Amway Faces Class Action

Time Out/August 10, 1994

Two distributors of the Amway Corporation, the multi-billion dollar multi- level marketing company which was the subject of a "Time Out" investigation earlier this year (June 22-29) have been served with a class action complaint in the Pennsylvania District Court by five former distributors.

The corporation, which sells a wide range of household good and products through a network of more than two million independent distributors around the world, is named in the 40-page complaint, along with two of its top distributors--know as "black hats"--Dexter Yager and Bill Britt. The complaint alleges that the latter two have built their vast sales organizations through the perpetration of fraud and restraint of competition and that Amway, while fully aware of this, had taken no action to halt such practices.

The lawsuit alleges that:

• Britt and Yager misrepresented to potential distributors the level of earnings they could expect to achieve by becoming involved with Amway and also the amount of time it would take to achieve such earnings.
• Britt and Yager misrepresented the affiliation between Amway and other large corporations, giving the impression that the companies were involved in profitable business relationships with Amway.
• Britt and Yager coerced distributors into purchasing motivational materials in the form of books and audio cassette tapes and falsely represented to distributors that they would be unable to build and maintain successful Amway distributorships without the purchase of such materials.

The action further alleges on each count that at all times, Amway was aware of and encouraged such practices by Britt and Yager and that it was in Amway's economic self-interest to permit such practices to continue.

As a class action, the lawsuit represents not just the five named former distributors but also any other former or current distributors dating back to the time when the action is deemed to have begun--in this case January 1990. Amway is expected to contest the action.

"Time Out's" article investigated similar allegations which have emerged from some of the corporations 73,000 British distributors and also examined evidence that, while Amway itself is not a cult, the techniques used by high level distributors such as Britt, Yager and their British counterparts to motivate and recruit people into the network often displayed alarming similarities to those used by cults.

In her book on cults, "Dangerous Persuaders," published by Penguin Australia in March, author Louise Samways states: "Increasingly, Amway is adopting similar tactics to many cults in order to attract recruits then to keep them involved and committed to the cause... extremely large gatherings are held regularly and at these many techniques used by traditional cults are employed to reinforce values and enhance commitment, for instance confessions, success sharing and singing. Participants are expected to conform to strict dress codes, jacket and tie for men, smart dress and jackets for women."

The lawsuit, if successful, would indicate that there has been direct involvement and cooperation between the Amway Corporation and its senior distributors, though it would only be at the end of the case, which is expected to take at least a year to come to trial, that such a link could be proved.