 10-15 hours a week and spend the rest of the time counting their money and enjoying life. One of my friends even spoke about how she could lie on a beach day in and day out, generating revenue all the while.

The whole cash-for-nothing deal sounds like a win-win situation, right? Quixtar is quick to point out that you could make 250,000 a year easily. While this is true, there are several facts to consider. First, the "Emerald" and "Diamond" sellers are mostly the original sellers, most likely with the company from day one. The rags-to-riches success stories that they spray across their followers at conventions are misleading: most of them didn't rise to wealth; they already had it. Those few that did make it from poverty got lucky. I challenge any member of Quixtar to find me a high-level seller that began after the year 2000 (Quixtar "revolutionized" the scene in 1999). So the goal is 250,000 dollars a year? Check Quixtar's website, and all the claims of massive salaries and no-effort comfortable living are rampant. Quixtar's IBO website especially seems like the program book for a cult (ironic, as some psychologists have described the ideal mindset of Quixtar IBOs as "cult mind control"), with such non-answers in their FAQ section that it's hard to take it all seriously unless you desperately are seeking hope. I point you to this site: Quixtar Questions ...most of the answers seem to be the work of brainwashers, playing off the numerous people who have sued Quixtar for ruining them financially saying, "the larger and higher profile a business, like Quixtar the larger target it provides for attracting lawsuits, no matter how unjustified the lawsuit is." Or see their response to "When I search Quixtar on the Internet, I find some negative stuff. What's up with that?" They demean the tons of research and whistle blowing as "some negative stuff," then go on to say that you shouldn't judge unless all the facts are on the table. They can't say that the "negative stuff" is false, because they'd be flat-out lying. Also note that the answer to the question "How much money can I really earn?" is answered non-committally... that profit is largely determined by "personal effort and the entrepreneurial nature of the business. Buried deep within a lot of legal jargon on another was the average yearly salary of an active IBO: 1400 dollars. That's your average reward for 10-15 hours a week. To put it in perspective, someone working at minimum wage for 10-15 hours a week will earn between 2600 and 4000 dollars. The average IBO is working for a wage of 1.80-2.70 dollars an hour. Also, to again put your chances in perspective: for every person that earns 250,000 dollars a year from the company, 178 people have to make absolutely no money to keep the 1,400 dollar average. I should also note that this figure, from ThisBizNow, is for active IBOs, which is 66% of the Quixtar force. These are IBOs who are ACTIVELY trying to make money with this, either through retail or by showing the plan. Not IBOs who buy for themselves, or IBOs who just signed up and waited for money. I've heard quite a bit of criticism of those building a case against Quixtar saying that the numbers are skewed due to inactive IBOs. The numbers come with a footnote that qualifies it further:
"Based on an independent survey during 2001. 'Active' means an IBO attempted to make a retail sale, or presented the Independent Business Ownership Plan, or received bonus money, or attended a company or IBO meeting in the year 2000. 'Gross Income' means the amount received from retail sales, minus the cost of goods sold, plus the amount of Performance Bonus retained. There may be significant business expenses, mostly discretionary, that may be greater in relation to income in the first year of operation."
These are not numbers made up by critics who want to see you fail; this is fact from an advocacy site, skewed towards the positive if anything. This also, of course, doesn't include the non-required expenses, namely motivational tools. I looked into this expense below:

Update: Special thanks to xanadustc for parsing his motivational tapes (the link is on the sidebar). Here is the list of cult-like thinking known as the Power Three:
Power of Unity – Only do what is taught by the system. Do not try to ‘reinvent the wheel’ or do things your own way. Me: (whereas common sense demonstrates that the system merely fills the pockets of your upline)
Power of Submission – Always be in submission to your upline.
Power of the Spoken Word – Always speak in the positive, confess in the positive, and never speak anything negative or anything that you don’t want to happen.

Probably the largest scam of the whole company is the sales of "tapes, books, and tickets," or the motivational tools of the IBO. The average active IBO makes 1400 a year. The average IBO also spends 60 dollars a month on motivational CDs, tapes, and books. In addition to this, the average IBO also spends 50 dollars a month on tickets to high-profile conventions, parties, meetings, and the like. So with the 1400 a year, minus 720 a year for motivational tools, minus 600 a year for the meetings, the average IBO is left with a yearly profit of 80 dollars. 80 dollars made from over 500 hours work? Shoemakers in Malaysia are making more than a lot of these IBOs are. The big hoax is this: all of the people who are making money with Quixtar are NOT making it from the sales of in-house products. Instead, they earn their thousands every month by duping the lower-level IBOs into buying this useless motivational crap. It's called the "tools system," and it is a wide-scale abuse of the trust that the new IBOs have placed in their up-line. I have a few quotes by some higher-ups in Quixtar that support this claim:
"Tools business is more important than Amway business" ~ Rich DeVos, co-founder of Amway and Quixtar
"Quixtar said 98% of the IBOs should not know about the tools income" ~ Andy Andrews, former Diamond IBO, fired by Quixtar for revealing the tools scam
"Amway's achievement numbers have not improved with the 'systems'" ~ Rich DeVos
"You can't give up your tools income because that means bankruptcy for you" ~ Bill Abraham, attorney for Yager Diamonds, an IBO focus group (why would they need an attorney?)
Perhaps the most incriminating of all...
"The tool and function business generates enormous profits. Simply put, the money is not in the Amway business; the money is in the hype of the Amway business." ~ Kenny Stewart, Crown IBO, and Brig Hart, Double Diamond IBO.
This shows the true nature of Quixtar. All the motivational crap they sell you is worthless, and the only function it serves is to fill the coffers of the up-line. Also check the last two websites in the list at the bottom of this post. There are many, many more incriminating quotes from members of Amway and Quixtar.

I also invite you to read the story of a woman who discovered the truth behind her hardships as a dedicated 40+ hours a week IBO with Quixtar here. In addition, I would like to give an example of how woefully useless these tools are...

A friend of mine called me up one day, wanting to offer me a "wonderful business opportunity." I promptly told him that I wanted no part of any pyramid scheme. This was before I had learned the new terminology. He quickly corrected me, saying that there are no more pyramid schemes, and that this was a legitimate business offer. I warned him explicitly that anything similar to a pyramid scheme would be a waste of his time and the 2-hour drive that he had to make it. I also suggested that he describe it to me over the phone instead. In a trained-sounding voice, he replied that for me to get the full benefit of the experience, I had to speak to him in person. I figured an hour or so out of my weekend wouldn't hurt, and I could use a job, so I agreed. I forgot to ask how he had gotten my number. Today I learned from my misguided compatriots that in the motivational tools, the IBOs are urged to make lists of hundreds and even thousands of people who could possibly be converted to the scheme. People such as second-grade classmates, babysitters, distant cousins, and even the unknown drunken cell-phone entries are fair game. Anyway, he continually pestered me with calls every day leading up to our meeting, asking me if I needed clarification of anything he had told me, the clarifications more confusing than the original problems, and constantly confirming our meeting. This is all part of the tool game plan. Eventually I told him to just leave me alone until the meeting. So the day comes, and I head out to the coffee shop where we were to meet. I go a half-hour early to grab a mocha before he got there, and I saw him in the window, apparently practicing a presentation with note cards to an empty booth. He saw me and smiled sheepishly, putting away the papers and pulling out a bunch of generic-looking food items. I walked in and sat down across from him. He opens a half-empty bottle of a sports-drink labeled "XS," takes a swallow, grimaces (at the taste?), and caps it. He then pulls the note cards back out. I have to admit, the people who script these "interviews" are psychological geniuses. Several of the note cards (almost a hundred of them wired in a notebook fashion) addressed my skeptic remarks right after I uttered them. The note cards themselves annoyed me. They had a transparently condescending air, treating me like an ADHD kid flash-reading for a multiplications-table test by using flashy diagrams of nothing and bar graphs with no numbers and enigmatic labels like "IBO min effort." Most of the presentation itself was a blur, mostly hyperbole about how you get exponentially richer (think a pyramid) the more you get people to sign up. They refute the pyramid right after (defensively) by drawing a web diagram, as if that makes it all better. There were also laughable attempts to make the presentation a personal one. Think Bill Engvall's joke about buying a spa he didn't want because the salesman coaxed his name out of him. This kid asked, "Now, if you could go to one place, where would it be?" I was startled by this question, thinking, "What does this have to do with anything?" I must have said something to this effect because he, too, was startled. This answer didn't fit his scheme and he became flustered, eventually stammering out "c-c-come on... just name a place." I called his bluff. "I don't want to," I replied. He pressed me over and over and refused to continue the presentation. Finally I said, "Fine, I want to go to the Bahamas." He brightened and straightened in his seat, back on track just as his superiors had instructed. "Well, how would you like to go to the Bahamas and still be making money at home with no effort?" I said, "I guess that would be nice." He replied "Yep," and then continued on with the presentation, absolutely no segue into that idea or out. I laughed at the other paltry attempts at involving my personal life, and when he asked for some friends' names, I just made stuff up and tried not to think of anyone in particular. It made the next exercise even more fruitless, as I offered my newfound imaginary friends discount sports drinks and the promise of free money. I told him that I was not interested, and he replied "Ok, it is your choice, and I will not pressure you any further." He then tried to pressure me further. I got up from the table, wished him luck, and barely made it out the door before I burst into cynical laughter.
UPDATE: My friend, who I mentioned above, is officially out of Quixtar. He lost thousands of dollars, forcing him to transfer from a private school to a cheaper public school. I recently had him over for a party and he had some interesting things to say.
"I couldn't stand being in that group anymore... everyone was being so fake."
"When I told my upline I wanted to leave, he told me that this was my big chance to spread the word of God."
He told me that he realized he had been brainwashed, and that the plan and the methods were useless. He also took no offense when he read this because he realized how foolish the endeavor had been. There's a true success story from Quixtar.

Back to today: I relayed my doubts about the program my friends had been duped into, trying desperately to fact-find in their speech. Every question I asked prompted a pre-programmed answer that answered nothing at all. Finally I cut them off and tried to ask them about the corporation's, as well as the higher IBO's, profit margin, if everyone was promised a large cut of the sales. I managed to coax an admission from them that they didn't buy a thing from Quixtar. Because the profits are based on how much is sold by you and those below you, I inquired as to how they planned on making the expected 2000+ dollars profit every month. After an awkward silence, the two friends launched into a (seemingly practiced) tandem volley of praise for the program, and of people they know who are "retiring in 10 years." One friend also countered my criticism of the "easy money" mentality by describing how her father was locked into manual labor with no retirement plan, that her motivation was to help him live out the rest of his life comfortably. This is a wholly admirable mentality, but the crooks at Amway will prey upon this, building up one's hopes and dreams before dashing them to nothing, stealing all the "optional" investments the poor down-line put into the scam. If I had researched this earlier, I would have asked them how much motivational stuff they had been sold by these people. They claimed the motivational tools helped, and were necessary purchases for the burgeoning IBO. Quixtar, after just 3 weeks, had already brainwashed two more followers. Ultimately, the two friends refused to believe that their win-win situation was a scam. I can only hope that their lives aren't ruined like so many others were before.

If you are involved in this company, please take my advice: do NOT buy the motivational tools, do NOT invest ANY money other than your membership fee, do NOT attend any functions that you must travel a long distance for, and do NOT buy tickets to conventions or parties. And be sure to check your morals at the door: the only way you can make any kind of salary (read:: more than 2,000 a year) is to dupe your down-line into investing in your own tools system. There's no easy money in Amway, just years of frustration with an eventual position, unethical and unrewarding, as a propaganda marketer and swindler.
--- (a book site from a former Quixtar corporate-type who blew the whistle on the deceptions of the tools system)
--- (a reporter infiltrated a Quixtar convention, interviewed several who were ruined by pursuing a career as an IBO, and cornered a higher-up about his incriminating admissions)
--- (quotes of higher-ups in Quixtar and Amway)
--- (information on all types of multi-level marketing schemes as well as links to other fact-based sites and truth-hunters)
--- (the lawsuit against Amway by two former top sellers)
--- (Quixtar facts on IBO earnings)

I also encourage you to read this overview of MLM law:
You can see here, using their tests, that Quixtar very nearly falls under the category of a pyramid scheme. And if you include the fact that the tools are the main source of income, it then shoves Quixtar into the realm of illegality. Also, if the third prong of the Howie test is considered, if your up-line is helping you recruit, then that up-line is in violation of an anti-pyramid provision. They try to get around this with motivational tools which, as you read above, are useless. I invite IBOs to let me know their net profit from this business, as well as how much time, money, and effort they've put into this operation. All I know is I've seen too little success and too much heartache to condone this company's actions.

Now that your eyes or open (or fused completely shut, depending on your reaction), I will take the positive support and knowledge that I've gleaned from Quixtar IBOs and give you a rough idea of how to succeed in the business. It does not mean part-time work, it does not mean "set it and forget it" downline abuse, and it means being both ethical and wary. You can read it here.