In Which I Encounter a Scam

It's funny how life works out sometimes.

Just a few weeks ago, Kazim at The Atheist Experience linked to an old webpage he put up years ago to detail his experience with Amway as a college student. I had heard of Amway, but never really knew what it was. I had never been directly confronted by it in my own life.

I devoured his story, at least in part because it reminded me a bit of my own Warriorschool series; a guy in college has a somewhat brief brush with a cultlike entity, does some research, and posts his story online in an attempt to reach more people.

I finished it, thinking "Wow, Amway is fucking nuts," and then went about my life.

Then last Thursday, multi-level marketing reared its ugly head in my own little corner of meatspace.

I took a few days off last week to visit friends and family on the other side of the state. Thursday I went to dinner with my mother and brother at the restaurant wherein my sister works. It's basically the "Cheers" bar of the city, the independent local eatery that kind of sucks but everyone in town goes there anyway. It's the kind of place where the owner is always there on the floor himself, enthusastically making the rounds and pressing the flesh. We'll call him "Jimbo," and he was very much in presence that night.

My family knows him fairly well. After all, my sister is employed by him. My mother eats there often and has worked on local charitable fundraisers alongside Jimbo. He knows my brother and myself through my mother and recognizes us on sight as her sons, if he doesn't know our names.

He approached our table as we were awaiting our appetizer (mmm, mozzarella sticks) and began telling my mom about this club he had joined. "It's the best thing you'll ever do," he said. He took a few seconds to describe how you just joined up (for a nominal fee), bought things through the club on the internet, and got back a small percentage of the purchase price. He pressed a business card into my mother's hand, said "Check it out on the web. You should come to our next meeting and so-and-so's house. It's on Tuesday," and then made to leave before looking back, pointing to me and my brother, and saying "You two should try it, too. It's the best decision you'll ever make."

Now, call me contrary, but I generally have a problem when over-enthusastic conservative Christians (of which Jimbo is one) recommend I do anything, not just worship their particular deity. Hell, I tend to get pretty skeptical when anyone is overenthusiastic about some vague system or plan or thing that will cost me money, if it's not a book or a movie or something.

I took the business card from my mom and looked it over. It had Jimbo's name on it, a URL to his website, and the name of his..."Corporation" that joining his club allowed him to form.

My skepticism went on high alert.

"Is Jimbo really trying to sell us Amway?" I said to my mother.

"You think it's Amway?"

I said that from what little he had told us, it definitly had the Amway ring to it: you pay to join, buy things through the club, who then (supposedly) gives you a small percentage of the purchase price back, you recruit new members to up your own status in the club, and you have meetings about the club at people's houses.

Of course, it could have just been one of those wholesale clubs, like an online Sam's Club or something, where you pay a small fee to be a member, but buy things you'd buy anyway for close-to-bulk prices so eventually recoup the cost. But I've never heard of anyone enthusastically approaching people in public to preach the wonders of CostCo, or of a Sam's Club member meeting at someone's house. I've never had someone hand me personal business card they made because their association with Price Club means they own their own little company. And besides, if it was one of those, he would have just told us the name instead of pointedly avoiding it, as Amway recruiters are instructed to do.

It was just a little fishy was all.

Now, my mother, who is most definitely a woo (at a later point on my trip eastward, she claimed that because the ancient Egyptians washed with olive oil, it was a good idea; I claimed that they also worshipped cats so should we do that, too? She said "At least they believed in something!" as if that was either relevant or positive), smells bullshit at the oddest times. This was one of those times, as she and my father had been involved in an MLM called Nu Skin when I was probably seven or eight. She brought it up after I explained why I thought we were being recruited into Amway, and it was rather surprising that she had the ability to see the organization for what it really was. Usually her rose-colored glasses come off about as often as Cyclops'.

I remember their time with Nu Skin very well. I remember a house filled with product that we weren't allowed to use, because it was all demo product meant to recruit others into the "business." I remember large plastic cases containing a dozen and a half audio tapes apiece, all of which supposedly helped you succeed with your new business. I remember being extremely embarrased that every family gathering for a year and change turned into a sales opportunity for my parents, as they hawked overpriced cosmetics to all of my aunts and uncles and tried to recruit them into Nuskin.

Even a first grader knows something isn't kosher when family Christmas turns into a tedious exercise in marketing and recruitment. We brought presents to put under the tree and product to set into a tasteful arrangement on a prominently-displayed card table. While I played with my cousins, my parents tried to talk theirs into joining the club with them. O Joyous Day that Christ was born! Let us celebrate by downlining our relatives!

I also remember the new friends my parents suddenly acquired as members of Nu Skin. One of them I remember because his house was on a shortcut through the woods my friends and I would often take to the local pool. I remember going to his house once with my dad while he showed off all his expensive things and they talked shop for a while.

This all kind of highlights one of the most annoying parts of MLMs: the members become incredibly tedious people. All they want to talk about with anyone is the business. They no longer look at anyone as a person, only another opportunity to sell product and (more importantly) build their downline. It is one of the most cultlike aspects of groups like Amway, and it profoundly bothered me, even when I was quite young.

Eventually my parents got out of Nu Skin for good and all. Their Nu Skin friends disappeared and they began hanging out with their old friends again. A few years later, I asked my dad if they had ever made any money off it, and I remember him averting his eyes as he quietly said "Yeah, a little" and then changed the subject.

So obviously my parents had wrestled that kangaroo before and come out somewhat unsatisfied. My mom and I talked for a while about the practices of MLMs and how Nu Skin had taken them in. She said she had heard a spiel similar to Jimbo's from another local businessman (we'll call him Hoss, as he shows up later) and politely declined it then. She was really hoping my little sister wouldn't fall for this one, as Jimbo had been pushing it on all his employees, too. Eventually my sister brought our dinner. We set to, and as we were finishing, Jimbo approached once again to ask how the food was and recommend once again that we try "it."

My mom, who, say what else I might about her, certainly doesn't have a problem stirring the shit, said "So is it Amway or what?"

Jimbo's eyes opened in astonishment, presumably at the brazen bluntness of the question. His voice dropped to a whisper and he waved nervous hands in a "cool down" motion. "Don't say that," he said. "Don't ever say that." He looked around conspiratorially, making sure nobody else had heard the blasphemy. "We're not associated with Amway," he said "and we're not anything like Amway. This is what we're like."

He then proceeded to describe Amway's marketing structure to a tee. You pay almost $500 to join (some "nominal fee" that is). You buy things through the company's website (which are supposedly cheaper than retail), you get back some of your money, you recruit people who then recruit more people and you make more money back the more people you recruit. You have meetings wherein you talk all about the business. He parroted the old Amway canard of "It allows you to own your own business," which was funny coming from a guy who does own his own business. You think he'd know the fucking difference between owning a corporation and being a link in the chain of an MLM.

And it's not like owning your own business is all that special. I own my own business. To be more accurate, I own 50% of my own business and Magus owns the other half (which is more than I can say about this blog that has his name at the top). It cost us $90 and five minutes worth of paperwork. We even have an EIN and a bank account. We laughed many times at what our business cards would say when we finally got them printed out: I would be "Vice-President of Pirate Operations" and he would be "Vice-President of Ninja Operations." If we ever had a third, he would be "Vice-President in Charge of Ninja/Pirate Relations." Nobody was ever really in charge; we were all Vice-Presidents.

We never got those cards printed out. They were funny for a lark, but in the end an unnecessary expense. Printing them would be nothing if not self-important. We had no desire to go around pressing our cards into the hands of anonymous people just to show off. (Okay, we did, but only for the utter silliness of it).

Point being, I know what it takes to own a company because I own one. And it isn't a partnership or sole proprietorship. It is a registered Limited Liability Company. You don't get to own your own company just by signing up with some private organization that tells you "Okay, now you own your own company." There are steps to take, and they're short and simple and involve the government, so if you want to walk around with a damn business card, just print out the PDF and send your statehouse a fucking check. The cards you can get free (plus shipping) from any of a dozen websites.

Whatever you do, don't buy some idiot line that purchasing products from CockRocket LTD while also hawking said products to the masses makes you a goddamned business owner. It doesn't.

Anyway, I should get back to the evening in question. It is incumbent upon me to mention that I pretty much sat quietly and finished my dinner as he droned on and on and on, as I wasn't about to open my big mouth and cause problems for my mother. If she wanted to cause her own problems, I was okay with that, but I wouldn't have been nearly as civil as she was. I was also less-than-confident in my ability to effectively argue something with which I had only recently become familiar.

Over the next ten minutes, Jimbo covered all the standard Amway talking points I had come to expect after reading Kazim's page. It was a win-win for everyone who joined. It was a great deal that allowed you to make money by buying things (who's dense enough to believe that, anyway?). It brought you close to good people.

He went over the local stats. It had started with only about 500 local people by Hoss, the same businessman that had tried to recruit my mother, but in recent months had ballooned to almost 9000 members, a scary thought, as the city has only 30,000 and surrounding towns can't contribute more than 20K others. But then, the town has hit some major economic hard times; one of the major plants keeping people employed closed years ago, and a series of major complications has kept it from being retooled and reopened by another company (not the least of which were the dumbass laid-off former employees who set the place on fire a couple of years ago). What jobs are left are service industry, Wal-Mart (don't get me started on their "we create jobs!" bullshit), or the dregs of a rapidly fading General Motors plant. It's only natural that people would look for any solution to their dire financial straits, and it's sad and criminal that someone would rip them off like this.

Jimbo showed his utter ignorance of Amway when he explained the ways ("way," really) in which his club differed from them. "With us," he explained, "you can buy online from all sorts of different companies. Amway locks you in to only buying Amway products, but with us you're not restricted like that." Seriously? That's all you have? Something that is blatantly untrue?

Now, I'm not saying he's lying. I'm saying he is parroting a line told him by his upline superiors to help differentiate his club from the terrible reputation that Amway has managed to achieve (gee, I wonder why?). It's just not true. One of Amway's apologetics is their "business partnerships" with companies like Coca-Cola, GM, and IBM. What, does he think Amway manufactures it own cars, computers, and name brand soda? All sorts of corporations sign on to let Amway sell their swag, and why not? It guarantees the product will be sold to a closed audience that won't go to their competitor.

So his only real "difference" turned out to be a complete fabrication.

He then began spouting a textbook Amway apologetic: "It may seem like a pyramid, but all corporations are pyramids, anyway. My restaurant has me at the top, then the managers, then the servers, and so on."

Kazim deals with that line of argument better than I could here, but I'll take a stab at it myself.

Basically it is a difference of where the money comes from. In a real corporation, the money comes from the outside. Yes, the guys at the top make their money in large part from the work of those below them, but those below get compensated for their work out of the pool of money coming into the company from the outside.

Amway, like any good pyramid scheme, expects its participants to rely only on the money of other participants for their profit. It's as if you bought a warehouse and hired a workforce whom you expected to pay you to come to work. Or maybe look at it like this: say you go to a job interview, and the interviewer loves you, thinks the job would be a great fit for you, and says "I'd love to offer it to you...If you pay me the joiner's fee of $500."

Like any good scam, there's money to be made. Unfortunately, it's the people at the top who expect you, the guy at the bottom, to foot the bill for their yachts, and you are never compensated in your turn. In a company, the money flows, in some sense, from the top down. Money comes to "the company" from the outside, and is then distributed among the employees. The top dogs may make more, but everyone makes something. In Amway, the money flows from the bottom up: the downline pays to join, pays to attend seminars, meetings, and speeches, pays for "motivational materials," works to sell products and recruit downline (both of which benefit their upline), all in the hopes that they, too, might someday pay for a yacht with somebody else's money.

And besides that, what kind of business tells you to dump your friends and family if they disagree with your choice to work there?

But all of this I merely thought, much less eloquently, at the time. I also thought "You're just the owner of a shitty local restaurant, asshole," and that thought was precipitated by this next, my favorite part:

Jimbo had run through his speech trying to sell his group to us, and then went in for the kill. He leaned over, looked around as if to make sure nobody else was listening, lowered his voice, and said "Now, you know me, and you know I'm not one to talk like this, but I'm kind of a...respected person in this community. And I wouldn't be recommending this if I didn't think it was a grand slam."

Say it with me: "You're just the owner of a shitty local restaurant, asshole."

It was so ridiculous I got up, hugged my mother, and left. And it wasn't just ridiculous. It was unethical. You don't go around trying to sell something extraneous to a captive audience of people who are good enough to buy your shitty food every couple of weeks. You especially don't try to recruit your employees into a scheme to net you more money. And did he really think that his personal recommendation meant anything? He isn't a financial expert, and his "good feelings" are irrelevant next to his self-interest in our membership. Of course he thinks it is a grand slam for us, because he stands to benefit if we join up.

I later mentioned the whole thing to a couple of friends at their pizza shop. "Jimbo tried to recruit me to a fucking multi-level marketing scheme."

"Yeah," one of them said. "Hoss got that started here. He sent out a fucking mass e-mail to all of the local 'young businesspeople,' so I got one. I fucking deleted it because I don't want Hoss's shit in my inbox."

"It sounded like Amway," I said, "but Jimbo swore it wasn't."

The other friend laughed. "It's fucking Quixtar." That's when it all came together for me.

Quixtar is Amway's new name.

Quixtar is their image revamp for the internet age. It's not hard to figure out who they really are (they don't even try to hide it on their main page). Jimbo is self-admittedly bad with computers, however, and I'm sure he didn't come across it online. He was sold by another person, who was sold by someone else, and so on and so forth. He was just told the same lines he fed us, except he bought them hook, line, and sinker, to the point where he didn't even know who he was really working for, and was actively demonizing his own upline just to get some new recruits.

Oh, I laughed long and hard at that one.

It also caused me to remember, at Pizza Friend Number Two's prompting, a Ponzi scheme somebody attempted to run when we were in college. They called it "University Matrix." The deal was that XBox 360s are expensive, and who wants to pay $400 for one? Well, with our simple system, you, poor college student, can get one for only $10! Just give us your $10 and put your name on this list. When we get $400 from our members, the first person on the list will get an XBox! Then they'll be taken off the list and the second person becomes next in line for a ten dollar XBox 360!

That sounds great! Except the part where the 40th person, who clinched the XBox for the first person, has to wait for the 1600th person before he gets his. I'm sure the asshole who started it probably found enough rubes to sign up to afford himself an XBox. Maybe the second person, too. But the rest of those folks were well and truly fucked.

I don't know if anything ever happened to those scammers, and I can't seem to find anything on Google about them. I hope they got their asses kicked by a group of angry scammees who afterwards stole their XBox.

I guess we always have to keep our wits about us. Skepticism isn't just about science, pseudoscience, and woo. It's a general way of viewing the world as rationally as possible, and if we apply it only to matters of science, we might someday get taken in by another type of bullshit. Logical fallacies, bad apologetics and false analogies are not merely the hallmarks of woo and religion. They show up all over the damn place, and we have to constantly be on guard.

And always remember: if it sounds too good to be true, it probably is.

And fucking Amway? Is it 1992 again or something?