Unpacking the Controversy: Is Amway Really a Pyramid Scheme?
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Are you familiar with Amway? Maybe you’ve been approached by someone who claims they have a great business opportunity for you. 

Or perhaps you’ve heard the rumours that Amway is nothing more than a pyramid scheme, a fraudulent business model that preys on unsuspecting individuals. Whatever the case may be, the controversy surrounding Amway is no secret. 

For decades, the company has faced criticism and legal battles, with many people claiming that its business practices are unethical and even illegal. 

But is Amway really a pyramid scheme? 

In this blog post, we’ll unpack the controversy and examine the evidence to determine the truth about Amway.

Disclaimer: This Amway review has been thoroughly researched with information and testimonials that are available online to anyone in the public.  Any conclusions drawn from that information are my own opinions.

Amway Review Overview

Product Name: Amway or American Way

Founder: Richard DeVos and Jay Van Andel

Product Type: Health and Wellness MLM company

Price: $69 one-time registration fee + $99 Starter Kit (optional) + budget for products

Best For: If you’re good at direct sales and recruiting

amway-mlm-product-example

What to Look For In an MLM

  • Low start-up fee and maintenance costs
  • High-quality affordable products
  • There is no need to carry inventory
  • An affiliate-like system
  • Generous compensation plan
  • Company is in early momentum phase

Pros

  • Wide range of products
  • Potential for income
  • Support and training
  • Flexibility
  • Positive company culture

Cons

  • High start-up costs + hidden costs
  • Income potential is low
  • Pyramid scheme in disguise…
  • Focus on recruitment
  • Time commitment
  • Negative reputation
  • Competition

Quick Summary

Amway is an established MLM that has been around for a very long time.  It sells products that get great feedback from customers, but their business opportunity paints a different picture.  

Most of their representatives lose money, according to their compensation plan.  They have also had to deal with many controversies over the years, relating to them being labelled a pyramid scheme.

This is down to their products being ridiculously expensive and a need for their IBOs to remain active, meaning they need to buy these products.  If you want to avoid doing this, you need to start recruiting a team that can buy the products instead and you can earn bonuses off their sales.

But it all points to Amway being a (potential) pyramid scheme in disguise…  Only the top 1% are making decent money. The rest are losing a lot of money.

Rating
5/5

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Table of Contents

What is Amway?

Amway is a multi-level marketing (MLM) company that sells a variety of products, including health supplements, beauty and personal care items, and home goods. 

The company was founded in 1959 by Jay Van Andel and Rich DeVos, and is headquartered in Ada, Michigan.

amway-mlm-founders-image

Richard and John started out a marketing line of nutritional products from a company known as Nutrillite.  Previously names the California Vitamin Company, Nutrillite actually sold the first-ever multivitamin sold in the US.

Using the direct sales model, they both became top distributors with Nutrillite.  They also loved how Nutrillite was using the MLM or Network Marketing system that offered commissions on sales and bonuses for newly recruited distributors.

They built up a team of more than five thousand distributors, but then decided to leave Nutrillite and go it alone.  (taking their top recruiters with them).

That is when they launched Amway or the “American Way”. And started building what we know today.

Amway’s first product was a highly concentrated organic household cleaner known as Frisk, which later got its name changed to L.O.C. or Liquid Organic Cleaner.  This is now known as Legacy of Clean.

This cleaner along with their Nutrillite supplement range, which they later acquired, become the core of Amway’s product offerings.  We’ll get into more detail about their products later in the review…

They also offered their distributors a way of earning residual income through their customer’s repeat purchases.

Amway now operates in more than 100 countries and territories worldwide, and is one of the largest MLM companies in the world. Participants in Amway are able to earn income through both product sales and recruitment of others into the company, and the company provides access to training and support resources to help participants build their businesses. 

However, Amway has been the subject of controversy and criticism over the years, with some people accusing the company of operating as a pyramid scheme.  Let’s get into more about this now…

Recommended Post: Affiliate Marketing Vs MLM: All You Need To Know in 2023

Is Amway A Pyramid Scheme?

The short answer is that No, Amway isn’t a pyramid scheme.  But if you expand on that answer, then it’s not as simple as that.

The reason is that Amway, like other MLM’s, have a business model that makes it hard to tell the difference between a legitimate MLM and a Pyramid Scheme.

First, let’s look at what a pyramid scheme is…

What is a Pyramid Scheme?

A Pyramid Scheme is a business that pays a commission for recruiting new members, not for selling a product or service.  They will typically try and promote it differently, to avoid being labelled a pyramid scheme.

But the reality is that the only way of earning money with them is to recruit more and more people into the scheme.

It starts with the initial promoter who recruits “investors”, who in turn recruit more investors, and so on.

The scheme is called a “pyramid” due to each level increasing the number of investors.  You can learn more with this video…

Another thing to point out is that Pyramid Schemes are illegal in most countries, so they don’t have a very long lifespan.  As soon as people stop joining them, there are no more “investors” to put money into the scheme. 

Meaning the scheme collapses and the majority of people lose their money.  The people behind these schemes usually start again with the same scheme, but with a different name, etc.

The hope is that the FTC and other authorities catch them before they hurt too many people.  Examples include Digital Altitude and MOBE, which were both outed as pyramid schemes and were closed down.

In short, pyramid schemes don’t typically have products (which Amway does) and they focus solely on recruitment.  But when you have a legitimate MLM (like Amway), who has expensive products and a need for their IBOs to remain active.  It forces them to keep on buying products when they don’t make sales.

They then try and influence you into recruiting more people into your team to offset the need to buy products.  So, the bigger question you should be asking is whether Amway is operating like a pyramid scheme in disguise.

Is Amway a Pyramid Scheme in Disguise?

What I mean by this is, are they more interested in getting you to recruit more people into the scheme or not.

Typically, the company won’t be pushing this.  But if you are being recruited by someone who is struggling with the business opportunity, then you aren’t going to get the kind of support you need to make a real go of this business opportunity.

When you look at the general statistics about MLMs, between 73% and 99% of their IBOs are losing money.

That doesn’t make Amway a pyramid scheme.  But the pressure to sell or recruit, with tough conditions to make a real go of this, does make you question whether it’s a good business opportunity to go for.

The factors for me, regarding Amway, are these:

  • Amways products are expensive – there are cheaper alternatives online
  • Amway’s hidden costs of getting started
  • The quality of the person you would be under – the person recruiting you

If the person recruiting you is being cagey with information or even their own success rate.  It tells you that they are struggling to make this work and want to pull you in to make it easier for them.

These are the factors that make most MLM’s be labelled as a pyramid scheme.  In my opinion, there are elements of it, especially with the recruitment side of any MLM.  

Check out this video to help you spot a true pyramid scheme…

From a legal point of view, Amway isn’t a pyramid scheme.  But they cannot seem to get away from that label.  They have had several lawsuits settled on this matter.

As we’ll discuss further in the review, the really low success rate coupled with the pressure some recruiters put on their members to recruit themselves can easily make any MLM look like a pyramid scheme.

Success is Rare at Amway...

To be honest, success is rare at any MLM.  Typically, between 73% and 99% of all MLM representatives lose money!

Now, you might be able to break into the top 1%, or maybe you feel Amway is different.  But they wouldn’t keep being labelled a scam or a pyramid scheme if that was true.

Even if you did break into the top 1% and don’t lose money, the fact is that you’ll need to make your money by recruiting other people who will HAVE to lose money!!

Think about who is trying to recruit you, is that why they are doing it?

The only way you can win in any MLM, like Amway, is to make others lose.

There is a reason why Amway doesn’t release income disclosures anymore, but we will dig into the company in more detail later on.

How Does Amway Work?

Amway is a health and wellness company that products hundreds of products that people do use on a daily basis.

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Using the direct selling model, they rely on their representatives or IBOs to sell these products instead of selling through the conventional method.

That is why you won’t find Amway products on the shelves.  They offer an opportunity for everyday people to promote these products in return for commissions and bonuses from any products their sell.

They also offer an opportunity for you make money from what others sell, which is the recruitment side of Amway.

Amway Product Line

One of the big advantages of becoming an Amway distributor is the range of products they offer.  They have a huge offering, with products in every category in the health and wellness sector.  They also have some household items and cleaning materials too.

Amway sells over 450 products and introduces new products on a regular basis.

Here are some of the products that Amway is known for, and what prospective business Independent Business Owners can sell:

Nutrillite

Nutrilite is a brand of health supplements and vitamins that is sold by Amway. The Nutrilite product range includes a variety of vitamins, minerals, and herbal supplements, as well as protein bars and shakes. 

The products are formulated with plant-based ingredients and are designed to support overall health and wellness. 

Some of the most popular Nutrilite products include daily multivitamins, immune-boosting supplements, and supplements designed to support heart health and digestive health. 

Nutrilite products are marketed as being made from high-quality, natural ingredients and are backed by scientific research and testing. 

The Nutrilite range is a significant part of Amway’s business, with the company placing a strong emphasis on health and wellness products as a key part of its overall product lineup.

They claim they are one of the only brands that grows, harvests and processes the plants for their supplements on their own certified organic farms.

Artistry

Artistry is a brand of skincare and beauty products that is sold by Amway. The Artistry product range includes a variety of items, such as moisturizers, cleansers, makeup, and fragrances.

amway-mlm-artistry-product-line

The products are formulated using high-quality ingredients and are designed to address a variety of skincare concerns, such as wrinkles, fine lines, dryness, and uneven skin tone. 

Artistry also offers a range of makeup products, including foundation, lipstick, and eyeshadow, that are designed to enhance natural beauty and provide long-lasting wear. 

The brand places a strong emphasis on research and development, with a team of scientists and experts working to create innovative, effective products. 

Artistry products are marketed as being suitable for all skin types and are designed to provide visible results over time. 

The Artistry range is a significant part of Amway’s business, with the company placing a strong emphasis on skincare and beauty products as a key part of its overall product lineup.

XS

XS is a brand of energy drinks that is sold by Amway. The XS product range includes a variety of energy drinks in different flavors, as well as related products such as energy shots and supplements.

amway-mlm-xs-product-line

The products are formulated with a blend of caffeine, vitamins, and other natural ingredients that are designed to provide a boost of energy and enhance mental focus and clarity. 

The XS brand is marketed towards individuals who are looking for a convenient and effective way to boost their energy levels, such as athletes, students, and busy professionals. 

The drinks are low in calories and sugar, and are available in a variety of flavors, including cranberry-grape, tropical, and cherry. XS energy drinks are marketed as being a healthier and more natural alternative to traditional energy drinks, and the brand places a strong emphasis on providing high-quality, effective products that can help people achieve their goals and stay focused throughout the day. 

The XS range is a significant part of Amway’s business, with the company placing a strong emphasis on health and wellness products as a key part of its overall product lineup.

Amway Online Reviews

When exploring any potential business opportunity, and spot whether an MLM could be a pyramid scheme.  It’s helpful to check out some online reviews about the business.

Amway has got a lot of positive reviews about their products.  This is good if you’re looking to make money from selling their products.  But it’s their business opportunity that gets them the bad press.

There are many negative comments made about their MLM opportunity.  This is the part of the business that does get them drawn into the debate of whether they’re a pyramid scheme or not.

Positive Product Reviews

Website like Consumer Affairs, have many positive reviews about Amway.  But the majority of these reviews are about their products.  I cannot say I’ve used their products, but based on the reviews here.  People are finding them good products to use.

amway-mlm-positive-product-review

There are also reviews on the Amway BBB profile.  They hold an A+ rating on the Better Business Bureau.  The reviews about their products are positive.

Generally speaking, the products that Amway reps would be promoting do get positive reviews.  That is a good sign, especially when looking for red flags that a company could be a pyramid scheme. 

As I said, the products themselves aren’t the issue.  the business opportunity is where the real issues lie.

Negative Business Opportunity Reviews

Amway is an MLM, which means that you will make money through selling these products to people.  It’s sounds easy, but with hidden costs and the products being overpriced.  It makes the business opportunity really hard.

This is reflected in the reviews you’ll find online.  The negative ones aren’t about the products.  But they are about the business opportunity.

The need to keep on buying products, if you don’t sell any yourself.  The pressure to recruit to make it easier.  Read the reviews below to see why people feel that Amway’s business opportunity could be a scam or even a pyramid scheme.

amway-mlm-negative-business-reviews
amway-mlm-bbb-business-op-reviews

Some of the key themes of the business opportunity is the way people are trying to sell the dream of being an independent business owner, whilst avoiding talking about the real costs of running this business.

Other complaints are related to the costs when they are made clear to people.

Amway isn’t a pyramid scheme, but due to the pressures their IBOs feel to make a sale or recruit people, it could be easily labelled a pyramid scheme in disguise.  Not in the legal sense.  But in the fact that you will either be buying a lot of products to remain active.

This makes you a permanent customer having to buy products each month regardless of any sales you make.  Or constantly bombarding your family to join your team and ruining relationships.

It’s a common theme with MLMs these days.  The reality is that the business opportunity is much harder than anyone involved at Amway will tell you.

I’m not saying it’s impossible and there are examples of people who have done really well at Amway.  But you need to be good at direct sales, recruiting, and marketing.

How to Make Money at Amway

As Amway is one of the founders of the MLM business model, you can understand that the ways to make money with them follow the usual routes of an MLM or Multi-Level Marketing company:

  1. Selling their products for commissions
  2. Earning bonuses for recruiting and building a downline

There is a little more to it than that, but we will cover that more in the compensation plan.

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Can You Really Make Money with Amway?

The harsh reality is that it will be really hard for you to make money with Amway.  Here’s why…

The few people that are making money as an IBO at Amway are typically very extroverted people who have a knack for recruiting people and selling products.

The vast majority of Amways IBOs will be losing money due to the costs of remaining active at the company.

As before, you can make money from

  1. Selling their products and earning a commission. 
  2. Recruiting people and earning bonuses from their sales.

This is the loophole that allows MLM’s to avoid being shut down as a pyramid scheme:

You can’t earn money directly from recruiting people

As you can only earn money if your downline makes sales or recruits, then it puts the emphasis on you to offer support to your downline to help them make sales.

But since you have to buy products just to start as an IBO you do actually make money as soon as you recruit people.

Very fine line, but it does keep them the right side of the argument (just…)

Getting Started with Amway

It will cost you about $150 to join Amway as an IBO or Independent Business Owner…

There is the $69 registration fee to get started.

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It will then cost you $99 for the starter kit, which comes with:

  • $245 worth of products
  • 10 mini catalogues
  • Basic training and marketing materials

Amway Monthly Costs

There is a monthly cost to “remain active” as an IBO.  This is what will make most of them lose money.

Just for marketing materials, like envelopes, business cards, stamps, etc. and a website, it can easily cost you $20+ a month before anything else.

Amway has “live events and training sessions” which all cost more money to attend.  Without factoring in things like travel or accommodation.

There are also things like their “inauguration bundle”.  Members are encouraged to buy these when they are released, but cost ridiculous amounts like $383!

Then there is the monthly sales quota to be eligible to receive the bonuses and commissions from the sales your team makes. You need to generate 50 PV (around $75 of products) each month to stay active as an IBO.

And you need to accumulate 100 PV just to receive any commissions for these bonuses…

That is around $150 worth of products!

So your total costs for your first year will look like this:

  • $69
  • $99
  • $20 x 12 (marketing costs)
  • $75 x 12 (product costs)

Total minimum expenses year 1 = $1,228

There are many forums online that suggest IBO’s spend over $3,000 per year at Amway… and you can see how!

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Amway Compensation Plan

If you’ve already taken a look at Amway’s compensation plan and are left baffled by what you saw.  Don’t worry about it.  We’re all just as baffled!

I think they have a competition to see who can come up with the most complicated plan for members.  But I do think Amway has won that contest, with their 90 page compensation plan!!

I’ll try my best to keep it nice and simple…  Here goes…

There are only two ways you can get paid at Amway:

  1. Immediate income (15-25% commission: retail – wholesale price)
  2. Performance Bonus (3%-25% bonuses from your team’s sales)
amway-mlm-compensation-structure

That diagram is supposed to explain their compensation plan, but just look at it!  I wouldn’t worry about trying to figure out the details.

Here is what you need to know…  There are only two ways to make money at Amway:

  1. Sell Amway Products
  2. Recruit People

Buying the products at wholesale cost and then selling them on at retail prices.  Or recruiting a team and helping them to sell products or recruit a team.

If you look very carefully, it will start to look like a pyramid…  Those at the top making the money and those at the bottom losing money.  But the bottom line is you have to recruit people.  Which is a sign of a pyramid scheme in disguise…

Or you can read the full 90-page Amway compensation plan here. 

Alternative: On the other hand, if you’re looking to learn the best business model to earn passive income online as a beginner, there are other, more suitable, and cost-effective alternatives elsewhere…

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Is Amway a Scam?

Amway is not technically a scam as they provide legit products and they pay their IBOs just like they say they will. 

However, some people would argue that because it is a pyramid scheme in disguise then it is really just a big scam as most IBOs lose money.

At the end of the day, the choice is yours and the rest of this Amway review will help you to make an informed decision…

Just to be fully transparent with you, I’m not a distributor myself and I don’t endorse Amway in any way.

I’ve researched the website, testimonials, and information available on the internet to fully understand what this program genuinely does.  This is because I’ve been burnt by programs like this one in the past and I want to prevent others from making the same mistakes.  If you’d like to learn how to spot an online marketing scam, then click the highlighted text.

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Amway: Pros

There are a few things that I did genuinely like about Amway MLM…

#1 Wide Range of Products

Amway offers a diverse selection of products across various categories, including health supplements, personal care items, and home goods.

#2 Potential for Income

Amway’s MLM structure provides participants with the opportunity to earn income through both product sales and recruiting others to join the company.

#3 Support and Training

Amway provides its participants with access to training and support resources, including online tools and in-person events.

#4 Flexibility

Participants in Amway can work on their own schedule and from anywhere, making it a good option for those looking for a flexible work arrangement.

#5 Positive Company Culture

Many participants in Amway praise the company’s supportive and positive culture, which can be helpful for those seeking a sense of community and belonging.

Amway: Cons

Whilst Amway does have a few good traits to back up their reputation with.  There are still a few concerns when it comes to their business opportunity. 

The problem is that most IBOs find out the hidden truths too late.

This section will help to open your eyes fully to the challenges and downsides to the company…

#1 Expensive Products

If you want to spot whether an MLM is a good fit for you or not, then you want to check out the prices.  It’s the first red flag that a company could be a pyramid scheme.

Check out the prices of their protein shakes…

amway-mlm-price-comparison
  • Amway Protein Shake – $3.60 per 20g protein
  • Highly rated Amazon protein shake – $1.26 per 20g Protein

Amway costs 200% more than alternatives. Now, I can almost hear your mind thinking…

“Surely Amway’s products are far superior though?!”

Well I thought that too, so I checked it out…  From the looks of both products, you actually get a better portion of protein from the Amazon alternatives…

#2 High Start-Up Costs

Joining Amway requires purchasing a starter kit and other materials, which can be expensive and may not be feasible for everyone. 

But the bigger issue is the hidden monthly expenses you will incur as an IBO in your chase to “remain active”.

#3 Hidden Monthly Expenses

We already discussed the monthly fees to “remain active” as an IBO. 

You need to sell at least $75 worth of products every month to remain active. This is why so many customers feel “pestered” to join all the time…

If you can’t sell enough Amway products each month you need to buy them yourself if you want to have a shot of “being your own boss” next month. 

This combined with the high costs means that…

#4 Amway is a Pyramid Scheme in Disguise...

Just take a moment and think about it…

Why would you want to carry on paying 200%+ for something that you could get from places like Amazon, that are often better quality, and are much more affordable?

The reason is that the IBOs are the main Amway customers because they are being “encouraged” (forced) to “remain active” and buy the products from their upline. They will be told that “it will get easier” but they really mean “stay active so I can keep making money from you.”

amway-mlm-reality

Amway spent 4 years in court to survive being called an outright pyramid scheme in 1979 by the FTC

They managed to get away with it because it is possible for people to make money from selling Amway products. It doesn’t seem to matter that it’s pretty much impossible to make good money in this way.

They’ve even faced other lawsuits such as paying $25 million in fines for alleged tax fraud in 1982 and a class action lawsuit for $56 million in 2010 to settle alleged claims it operates as a “pyramid scheme”

#5 Heavy Focus on recruitment

While it is possible to earn money through product sales alone, Amway’s MLM structure places a heavy emphasis on recruitment, which can be off-putting for some people.

#6 Negative reputation

Amway has been accused of being a pyramid scheme by some critics, which may make it difficult to convince others to join or purchase products.

#7 Competition

The market for Amway products is highly competitive, with many similar products available from other companies, making it challenging to stand out and gain customers

#8 Low SUccess Rate

The reality is that the majority of people will not be making money with Amway.

If you take the time to read through their compensation plan, and all the small print… You will see the reality of it all…

amway-mlm-success-rate

The average gross monthly income for IBOs was $202.

When you factor in that the typically expenditure of an Amway IBO is over $3,000 a year.  That means they are losing a lot of money in the process.

When you take into account that some IBOs at the top of the company will be making hundreds of thousands a month you can see that the vast majority of Amway IBOs lose money.

Just check out the below example of profit and loss for an Amway IBO…

So, they did make $5,100 profit that year…

But they ended up at a loss of $480 when they factored in all of their expenses.  And what you have to think about is this is someone who dedicated all of their time to it. 

They didn’t start it as a side hustle or as a part time job.  They fully committed and still ended up losing money!

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Do I Recommend Amway?

Well, that depends…  Are you an expert sales person who can effectively harness marketing strategies to sell Amway products by the bucket load?

Are you an effective leader who can recruit a team of effective sales people to promote Amway products?

I think you have to really sit down and consider those things before deciding whether Amway is the right move for you.

If you aren’t versed in sales and recruitment.  And haven’t got a clue about online marketing, then it isn’t something I would recommend.

MLM’s require you to spend money straightaway, which makes it a risky investment without 100% commitment and the ability to learn the skills you need quickly.

I personally recommend a much safer environment, where you can get started with a little budget and learn the skills you need at your own pace.  MLM is a tough start for someone just starting out. 

Affiliate Marketing doesn’t have as much of a steep learning curve.  There is no need to buy endless numbers of products.  You can make money promoting other people’s products for free…  Learn more with our in-depth guide.

Amway FAQ's

Here’s some of the most frequently asked questions about Amway, and whether it’s a pyramid scheme or not:

Q: What is Amway?

A: Amway is a multi-level marketing (MLM) company that sells a variety of products, including health supplements, beauty and personal care items, and home goods.

Q: What is a pyramid scheme?

A: A pyramid scheme is an illegal business model where participants make money primarily by recruiting others into the scheme, rather than by selling products or services.

Q: Is Amway a pyramid scheme?

A: Amway has been accused of being a pyramid scheme, but the company has consistently denied these claims and has never been found guilty of running a pyramid scheme in a court of law.

Q: Why do people accuse Amway of being a pyramid scheme?

A: Critics of Amway argue that the company’s business practices are similar to those of a pyramid scheme, as they rely heavily on recruitment and require participants to purchase expensive starter kits and training materials.

Q: What is Amway’s response to these accusations?

A: Amway maintains that it is a legitimate MLM company that operates within the bounds of the law and that its business practices are ethical and transparent.

Q: Is it possible to make money with Amway without recruiting others?

A: Yes, Amway allows participants to earn money through product sales, and some people have been successful in building a profitable business through the company’s MLM structure without relying on recruitment.

Q: Should I join Amway?

A: That is a decision that you will have to make for yourself. It’s important to do your own research and carefully consider the risks and benefits before deciding to participate in any MLM opportunity.

Is Amway A Pyramid Scheme: Conclusion

Amway is a legitimate MLM company that has been around for a long time.  They have had a few controversies over the years.  Which I can understand.  Most MLMs do skate close to what could be considered a pyramid scheme in disguise.

The reality is that to make the money they claim you can make, you will need to get into the top 1% of their IBOs.  That requires recruiting a lot of people.

But as most IBOs are losing a lot of money, it means you have to make money at the misfortune of others and I can’t abide by that.

The business opportunity could be a good fit for someone great at sales and recruiting.  But expect a hard yard to make it up the ladder without recruiting.  If you’re new, you might not understand the hardship in this.

But your sponsor will start the conversation quite early about recruiting… they will also say they have a list of how you can come up with a list of 100 people…  But that means your friends, family members, and any old friends on Facebook will soon be on your hit list to recruit.

The bottom line is that this Amway business opportunity relies on you selling products and recruiting people to sell products.  So, I do need to say that Amway isn’t a pyramid scheme. 

But having said that, I do feel it is possibly operating as a pyramid scheme in disguise as you will have to recruit people if you want to avoid losing money.

If you want a less-risky option, where you can make money without buying products first, then keep on reading.

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