Book Review: Merchants of Deception - The Amway Inside Story

March 29, 2008

Merchants of Deception is a book by Eric Scheibeler, former Amway Emerald Distributor, who once believed strongly that Amway would fetch him a financial freedom and success, reached near top of the chain, only to discover how fraudulent the system is and how everyone involved are guaranteed to lose money.

His book exposes some key inside info regarding the operation of Amway (and other such multi-level marketing companies) and is a must read to everyone involved in this business or considering entering into it.
Merchants of Deception, a Book by Eric Scheibeler, a former Amway Emerald distributor
Most of you have heard of Amway and other network marketing/MLM companies. Chances are, some of you might be a part of it or faced pressure to join it. These “Business Opportunities” are projected as wealth creation tools or vehicles to achieve financial freedom. But the truth often is otherwise.

Those who join these kind of business almost always suffer a loss - financial or otherwise. It may be difficult to blindly agree that these NM/MLM companies do more harm than good and you HAVE to read, Merchants of Deception, to know how exactly these companies fool people with an illusion of financial freedom.

The book is 232 pages long and free for download in pdf format from the author's website (2.91MB), Click here to read Merchants of Deception for free.

The book is written in first person, in a sequential order, starting from Eric’s life before joining Amway, his initial days as Amway distributor, how he trusted the company, developed loyalty to his up liners and slogged hard to promote the business and eventually climbed up the ladder to different levels in the chain.

Then he gradually discovers he is not making the amount of money he is supposed to me making at his level (Emerald) and slowly comes out of his pre-programmed mindset and starts exploring things. The truths he uncovered and the trouble he faced from his upliners because of that make this book a must read for anyone who believes network marketing can make them rich.

As some of you may not find enough time to read all 232 pages of the book, I am listing below some key extracts from the book, with permission from the author, the facts you might have never known and are guaranteed to find it difficult to digest.

Eric Scheibeler, Author of merchants of deception backstage an Amway motivational seminarFirst, an open request to all Amway IBOs and members of other similar businesses who are reading this: I am aware that your current mindset doesn’t allow you to accept and digest the facts given below. Your upliners are guaranteed to brand these facts as rubbish and baseless allegations and distractions which will deviate you from your goal. MY sincere request to you  don’t trust me or your upliners - Think independently and make an attempt to verify the facts on your own.

1. Amway top leaders make a fortune, NOT from Amway distributorship but by selling training material (Seminars, video, audio and books, etc.)

While few top Amway IBOs (At Diamond level and above) appear to be super rich, everyone thinks they made money because of core Amway activities (buying and using products), but Eric has discovered that their IT returns prove that wrong. Just 5% of their income came from Amway and over 95% came from “tools business”, a collective name for motivational stuff they sell to down liners .
These include, conducting seminars and charging people for it, selling audio and video contents with motivational stuff that will guide down liners towards success, books, etc. Low-level IBOs who buy this stuff think that the diamonds are sharing their success about to how to become millionaires like them, while diamonds pocket millions for the simple reason that others are buying their motivational stuffs.
Hardly 1-2% of members in a total network reach Diamond and above levels and mint money this way and the rest of the distributors (IBOs) will never be able to achieve that (because they can’t create and sell such motivational stuff)

If you doubt the above, ask for the income tax returns of these millionaires.

2. There’s no way to track your earning.
Amway IBOs don’t have an option to track their earning on Amway's Web site. If they get a check for an amount which is far below what they were supposed to get, there’s no way they can trace down the cause. At Emerald level, Eric was supposed to be making $100,000 an year, but he was making a little less than $30,000.
One of his down liners, a Ruby Direct, was supposed to be earning $50,000 but had made only around $4,000. An IBO is not supposed to discuss his woes with his downliners or cross lines and upliners won’t give any explanation why there is such a huge difference. Not earning enough is attributed to "not working hard enough" or "lack of commitment to the business" or "a personal failure" and an IBO will be assured that all his woes will vanish once he reaches the next level - for which he needs to work harder.
Everyone will be under an illusion that everyone else is making lots of money and only he is not making enough. They may try to hide this fact by attempting to show off wealth and saying they’re making huge money. If they say they are not earning enough their downliners will get discouraged and de-motivated, new prospects hesitate to join and business falls further, so faking success is the only way for everyone in this business.
3. Amway founders were very much aware of all the wrong things in the organization (Cultism, Tools, Business, Under-paid distributors, Near 100% of people lose money)
Eric shows, with evidence, that the frauds he detected were not isolated incidents but spread across the organization. More importantly he proves that Amway founders were aware of this from the very early stages and nothing was done to protect innocent distributors who lost tens of thousands of dollars or punish kingpin distributors who were making fortunes by exploiting the unsuspecting downliners. The book also details several unethical things done by Amway management to silence things they didn’t want the outer world to know.

4. The four cardinal principles of Amway (and such companies)
Amway distributors were brainwashed systematically about four cardinal rules, that they should never, ever violate. They will have 100% success rate as long as they blindly adhere to the system following instructions of their seniors and outside the system there is a 0% success rate.
a. Never De-edify:
Never question your upliners. You are expected to blindly believe in whatever has been told/instructed to you by your up liners. You’re not welcome to give suggestions / make deviations / use your discretion. Eric’s loyalty was questioned when he decided to correct a few grammatical errors in a newsletter given to him for circulation by his upliner.
Further, a distributor is expected to praise his upliner whenever there's an opportunity and serve him (by fueling his tank, paying the bill and being loyal) whenever he receives advice/help from his upliner. You’re expected to blindly duplicate.
b. Never pass on negatives:
Anything that’s against Amway is branded as negative stuff. IBOs are brainwashed to believe that those who chose not to join Amway are losers, who have no dreams, no hope, no ambitions and would never achieve anything in life.
Anyone who cautions you about any possible negative impacts of Amway are jealous of your progress and trying to pull you down. You’re supposed to use only Amway products at home, nevermind how expensive it is. You’re expected not to have a plan B as that would mean you don’t trust the system fully.
If you’re not willing to put in enough efforts to promote the business you don’t love your family. You’re always expected to give positive feedback and talk good things and show off (though you didn’t like the product or running a financial loss).

c. Never Cross Line:
You need to interact with your upline and downline only and are not supposed to interact with other members of the company. This is typically to ensure retention of secrecy.

d. Never implement new ideas:
You must do what you’re told to do. Nothing more, nothing less. You’re supposed to be the owner of your business, but you have no freedom to bring in a change or run it the way you want it.

5. Nearly 100% people fail
This can sound unrealistic. With so many millionaires as living examples, how can anyone say the system is not good? After recruiting over 2,000 people under him, Eric realized that he could identify only 10 people who made net earnings of $1 or above in a year (after deducting the expenses incurred in promoting the business).
The system is such that it ensures its members keep pumping money in by buying overpriced products, attending seminars, buying motivational materials, etc. The earnings they make usually will be far less than expenses incurred for all these. People are kept going until they break, under a nonexistent hope of financial freedom which would come as soon as they reach the "next level."
Failure, when it finally happens, is attributed to an individual rather than the system, so others continue in the belief, "That can’t happen to me."
6. Dream building is a key technique employed
A prospect is made to build a huge dream (mansions, private jets, etc.) and is made to believe that their current job can never take them there but a business like Amway has the potential to take them there within years.
Greed is quite a common weakness in humans and MLM companies very effectively target that and most people don’t find any fault as such in the system and silently fall prey. The brainwashing that happens gradually after they join will keep them loyal to the system. If anyone tries to save them from the impending disaster they are heading to, such people are treated almost like enemies who are snatching their dreams away.
The book explains all these in detail. It also reveals the cultism, the emotional and financial trauma he and his family faced, the tactics adopted by his upliners to keep him silent, how he was blackmailed and threatened and more.
His struggle to recover to normalcy is remarkable. He could have walked away with huge amounts of money, had he chosen to remain silent. But he chose to spread awareness and has actively helped law enforcement agencies across the globe to investigate scams of this nature. He receives over 3,000 testimonials a day from MLM victims across the globe and his Web site is full of supporting documents, proof, the latest news related to the business.

Business Analyst with leading IT company. Read my blog
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March 29, 2008
12:21 PM

Wow. Amazing.

March 29, 2008
12:27 PM

There is a reason why Amway was forcibly dissolved in the US and was declared illegal. It is a pyramid scheme, and only the people at the very top get rich. The government here finally stepped in to stop the madness because so many people fell for the scam.

March 29, 2008
12:32 PM

actually, I misspoke... I just read up on what my understanding was and apparently they were not forced to restructure and were not declared a pyramid scheme. they were charged with tax evasion, though.

anyway, I still hold the opinion that they only server to make the people at the top very rich.

Naveen Roy
March 29, 2008
01:49 PM

Wow!! You have guts to write about this and other MLM schemes!!. I wrote an article once and got whole page comments ridiculing me and my thoughts on Ponzi and other MLM schemes. So bad in fact, that I took the article down.

I advice you - prepare to get INSANE comments supporting MLM schemes on this post!!!

Shrinidhi Hande
March 29, 2008
09:32 PM

Thanks People for your comments.

@Smallsquirrel: It is proven truth that only people at top make money.

@NAveen... I am prepared for insane comments... Let us see...

March 30, 2008
12:03 AM

When in the US, I had come across many Indian couples who were into Amway. Needless to say, they were an annoying lot. They would walk up to an unsuspecting fellow Indian at a grocery store and begin their conversation with a lie : "Oh, have we met before?" or, "You attended XYZ college, didn't you?". Even if you answer in the negative, they would not leave you then. Of course, doing so would defeat the purpose.

I considered them losers who needed to get a life. They generally had few friends outside of their Amway circle. And they had to religiously attend Amway meetings dressed in suits, like going to church. I had the misfortune of attending one such meeting at the invitation of someone I knew. The word "cult" came to my mind.

Ruvy in Jerusalem
March 30, 2008
01:27 AM

There is an old saying in the States credited to P.T. Barnum - "never give a sucker an even break". And Amway and the many other Ponzi-like schemes are perfect examples of this. Having floated on the edge of such schemes for a while, and even having sold Tupperware once, I figured out that the real money was in hustling the motivational materials, and in sucking in fresh blood all the time, thus selling the company's central delusion of ever expanding wealth.

When I was trained as a Burger King manager many years ago, it was made clear to me that what I was selling was the delusion of flavor - that I was hustling dreams to hungry people watering at th the mouth to consume them. The same "Whopper" is sold by Amway and its brother con-artists - but instead of deluding the customer, you are persuaded to delude yourself.

March 30, 2008
08:03 AM

Ex-Amway distributor admits lying"Scheibeler")&xcal_numdocs=20&p_perpage=10&p_sort=YMD_date:D&xcal_useweights=no

Shrinidhi Hande
March 30, 2008
08:23 AM

Ledzius and Ruvy thanks for sharing your experiences.

@Billy: The link doesn't appear to be authentic enough and we're expected to pay for reading rest of the article...

Please share links from any well known magazines/newspapers/government agency websites

April 6, 2008
01:55 PM

Great review!

I have 4 books that I am in various stages of reading, and all are about Amway/Quixtar.

They are "Behind the Smoke and Mirrors", "Amway The Cult Of Free Enterprise", "Consumed By Success", and "The Dark Side of The Pyramid".

"The Dark Side of The Pyramid" also has the original "Fake it 'till you make it" by Phil Kerns.

Thanks for the inspiration.

May 2, 2008
03:14 AM

MLMs work on a 60-80% profit margin. a "decent" MLM has their products at the 60% level and the "bad" ones at 80% (maybe even more) The problem with the Us is that most people have no idea of what any "product" is truly worth. In India, owing to a strong awareness of manufacturing and what commodity costs are, it is easy to "peg" the cost of a product. As long as you look at MLMs as "supplementary" income rather than making your riches, I think they are yet another "indulgence" towards greed!

May 2, 2008
07:42 PM


I too floated on the fringes of the Avon pyramid for awhile. I used it mainly to buy stuff for myself at the discounted rate, then realised I wasn't getting proportionate commissions and I was buying make up I never used.

Fortunately I realised my folly before I spent too much and don't go near any pyramid schemes with a barge pole.

Deepti Lamba
May 3, 2008
06:33 AM

A friend of mine tried to induct me way back during college days. I found the idea of hosting dinner parties and selling tupperware to be social suicide.

May 3, 2008
07:28 AM

Good article and sage comments...everyone seems well informed.

I add the following reinforcement from the US Federal Trade Commission:

"Be skeptical if a distributor tells you that for the price of a "start-up kit" of inventory and sales literature - and sometimes a commitment to sell a specific amount of the product or service each month - you'll be on the road to riches. Often consumers spend a lot of money to "build their business" by participating in training programs, buying sales leads or purchasing the products themselves. Too often, these purchases are all they ever see for their investments."

Ciao, Guido

June 6, 2008
11:29 AM

My neighbor, an old lady became a widow way back in the 60s. and she brought up her children, by herself with Tupperware sales for over 50 years!

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