Most likely it is.

Amway, or Quixtar, or Britt Worldwide (BWW).. different names for the same thing.. is a multi-level marketing scheme. Unlike pyramid schemes of the past, MLM involves some real product. It is based on an idea as an alternative way to do business, to bring the products straight from the factories to the distributors and to the consumers without all the marketing, middle man, rentals etc. So if you sell a product for them, you get a cut from the money saved in all those areas. The more you sell, the more money they will give you for selling their products. The promised land in MLM is that you can earn up to 250K per year by doing nothing after working on the scheme for 5 years.

Sounds ideal, but there's a few fundamental problems with the scheme after hearing one out. As presented by NBC, this maybe a scam after all and here's why.

1.) One of the key characteristics of this MLM scheme, is that you are not employed by Amway, Quixtar or BWW, you become business associates. So you are not entitled to any benefits as an employee. That's not the main crux of the problem, the main problem is, you are encouraged to 'recruit' more business associates yourself because you will get a cut of the products sold by business associates recruited by you. And you get a smaller cut of the products sold by associates recruited by your associates... So if you want to get to the promised land of 250K per year by doing nothing, it is more likely that you will sell the 'MLM schemes' more than the products.

2.) There are no consumers in MLM, only associates. Wait, didn't I mention that MLM delivers products to the consumer directly hence you get a cut of the savings from the usual marketing methods, so what do you mean there's no consumers in this case? That's because if you are an associate yourself, you get to buy the products at discounted price so it makes more sense to join them for a nominal fee of about $30 (same as Challenger membership price), and save more than buy direct from other associates. And there's more, the associates stand to benefit more if you join the scheme to be a fellow associate than say just buy the same products from them. They will get a cut of the profits from you since they roped in you as a new associate, they don't have to serve you and you will serve them potentially by looking for new associates yourself. It's a clearly win-win situation.

How is that a problem? Well, if it's all about the money, who is going to do the whistle blowing if there's a problem with the products. Being a business associate instead of a consumer, what are your rights then? Products from Amway may be winning awards in Reader's Digests as being the 'most trusted' brands but remember, the people using them are the people selling them too so is it really that good? And what do you do if things go wrong? After all, it is very likely that you are inside this scheme because your friends introduced it to you... so what are you going to do then? They may have a liberal return policy if you are not satisfied with the products, but what about if the products harm you like the milk powder scandal?

3.) Suppose that their products are genuinely good and everybody in the planet gets into their scheme, can it be sustainable? It will be similar to the pyramid schemes where majority of the associates are actually at the base of the triangle. Stats has shown that only 1.6 out of 1000 associates make about $4000 a month, enough to lead a decent life. Only 1.2 out of 10000 associates are able to reach the promise land netting more than $10K a month. The key problem is how to get to that 0.012%. If you have only 10 associates and 2 of them drop out, none of them managed to recruit new associates and the average sales of the associates fall, your income will fall too. You may need to have thousands of associates recruited directly or indirectly so that you can reach a steady state. In other words, you need the law of large numbers. So if you thought that MLM can provide you with a steady income year after year, you may be in for a surprise.

4.) Amway sells many products, so many products that you will be tempted to buy everything from them since you need to use them anyway (like toothpaste). Why, because you can hit the minimum sales requirement as an associate and become eligible for a cut of the products you 'sold'. You will be driven by greed rather than purpose. You are using their cosmetics, not because it is the best for you but because you get some money back (to me, it's just another name for discounts). Dealing with MLM seems like dealing with the devil, because I'm hearing more about the money than about the product. They may have good products but it is a shame that it gets sold in this manner.

There are many ways to reach financial independence, MLM may be a slippery way as you bet on your friends (a.k.a. associates) more than the quality of a product that you are selling.

Financial independence for the sake of it may not even be a worthwhile dream at all.