"INSIDER"s OBSESSION ;-) WITH THE "RETAIL SALES RULE"
There's a Quixtar/Amway apologist, who goes by "INSIDER", whose main job seems to be, to visit all the Critical Websites, and furiously ;-) post comments trying to prove (and ;-)) failing miserably) that the FTC's Retail Sales Rule is a myth. It seems to me that he has posted on almost every single critical website, where the Retail Sales Rule is discussed.
I have a THEORY about why he is doing this.
But, first a little background on this Retail Sales Rule. Chain-Letters, Pyramid-Schemes, and other Ponzi-Schemes are ILLEGAL and UNETHICAL, right? Well, some genius ;-) thought he figured out a way to circumvent this by introducing a PRODUCT into the mix. Thereby give it a veneer of legality. It is precisely to combat this disguising of a Chain-Letter-Scheme as a product-based pyramid, that the FTC established the Retail Sales Rule. and the Courts repeatedly agreed with the FTC in the prosecutions of different MLM schemes. i.e. THAT THE PRODUCTS OF A LEGAL MULTI-LEVEL-MARKETING COMPANY MUST BE PRIMARILY SOLD TO END-CONSUMERS WHO ARE NOT PARTICIPANTS IN THE MLM SCHEME.
Now, back to my theory. Lots of MLM companies that were shut down by the FTC, were prosecuted on the basis of this Retail Sales Rule. Amazingly, one company has gotten away with flagrant violations of this Rule. AND, they have been doing it for over 25 years. AMWAY, now known as QUIXTAR. With the proliferation of the internet during the mid-90s, the critics got a new medium (which was not only cheap, but also provided a vast world-wide audience) to broadcast their criticisms. This resulted in the creation of many websites critical of Amway. The first one, I believe, being the AUS website, by Sidney Schwartz. Then there was Ashley Wilkes, whose website was gutted by legal bills, fighting the Amway Corp.'s Legal Might. John Hoagland, Jeff Probandt, Russell Glasser, Ruth Carter...... the critics just kept coming. Finally, I believe, it was Scott Larsen's website, www.amquix.info that broke the dam. Amway/Quixtar, inspite of its best efforts could not silence its critics anymore. And I think, even the Amway/Quixtar Corp. owners have realized that their investment in political-payoffs can NOT buy them regulatory protection anymore, that the tide is finally turning. It used to be, they wrapped themselves in the 'Flag' and 'Christianity', and they brushed off critics as 'Liberals', and 'Communists'. And most Evangelical/Conservative Christians broadly held the view that it was a legitimate business, and that Amway/Quixtar Distributors are generally honest 'Christian' people. Now that so much information is available, even Conservative, Christians like Tim, Xandaustc, and Me are criticizing Amway/Quixtar. And the Retail Sales Rule has been thoroughly explained by a Lawyer also, who is a critic.
When the lay-person outside of the Quixtar Business, starts referring to the Retail Sales Rule, it puts the Amway/Quixtar Corpn. in a very uncomfortable position. It is this very Retail Sales Rule, that Amway had in its 'Business Conduct & Rules' requirements, that saved its skin when Amway was prosecuted by the FTC in 1979. So, it seems the Amway/Quixtar Coprn., decided to change the rules, so that its Distributors/IBOs wouldn't be in violation of its own rules.
Strange coincidence, but at the same time, "INSIDER" is going around furiously trying to prove that the Retail Sales Rule is a myth. Anybody care to hazard a guess, what this guy's relationship with ;-)) Quixtar is??
Here's one ;-)) of the many comments regarding the Retail Sales Rule that this guy has posted. It was on Eric Jansen's QUIXTAR BLOG, under the No More Pretending Post. I have posted his comments in Red, and my rebuttal in Blue.
sigh ... why does this myth still perpetuate??? The rule is a 70% sales rule, NOT a 70% retail sales rule. If you have NO retail sales, but still have more than 70% of your volume downline, then you are in compliance with the 70% rule. The myth started because it was just one of a whole facet of things the FTC looked at back in 74-79 and they said that this rule encourages retail sales. This is completely true. If you are a new IBO, then you do not qualify for a bonus unless you have downline or retail sales. Doing retails sales is the easiest way to qualify for a bonus when you start. It encourages retail sales. Note however this is NOT a definition the FTC uses to define pyramids.
- Posted by: insider at November 28, 2005 12:55 PM
Boy, this 'INSIDER' guy just doesn't get it, does he? He seems to be single-handedly ;-)) trying to change, TENS of COURT DECISIONS, STATUTES and ESTABLISHED CASE LAW. And he seems to decide for HIMSELF what were the conditions, the FTC established to identify an illegal pyramid scheme!
Let me try to explain the the fundamental logic behind the courts & the FTC insisting on MLM companies having "RETAIL SALES TO AN END CONSUMER OUTSIDE THE BUSINESS" as a condition for legality.
Take a chain-letter scheme. EVERYONE would agree that it is inherently exploitative, unethical, and illegal, right? Now SUBSTITUTE an OVERPRICED PRODUCT as a SHILL in the scheme. For e.g., if it is a $100 chain-letter scheme, instead of the participants paying $100 to participate in the chain-letter scheme, they are told to buy $100.75 Snickers Bars. The Snickers Bars cost only $0.75, but they are being sold to the participants for $100.75 instead. This $100 OVERPRICING, or PRICE DIFFERENTIAL basically enables the chain-letter scheme to operate as a PRODUCT-BASED PYRAMID SCHEME, with a thin veneer of SUPPOSED legality! Think about it, a $100 Snickers Bar has NO ECONOMIC VALUE in the REAL WORLD. Nobody would buy it! The participants in the scheme WOULD NOT BE ABLE TO RETAIL IT! The participants in this chain-letter sheme buy it, ONLY BECAUSE THEY HOPE TO PROFIT OFF OF OTHER PEOPLE GETTING INTO THE PYRAMID BELOW THEM! But, a LOT OF PEOPLE WILL BE LEFT HOLDING THE BAG AT THE BOTTOM OF THE PYRAMID BECAUSE THE POPULATION OF THE EARTH IS FINITE, AND BECAUSE A LOT OF PEOPLE WILL RECOGNIZE IT AS A SCAM AT SOME POINT IN THE PYRAMID'S GROWTH AND THUS IT WILL COLLAPSE! Just like any Chain-Letter/Ponzi Scheme would.
This is the LOGICAL BASIS for the courts' decisions in dozens of cases where MLM schemes were prosecuted, that THE EXISTENCE/LACK OF RETAIL SALES IS THE TEST OF THE LEGALITY OF THE SCHEME.
Read these threads, look at the court decisions, make up your own mind. So, INSIDER, is this a clear enough exposition for you now, or you still don't get it?
Posted by: perceptive at December 3, 2005 06:46 PM
There's one more flaw in 'INSIDER's comments, that Imran Aziz of the QuixtarSucks Blog, pointed out. I will post his comment here in Green.
So I do 300 PV on personal volume, I shouldn't get a bonus? Posted by: Imran at November 28, 2005 04:30 PM
This 'INSIDER' guy has a comment on my blog also ;-)), under my HOW I GOT INTO THIS.... post. Like I said, desperate, desperate ;-)).....