Amway: The Untold Story

Amway had published on its web site a statement regarding me and my reasons for removing information from my web site. As expected, this statement is replete with self-serving misinformation and distortions.

I have stated a number of times now on this web site that Amway has never once refuted any of the information on my web site, nor idicated to me why anything on this site would be considered illegal⁽¹⁾. This is still the case, despite requests from my attorney to Amway's attorneys to identify exactly what it is about my site or my conduct that they believe is actionable. Amway has also continued to imply--despite admitting that it has no evidence⁽²⁾, and having never found or produced any such evidence in court or elsewhere despite its investigations--that there is something improper or even illegal about my consulting relationship with Procter & Gamble. Apparently Amway is not only contemptuous of the right to free speech when such speech is critical of Amway, but also has little regard for the notion of "innocent until proven guilty."

Amway's actions, while shamefully unethical, are hardly surprising when you consider the position in which Amway has put itself. Faced long ago with widespread, serious abuses perpetrated by the purveyors of the "tools business"--a system which Amway itself found to be "inherently illegal"⁽³⁾--Amway has not only failed to take adequate steps to protect distributors from these continued abuses⁽⁴⁾, but has continued to glorify and promote as role models the originators and purveyors of the very system it determined to be illegal and abusive. This is not to mention Amway's history of other illegal and unethical activities, like customs fraud⁽⁵⁾, price fixing⁽⁶⁾, illegal misrepresentation of income⁽⁷⁾, and (according to numerous lawsuits) improperly interfering in the businesses of its distributors⁽⁸⁾ and failing to enforce its own rules⁽⁸⁾.

Up until fairly recently, much of the information regarding these matters has been difficult for most people to come by, if indeed they even knew it existed. The lawsuits in particular are a prime example of this. With the advent and increasing popularity of the World Wide Web, however, millions of people can now locate with relative ease information which Amway could previously count on to remain buried in a box somewhere in a courthouse basement, or to molder away in library stacks. (Although, as we will see, Amway is now trying to bury this information even on the internet.)

Amway now finds themselves caught, through no one's fault but their own, with their ethical pants down. Faced with glaring evidence of unethical and illegal conduct, they have the same choices that we as individuals have (and one that most of us don't):

1. They can attempt to refute the evidence. Amway has so far not even tried to do this, at least not that I've seen.
2. If unable to refute the evidence, they can own up to what they did and try to make it right, or…
3. They can continue to deny what is there in black and white for everyone to see. And if you're a billion dollar company, you can devote your considerable resources to trying to suppress embarrassing information and harass and intimidate those who would try to make this information available to the public.

I think it's obvious which route Amway has chosen to take.

Now that Amway's statements have been put in their proper context, I'd like go through them point by point. Amway's statements are in italics.

[Update: Return here when you're done to read my response to Amway's further attempts at malicious disparagement]

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. . . ON FREE SPEECH
Since its founding in 1959, Amway and its founders have been active supporters of personal freedoms, including freedom of speech. Freedom is one of the essential elements of Amway's fundamental business philosophy.

A truly remarkable statement when we consider that Amway, in the face of continuing problems with the tools business, now requires distributors to give up their right to file a lawsuit, and to even give up their First Amendment rights should they enter into the mandatory arbitration process to resolve any disputes they may have with Amway or their upline⁽⁹⁾. (Not to mention that Amway has a whole raft of rules that restrict their distributors' "freedom" to advertise where and how they choose, sell product where and how they choose, and even to split a distributorship as they choose in the case of a divorce.)

. . . ON THE INTERNET
Amway is excited about the Internet and its potential to foster greater international communication and understanding.

You'll notice that Amway says nothing about the potential benefits of the internet to Amway distributors. That's because Amway, this Champion of Free Speech and Free Enterprise, actually prohibits its distributors from doing business on the internet, or on any on-line service or computer network, for that matter. Amway even prohibits its distributors who bother to set up web sites from including links to any but two official Amway sites. In effect what Amway is telling its distributors is that they are "free" to spend their own time and money polishing Amway Corp.'s public image for them⁽¹⁰⁾.

Further evidence of Amway's hypocrisy regarding the Internet is the admission by an Amway Vice President that Amway is doing all it can to ensure that those who use the WWW to research Amway will have a harder time finding the kind of information that Amway finds embarrassing. And as many of you have already noticed, if you use one of the popular search engines to search on the keyword "Amway," you'll come up with hundreds of sites put up by Amway Corp. and the Amway Distributors Association. Unable to intelligently refute the information on the many Amway Information sites, Amway is instead trying to use its resources to "bury" them.

Amway also believes that respect for basic rights, as well as honesty and civility, are essential to any marketplace of ideas, including the web.

Amway carefully reviews all its postings to ensure they are absolutely truthful, legal and respectful of the rights of others.

You can decide for yourself after reading this if Amway is being "absolutely truthful" in its statements regarding me, and "respectful" of my rights.

While we respect and welcome honest disagreement and discussion, we expect that others who comment about Amway -- or about the millions of hard-working, dedicated Amway distributors worldwide - will also seek to tell the truth, obey the law and respect others and their differences.

Here Amway seems to be bending over backwards to imply that my disagreement with them is somehow dishonest, and/or that I've done something illegal, despite the fact that they have never produced any evidence to support such charges. It's remarkable how Amway can profess a respect for honesty and civility, while in the very same breath violate those very principles by resorting to oily innuendo.

I should add that Amway has never once contacted me to express the slightest bit of concern over the many nasty, obscene and hateful emails, including threats of violence and death, that I've gotten from Amway distributors. Apparently civility and respect don't apply when attacking Amway's critics.

. . . ON SIDNEY SCHWARTZ AND P&G
For some time, Amway has been aware of a web site created by Mr. Sidney Schwartz. Mr. Schwartz makes no secret of the fact that he disapproves of Amway and has little or no respect for our distributors and their business opportunity.

My only comment here is that I respect anyone, Amway distributor or not, who is honest and ethical. It's my impression that most Amway distributors are decent and sincere people who have been victimized. In fact, I would go so far as to say that my concern for Amway's distributors is greater than Amway's; while Amway has allowed the continued abuse of distributors by a system Amway had determined to be illegal, at least I have made the attempt to inform distributors of this fact so that they are in a better position to make intelligent, informed decisions about their Amway businesses.

By itself this causes Amway no problems; everyone is entitled to express his or her opinion. But Mr. Schwartz also posted a considerable amount of material, some of it clearly written by others, that we believe crossed the line from truth and honest opinion to defamation and lies.

Amway is being disingenuous. It is not my opinion that is causing them a problem. Indeed, there is little on my web site that could even be categorized as strictly my opinion; most of what is there is material that has been collected from other sources, and what opinions of mine are expressed are based on an evaluation of these materials. What causes Amway "problems" is that I have made available factual information that few distributors or potential distributors would otherwise know about. It is not the fact that I believe the tools business to be illegal that is causing a problem for Amway--it is the fact that Amway itself came to that very same conclusion years before I'd ever even heard of Amway, and thanks to AUS Amway's dirty little secret has been exposed. It is not my belief that the tools business provides most of the income for the Diamond distributors that is causing a problem for Amway, it is the admission by one of those Diamonds (in addition to lots of other evidence) that this is in fact the case, and thanks to AUS Amway's dirty little secret has been exposed. And it is not my opinion that Amway's owners pled guilty to planning and carrying out a massive criminal fraud, it's a fact--I'm only bringing their unethical and illegal activities to light.

I will point out, again, that Amway has never identified to me why anything on my site is "defamations and lies". You'd think that if they were genuinely concerned with having these "defamations and lies" removed from my site, as they claim to be, they would have identified them to me long ago. So why didn't they?

Also, some of the material posted on Mr. Schwartz's site clearly infringed Amway's trademarks and republished copyrighted material without permission.

Again, Amway has not been specific, and I can't even guess what they might be referring to here. Sounds like the kind of petty, nitpicky stuff you go after when you have no real case, though, doesn't it? Maybe they'll sue me for quoting from their own rules.

We recently learned Mr. Schwartz removed most of his web site. While Amway naturally was pleased with Mr. Schwartz's voluntary decision to remove materials we believed were in violation of laws, his explanation and his vague and ominous references to threats by Amway are sensational, inaccurate and highly misleading.

On 9/22/97 I was deposed (questioned) for about six hours by Amway's attorneys in regards to their Utah lawsuit with Procter & Gamble. Supposedly Amway's reason for deposing me was to investigate my relationship with Procter & Gamble. A number of hearings resulted from that deposition regarding the disposition of information that Amway obtained. (The deposition itself has been sealed and I may not discuss any particulars.) In a letter dated 12/11/97 and sent by Tim Delaney, one of Amway's attorneys, to Judge Robert E. Jones in U.S. District Court here in Oregon, Delaney makes the following statement:

"Still further, Amway is investigating possible causes of action against Mr. Schwartz."

Also, in an 11/21/97 hearing before Judge Boyce in Utah, in which Amway sought to have my deposition unsealed, the following statements were made:

Mr. Delaney: We would like if it is not confidential information [the deposition], we believe we should be able to use it for any purpose under the Federal Rules.

The Court: Any purpose but I want to know what it is you have in mind, how you're going to promote this investigation. That is what I'm concerned about.

Mr. Delaney: Well, there is, you know, there is a number of people that Mr. Swartz is in daily communication with over the internet and there is some people that we could, you know, discuss, find out what we learned to see if they have heard anything about the situation, as an example."

So here Amway's attorneys are plainly stating that they are not only considering suing me, but also intend to involve people who have been communicating with me. How "ominous" would it sound to you if a billion dollar corporation with an army of lawyers stated in writing that they were considering suing you?

It is important to also mention that these statements are being made in the larger context of Amway's false and malicious accusations regarding my relationship with Procter & Gamble, and their attempts to embroil me in that litigation. Considering all of the above, and the relative resources of myself and Amway Corp., my reasons for removing most of my web site are hardly "sensational, inaccurate and highly misleading." And, unlike Amway, I am willing to both be specific about issues I discuss and to back up what I say with evidence, and not just continually repeat malicious and empty accusations.

Mr. Schwartz falsely states that Amway has never tried to contact him when, in fact, Amway's attempts to initiate dialogue with Mr. Schwartz and discuss his concerns have been rebuffed.

Here Amway stoops to a deliberate (and clumsily transparent) distortion in order to try and justify their bullying. What I actually said (and what is still up on my web site for anyone to verify) was this:

"In all that time Amway has never once contacted me and requested or demanded that I remove or change any of the information on my site."

Notice the part that Amway deceptively omits, knowing that it is in fact true and undermines their own claims concerning me.

The truth is that prior to being served with a subpoena, I was never contacted by any officer or employee of Amway Corporation, period. The only "contact," if you interpret the word broadly, was an informal invitation in September of 1996 by Paul Pilzer, an Amway distributor and motivational speaker, to meet with Amway Vice President Ken MacDonald. At the time Pilzer (not Amway) extended this invitation, it was never stated or suggested that the purpose of the meeting would be to discuss what information on my site Amway considered false, defamatory, or in some other way illegal. What Pilzer communicated to me was that 1) My web site had gotten Amway's attention, and 2) He (Pilzer) felt that it would benefit Amway to speak with me and get my input on how to deal with the problems raised on my site. For reasons explained in my response to Pilzer's invitation and in my sworn affidavit submitted to the judge here in Oregon, I declined. Moreover, the invitation was not Amway's, the purported purpose of the meeting was unclear, and I felt I had good reason to "rebuff" it in any case.

The first time Amway actually invited me enter into a dialogue regarding their concerns about the information on my web site was in a letter to my attorney dated 12/10/97, after I had already taken most of the information off the site. As our response clearly shows, I am willing to review Amway's concerns and respond if they will finally be specific about what those concerns are. I have always been willing to do so…Amway just never before had the courtesy to approach me with their concerns. Our response is further evidence that Amway's attempts to characterize me as unwilling to enter into a dialogue with them are false and intended to disparage me.

He also gives others the false impression Amway has sued him.

Another blatant distortion. I have never stated anywhere or to anyone that Amway has sued me. I clearly stated on my web site: "Due to the threat of legal harassment by Amway Corporation, this site has been shut down." Obviously Amway forgot to review this post of theirs to ensure that it was "absolutely truthful."

To date, even though we are reasonably certain some of the material on his web site violated federal and state law, Amway has chosen not to pursue any kind of legal claim against Mr. Schwartz.

Amway, a billion dollar corporation with an army of attorneys at its disposal, has certainly shown no hesitation to file lawsuits in the past when they thought they had good cause to do so⁽¹¹⁾. Also, the sheer number of lawsuits that Amway is involved in at any given time makes the notion that they would hesitate to sue someone who doesn't even have the resources to defend himself seem rather ludicrous⁽¹²⁾.

Given the fact that Amway has yet to indicate anything on my site that was in violation of any law, I think the much more likely explanation is that they know they have no basis for a lawsuit. As already pointed out, Amway has still not indicated to me why anything on my site would be considered illegal or improper. Wouldn't this be the logical and sensible first step, if they truly believed their objections were legitimate ones, rather than jumping directly to threats of lawsuits?

Now, Mr. Schwartz is encouraging others to duplicate the illegal material that was presented on his site.

I'm encouraging them to duplicate the materials that Amway has never shown to be illegal in any way, but nonetheless persists in falsely and deliberately characterizing as such. I'm encouraging them to continue to provide Amway distributors with critical information that Amway tries to suppress.

The truth is that Mr. Schwartz is a consultant to Procter & Gamble and is being used in a commercial lawsuit P&G has brought against Amway. The truth is that Amway has the right to question Mr. Schwartz and P&G about their secret consulting relationship so Amway can prepare for trial.

Attorneys retained by Procter & Gamble have paid me to provide them with the information that I've compiled over the course of eight years of researching Amway, as well as any other new information my continuing research might uncover. While almost all of this information is from publicly available sources, it is obviously much less costly and time-consuming for P&G's attorneys to get it from someone who has already collected it. In other words, they are only doing what any competent attorney would do in a similar situation. That is the entire extent of our relationship. P&G's attorneys didn't even contact me until after my web site had been up for almost a year; until a year after they had filed against Amway the lawsuit that Amway is improperly trying to involve me in; after I'd already been researching Amway and sharing the same information for eight years. Neither P&G, P&G's attorneys nor anyone else pays me to maintain my web site or tells me what to put on that site. I have stated so in a sworn affidavit and on this web site. There is no "secret" consulting relationship; Amway is already well aware of the full extent of this relationship, yet despite lacking any shred of evidence to disprove my sworn testimony (and that of P&G's attorneys, Amway has taken every opportunity to make false, malicious and libelous accusations regarding me.

I wonder how Amway explains the fact that there are almost two dozen other web sites critical of Amway. Is P&G paying all these people, too? Did P&G also pay the hundreds of people who emailed me to say that the information on my site was an accurate reflection of their own Amway experience, and to thank me for making it available? Oh wait…I suppose P&G is also behind all the "negative" books, articles and court cases that I cite. When examined with a bit of logic and common sense, Amway's assertions are laughable.

The truth is that Amway has been met with resistance from Mr. Schwartz and P&G every step of the way, and the court has ordered Mr. Schwartz to answer questions about his consulting relationship with P&G.

Just when you think Amway has sunk as low as they can go, they prove you wrong. What Amway falsely characterizes as "resistance" is simply the exercise of one's LEGAL RIGHTS, something that seems to greatly upset Amway. If a person served with a subpoena feels that a demand for information is improper, that person has a LEGAL RIGHT to voice his or her objections and to have those objections heard by the court. Do Amway's attorneys turn over without question or objection any materials that are requested by the opposing party in a lawsuit? Of course they don't, unless they're grossly incompetent. I find it incredible that they would attempt to excoriate someone for doing something that they themselves do on a regular basis and that is indeed an accepted and important part of our legal system. Amway fails to mention that the court agreed with our objections in part by ultimately narrowing the scope of what Amway was allowed to obtain to in the way of information and materials.

It should also be pointed out that Amway has not named me in their countersuit against P&G. Indeed, I am not even mentioned in that countersuit. As P&G correctly pointed out in their objections to the subpoena served on me by Amway, "No allegations in Amway's counterclaims, however, discuss Mr. Schwartz or even remotely suggest that any activity of Mr. Schwartz has any bearing on any matter at issue in either the Utah or Texas Cases. Indeed, Amway has wholly failed to assert any such nexus." Amway also "forgets" to mention that I have already answered, during a lengthy deposition, all of Amway's questions about my consulting relationship with P&G.

The truth is that Amway has tried to contact Mr. Schwartz, but he will not talk.

A transparent lie, considering that I've already talked to Amway's attorneys for about six hours and answered all their questions, as Amway knows full well. And, as already pointed out, Amway did not contact me to discuss their objections to my web site until very recently, and when they finally did so I indicated that I would entertain their concerns and respond to them.

The truth is that Amway prefers dialogue and has shown great restraint by not suing Mr. Schwartz.

The truth is that Amway made no attempts to engage in dialogue regarding what on my site it considered actionable until I had already removed most of the information from the site; Amway would certainly have made such an attempt long ago if it were being truthful about its desire to avoid filing a lawsuit. The truth is that Amway has failed to indicate any basis whatsoever for a lawsuit.

The truth is that this is not about free speech. This is about defending Amway in litigation brought by a competitor - from someone who cloaks himself in free speech and under that guise attacks Amway and its millions of distributors.

Amway would desperately like you to believe this, but what have they done to prove that it is not about free speech? Nothing, except to continually repeat false and malicious accusations without providing a shred of proof to substantiate them. Let me reiterate a couple of very important points. (I dislike having to repeat myself, but when faced with a persistent liar one must be equally as persistent in asserting the truth.)

It cannot about the information on my web site, since Amway has not shown any of it to be actionable. It cannot about my relationship with P&G, since Amway has not produced a shred of evidence to show that there is anything improper or illegal going on. It is very much about Free Speech. It is very much about large and powerful corporation with a lot to hide, trying to intimidate and silence those who would make embarrassing information available to the public.

Amway always has and continues to welcome open, honest discussion of any questions or concerns Mr. Schwartz or anyone else has about Amway or the Amway opportunity.

I believe the following is a more accurate description of Amway's attitude and its response to its problems:

"Buck passing is…also one of the most salient features of those organizations that, as we shall see, are Crisis Prone: their fundamental inability to tell and to admit the truth to themselves, let alone the world. Instead of allowing the truth to come out, they suppress it or obscure it, worsening their reputation. They persist in communicating the belief that is is they who have been wronged, thus contributing even further to the very thing they continue without much success to combat, their appearance of arrogance."⁽¹⁴⁾

Amway would certainly seem to be a "Crisis Prone" organization, one that creates and perpetuates its own crisis by by devoting its resources to attacking its critics rather than to eliminating the problems these critics bring to the public's attention. If the tools business is illegal, then why is Amway devoting its resources to harassing me, rather than to cleaning up their own mess? Maybe they figure that trying to shut me up is more "cost effective," even if it's not the ethical and moral thing to do.

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