### Amway: The Untold Story

Directly Speaking

To anyone who has makes a serious study of Amway and the problems that have for so long plagued it, one thing becomes overwhelmingly obvious: if there is any one primary cause for almost all those problems, it would have to be the "Systems" developed by a small number of high-level distributors to sell large amounts of motivational "tools" to the thousands or hundreds of thousands of distributors in their downlines.

While each of these Systems claims to be different from and superior to the others, they seem to me mostly indistinguishable from each other, sharing a number of common characteristics:

1. Recruits are lured in by exaggerated income claims and ostentatious displays of wealth.
2. Once they are in, it is repeatedly stressed that they will not have any chance of attaining said wealth unless they strictly adhere to the System, meaning they should buy at least one tape per week, attend all meetings and rallies, and spend most or all of their free time trying to recruit others. Amway's rules state that the purchase of motivational tools is optional, but it seems clear that those who sell the tools have figured out how to pay lip service to these rules while continuing to exert pressure on their downlines to buy the tools. "The tools are optional, and so is success," goes the oft heard refrain.
3. Retailing is downplayed or ignored completely in favor of self-consumption of Amway products.

It's not surprising that these Systems have been the subject of a series of lawsuits, as they are inherently deceptive and fraudulent. Distributors are routinely not informed that their upline may be making as much or more from the sale of motivational tools as they are from the sale of Amway products. Without this vital piece of information, distributors naturally assume that the incomes and lifestyles of their upline are attributable to their Amway businesses, and they buy the motivational tools in the hopes of achieving a similar success. It's an insidious and self-perpetuating cycle: the more motivational tools the masses of downline distributors buy, the more successful the upline distributors appear to be in their Amway businesses, which in turn inspires the downline distributors to buy more motivational tools, and round and round she goes. Lower level distributors are either bled dry and quit, or hang in long enough to make it to the level where they start to get a cut of the tools profits.

Most Amway distributors seem largely ignorant of what Phil Kerns so accurately referred to back in 1982 as a "ghost system of non-Amway produced materials." Many deny that their uplines make any profit at all from the sale of the tools; that their uplines may actually be making most of their money from the tools is inconceivable to them. They are either unaware of the compelling evidence that has been available for years, or have chosen to ignore it. (Some of this evidence is discussed in the "Tools Scam" article.)

Amway Corp.'s public reaction to these problems has been to either deny that these problems exist, or to acknowledge them but claim that the culprits are "independent distributors" and that Amway Corp. bears no responsibility for their actions. A glaring example of the former is Amway Vice President Craig Meurlin's recent comment on the proposed settlement in the Hanrahan class action lawsuit: "We’re just pleased to move on. Stacy Hanrahan and the other plaintiffs had a very abnormal experience with the company." Keep these words in mind as you read the very revealing court documents that follow.

In 1984 Cairns v. Amway was initiated by a group of Amway distributors; these documents were entered into the court records as evidence by the plaintiffs. These documents indicate that, at some point in the late '70's or early '80's, Amway Corp. became concerned at the increasing attention being focused on them by the FTC and various state attorneys general, and in response conducted one or more internal investigations. The first two documents are Amway Corp. memos concerning the causes and findings of these investigations. Clearly Amway Corp. was very concerned about what it found, and various courses of action were recommended. One of the responses to the findings of the investigations were the two "Directly Speaking" tapes made by Rich DeVos in 1983, in which he addresses a whole laundry list of problems and asks for the help of the Direct Distributors in eliminating them.

It is equally as clear that whatever action Amway undertook to control these problems was ultimately ineffective, as every one of the problems discussed by DeVos are still evident today. We know this from the more recent lawsuits as well as from the hundreds of comments received from current and former Amway distributors. At this point we can only speculate as to whether Amway Corp. was unable to control these problems, or unwilling to, or some combination of both. As Dr. Juth pointed out, by the time the Cairns case was filed, Amway Corp. and the distributor groups had become equally powerful, mutually dependent organizations:

> "The entrepreneurs of the Amway Corporation, perhaps unwittingly, created an organizational structure which evolved into two powerful, symbiotic organizations. The survival of the Corporation and the distributor organizations are now dependent on and constrained by the other. The Amway Corporation is constrained in its ability to garner desired profits because of the amount of money it must allow for distributor incentives and the fact that distributors are more inclined to sponsor rather than to sell (retail). Corporate profit levels are also constrained by the legal "wars" it must wage because of the illegal and deviant behavior of some of its distributors. Corporate profits can also be constrained by legal changes, e.g., customs laws. Finally, the Corporation can be constrained in its decisions regarding distributors by actions of the Board of the Amway Distributors Associations.

> "The distributor organizations are dependent upon the Amway Corporation for products and visibility (through advertising). The distributors actions are constrained by Amway's Code of Ethics and Rules of Conduct. Distributors are also under pressure by the corporation and its top distributor organizations to sell more and recruit more. Additional sales and recruits however are constrained by uncontrollable external social and market conditions.

> "Structural constraints impede the efforts of both entrepreneurial organizations (the corporation and the distributors organizations) in obtaining their goals. As a consequence, each organization adroitly manipulates, often in an illegal and deviant manner, its constraints in order to ensure its success. When the goals of the corporation and the distributor organization coincide, as they do in recruitment and sponsoring efforts, then accommodation and tacit support by the corporation for successful but illegal and deviant practices of the distributor organizations may occur. When the goals of the corporation and the distributor organizations conflict, as in the sales of non-Amway goods, some attempt may be made by the corporation to control such activities but the structure of the Amway organization is such that real enforcement efforts by the corporation would threaten the survival of the total enterprise. The independent contractor status of distributors, the sheer number of distributors involved, and Amway's policies which allow distributors to produce their own materials, combine to make such questionable practices normative. Illegal and deviant behavior exists in the organization because it benefits either directly or indirectly each organization."

One thing is clear: Amway Corp. has long known of the serious abuses being perpetrated on its distributors, and has failed in its moral and ethical responsibility to either protect them, or to sufficiently inform them so they could protect themselves. (The "Directly Speaking" tapes, as the name implies, were sent only to Direct Distributors.)

These documents have been reproduced here as accurately as possible, except were the copies I have were illegible. All emphasis is as it was in the originals. The documents were obtained from District Court in Cincinnati.

    Exhibit "E"
    author and date unknown (probably 1982)

`AMWAY DISTRIBUTOR COMPLIANCE WITH THE`
`CODE OF ETHICS AND RULES OF CONDUCT`

`The purpose of this memorandum and the attachments is to`
`communicate to Senior Corporate Management - worldwide, as`
`clearly and concisely as possible, Sales Division programs`
`that are currently being carried out in North America to:`

`A) Obtain maximum possible compliance by Amway`
`distributors with the Code of Ethics and Rules`
`of Conduct, and`

`B) Eliminate the illegalities and abuses inherent in`
`distributor (motivational) "systems" of non-Amway`
`designed/produced audio visuals, literature,`
`rallies and seminars.`

`Although what follows is particularly applicable to the United`
`States and Canada, the Chief Executives and their Executive`
`Committees in Amway's overseas affiliates are to be alert`
`to similar challenges in their markets and, with approvals`
`from their respective Regional Vice President, initiate similar`
`programs in their markets.`

`Hopefully, North American Executive Committee members will be`
`able to have a better understanding of our Corporate challenges`
`in the compliance areas, and when hosting Diamond Seminars on`
`board the Enterprise Yachts and at Peter Island, they will be`
`better informed to answer questions and reiterate Amway's`
`position.`

`This memorandum is also designed to respond to Mr. Van Andel's`
`request for Public Relations and Government Affairs`
`Departments to be briefed on our compliance activities and help them`
`initiate pro-active programs with media and regulatory agencies in`
`the U.S.A. and Canada.`

`THE PROBLEMS`

`They are in two prime categories:`

`A) Widespread illegalities inherent in Amway distributor`
`designed "systems" of tapes, books, and rallies. While`
`most of these "systems" were conceived in the late 1960's`
`and early 1970's as genuine "support" programs to help`
`Amway distributors develop their Amway businesses, entre-`
`preneurial "higher pins" discovered and developed programs`
`for substantial, separate, additional income, under the`
`Amway "umbrella."`

`Appendix 'A', a confidential memorandum to Policy Committee`
`of August 1982, provides you with all the background as`
`to how these "support systems" escalated to what we believe`
`is now a threat to the future security of Amway Corporation,`
`at least in the United States.`

`As this document - "Challenge of the '80's" - points out,`
`the escalating profits and pressures of these businesses`
`lead to an alarming rise in violations of the Code of Ethics`
`and Rules of Conduct.`

`Subsequent legal evaluations disclosed that the dispropor-`
`tionate (to Amway) sales, intensity and solicitation of`
`these "tools/systems" are illegal, per se, under several U.S.`
`federal and state laws.`

`B) Specific violations of the Amway Rules of Conduct and the`
`Manifesto. The principle violations related to the upsurge`
`in distributor "systems" have been:`

`RULE 4 - Prohibiting "cross" group sales/solicitation of`
`non-Amway produced materials and services.`

`RULE 1 - Section B, Part II - Prohibiting distributor`
`reproduction and sale of tapes and literature of the Amway`
`Sales and Marketing Plan.`

`MANIFESTO ITEM #2 - NOW RULE 2, SECTION C, PART II - Prohib-`
`iting misrepresentations of the Amway Sales and Marketing Plan.`

`MANIFESTO ITEM #3 - NOW RULE 3, SECTION C, PART II -`
`Prohibiting mandatory purchase of any products and/or`
`sales aids in order to become an Amway distributor, or`
`to receive help in developing an Amway distributorship.`

`MANIFESTO ITEM #4 - NOW RULE 6, SECTION A, PART II -`
`Prohibiting deceitful invitations to prospective distri-`
`butors.`

`As items in the Manifesto were not legally enforced by`
`Amway, the Board of Directors of the Amway Distributors`
`Association endorsed Amway's decision to incorporate these`
`three items into the Rules of Conduct.`

`Appendix 'B' - the Diamond Bulletin released to the U.S.`
`and Canadian Diamond Club in January 1983 (and shortly to`
`be released through the U.S. and Canadian Newsgrams and`
`Amagrams), provides precise details of all Rules mentioned`
`above.`

`Appendix "C" - Provides precise details of Rule I, Section`
`B, Part II, excerpted from the Amway Career Manual.`

`Appendix 'D' - Provides you with an excellent "overview"`
`of the challenges, articulated in a memorandum to me from`
`Mr. Halliday.`

`THE SOLUTIONS`

`A) Getting the attention of the distributor leadership that`
`we have mutual challenges/problems, and that Amway is`
`committed to stop the abuses. Following and expanding on`
`the strategy proposed in the document - "Challenge of the`
`'80's" - Policy Committee and Management Committee:`

`1. Resolved that Amway must purge our business of these`
`illegalities/abuses.`

`2. Declared our position at:`

`* E.D.C. meeting in Burgenstock, Switzerland`
`* R.D.V. Fall meeting swing in 14 U.S. cities (video`
`and cassette tapes available)`
`* Diamond Club - January 1983 in Hawaii (cassette tapes`
`available)`

`3. Provides a Corporate alternative and competition to`
`distributor designed motivational tape programs by adding`
`cassettes and B.V. (refer Appendix 'E' - Newsgram release).`

`4. Published R.D.V.'s "10 Points", established at January`
`1983 Diamond Club (refer Appendix 'F' - Diamond Bulletin of`
`February 1983).`

`5. Produced two R.D.V. Directly Speaking cassettes on the`
`subject matter (previously distributed and available upon`
`request).`

`B) Expansion of resources to deal with Rules violators & estab-`
`lishment of Compliance Committee - Responding to distributor`
`concerns that Amway was tending to "paint everyone with the`
`same brush", Sales Division joined forces with the Legal`
`Division to expand our (already existing) "Special Handling`
`Department" (managed by Paul Burt who reports directly to`
`Randy Preston).`

`All specific complaints now go directly to this department,`
`whether identified by an Amway distributor, an ex-Amway`
`distributor, member of the general public, or by an Amway`
`employee.`

`Major complaints are now reviewed weekly by a new "Compliance`
`Committee", jointly chaired by W.J. Halliday and L.S. Mulham`
`and enforcement decisions made more quickly, on the basis`
`of facts, and whether "cease and desist", "censure", and/or`
`"termination" is the appropriate penalty. Appendix 'G' is`
`and example of the weekly violations log.`

`The Compliance Committee, including Roger Krause, Randy`
`Preston, the appropriate Sales Director and the appropriate Legal`
`Officer, will also review enforcement procedures and`
`recommend rules changes.`

`While Amway is not initiating investigations without quali-`
`fied (preferably written) complaints, Policy Committee has`
`directed that Amway Sales Division must follow through`
`quickly and completely - BEFORE other outside agencies do it`
`for us. (Refer to Appendix 'H' for details of Enforcement`
`Procedures excerpted from the Direct Distributor Manual.)`

`C) The "P.A.C" Men Program`

`While the essentially "re-active" program explained in 'B'`
`above will deal with violations as they arise, the Corpor-`
`ations main objective is to do everything possible to`
`stop them from happening in the first place.`

`To achieve this objective, a massive, personalized communi-`
`cations program is already underway utilizing essentially`
`persuasive, selling techniques.`

`With 'yours truly", Roger Krause and the Regional Sales`
`Directors in the forefront, we hope to:`

`Persuade`
`get Action from, and`
`Communicate to`

`all Direct Distributors, thru Summer 1983, the following:`

`1. That operating and/or participating in a solicitation,`
`sales and/or distribution scheme involving only`
`non-consumer items - particularly motivational tapes -`
`violates state pyramid/chain distribution laws, and`
`could lead to Amway distributors being indicted and/or`
`convicted of criminal fraud.`

`2. That regulatory agencies, particularly state Attorneys`
`Generals, are increasingly sensitive to the ongoing`
`emergence of such programs.`

`3. Increasing proliferation of Amway distributor partici-`
`pants publicaly stating "We're not in Amway", or`
`"Amway is just a supplier", etc., could become self-`
`fulfilling prophecy.`

`4. Particularly where "organization names are used to`
`"replace" the Amway name - e.g. "Mindbenders International"`

`5. That Federal Trade Commission and Anti-Trust Laws are`
`being violated through price fixing and collusion.`

`6. That Amway will help the "systems" entrepreneurs and`
`participants restructure their support programs to`
`provide legal, non-coercive, voluntary programs.`

`7. That all Amway Rules of Conduct must be adhered to`
`and all Direct Distributors must become fully under-`
`standing of the Rules and regularly communicate them`
`to their own personal group.`

`8. That "peer" group leaders state in public to their`
`"organizations" that corrective statements have to be`
`immediately implemented to correct misstatements such`
`as:`

`"No Selling"`
`"Not Amway"`
`"Must Have Tape of the Week"`
`"Must Attend Rallies to Succeed" (in Amway)`

`SALES DIVISION OBJECTIVE IN TIMING IS AS FOLLOWS:`

`"Systems organizations" titular heads - end March 1983`
`All Diamonds and above - end April 1983`
`All Emeralds - end May 1983`
`All Direct Distributors and above - end Summer 1983`

`All meetings are being organized progressively with the coopera-`
`tion and participation of the "upline influencer" Direct Distri-`
`butor wherever possible, but are not necessarily restricted to`
`this criteria. At this date, progress is excellent with all`
`Diamond Directs and above, that we have met with, willing to`
`cooperate.`

`Violating distributor-produced literature is being withdrawn,`
`statements we require under the retraining objectives are being`
`made from the podiums in our presence. Appendix 'I' details`
`the more typical misrepresentations/violations in a retraining`
`"checklist."`

`The following, important statement from Hogan & Hartson's 28`
`page legal evaluation of the legal risks inherent in selling`
`and distributing non-consumable "products" through a multi-level`
`system, has helped us greatly in getting the attention of the`
`"systems" entrepreneurs:`

`"Because of the extensive and extremely adverse publicity`
`associated with Glenn Turner's "Dare to be Great"`
`operation -- an operation based primarily on the sale of`
`motivational tapes -- it must be recognized that any`
`multi-level sales plan which unduly emphasizes sales of`
`motivational literature or tapes is likely to attract the`
`attention of enforcement authorities!!!"`

`[signature illegible]`

`Exhibit "A", memo hand notated as "First Draft"`

`TO: Jay Van Andel`

`FROM: Casey Wondergem`

`DATE: December , 1982`

`SUBJECT: DISTRIBUTOR ACTIVITIES DRAWING LEGAL AND MEDIA HEAT ON AMWAY`

`More and more frequently distributor activities are drawing the`
`attention of state authorities and the media toward Amway. The results`
`are more negative publicity for Amway.`

`In this background memo, I'll sketch the history of this problem`
`in recent years and its current status. There will also be some predictions`
`about where other such problems are likely to flare, a rundown on how Amway`
`now tries to combat such problems, and some possible solutions to a`
`growing problem.`

`Through the years, various state attornys general have`
`examined Amway. For years, the focus of their attention was on the`
`question of whether Amway was a pyramid. The demise of such schemes`
`as Koscot and Dare to be Great plus the Federal Trade Commission's`
`definitive ruling that Amway isn't a pyramid led to a refocusing`
`of law enforcement interest. That new focus seemed to center`
`upon what prospective distributors were hearing about income`
`opportunities in Amway.`

`About 2-1/2 years ago, Amway saw one of the original symptoms of`
`this new interest in Wisconsin. That state's attorney general's staff`
`attended meetings of distributors in the Milwaukee area`
`and then expressed their concerns to Amway. It is my understanding`
`Special Handling checked the complaints and found some of them`
`merited. However, no one was terminated as a result of either the`
`state's or Amway's findings. Last summer, two years after the`
`initial complaint, the attorney general's people in Wisconsin`
`attended additional meetings held by the same distributors investigated`
`in 1980. This time, the state filed civil complaints not only against`
`the distributors but also against Amway. The state's action drew`
`nationwide news coverage.`

`After the filing of Wisconsin's claims, we have detected a`
`widespread emphasis among reporters questioning exactly how Amway`
`polices distributors and prevents violations of Amway rules. You saw`
`it personally from Mike Wallace during the 60 Minutes interview and`
`again in the interview with Chicago's WBBM-TV.`

`The same types of questions are at the heart of this months two Amway`
`programs by New York's WABC-TV. That station claims it became`
`interested in Amway because of a letter from one viewer. They traced`
`down three former distributors on Staten Island and interviewed them`
`about their complaints. Basically, all three contended they couldn't`
`make as much money in Amway as they had been led to believe.`

`Their story is an old one and tempting to ignore. However, the`
`first WABC-TV program apparently caught the attention of the New`
`York Attorney General's office. They insist that they were investigating`
`Amway before that television program. That claim is questionable [unreadable]`
`cannot be questioned that the Attorney General's office in New`
`York is investigating Amway. They're specifically interested in`
`what meetings our Northeast Regional Sales people have attended in`
`New York during the past two months, if they reported any violations`
`of our Plan, and if Amway has enforced its rules against any New York`
`distributors in the past two or three years. This office speaks of`
`investigating Amway under New York's Consumer Fraud statutes.`

`We now have attorneys general in two states--Wisconsin and New York--`
`publicly announcing investigations of Amway and its distributors.`

`In addition, PR is aware of contacts from the California`
`Attorney General's office (Deputy AG Albert Norman Shelden), the San Diego`
`City Attorney's office (apparently over newspaper ads and presentations`
`of the Plan), and an apparently unconfirmed report in August that`
`a distributor overheard members of the Minnesota Attorney General's`
`staff discussing "looking at Amway."`

`California, aside from the two contacts with legal officials`
`noted already, offers added potential for publicity unfavorable to`
`Amway because of a problem the Southern California Better Business Bureau`
`in Bakersfield perceives with the Champions organization there. We know`
`the BBB's manager has attended meetings organized by Champions and has`
`been complaining about them for more than a year.`

`Another fertile field for problems with the state or local law`
`enforcement officials in Oregon. We've had two specific complaints`
`from that state in the past two months about the curiosity approach [unreadable]`
`a mysterious and unfollowed up telephone call from someone claiming`
`to be a psychiatrist "deprogramming" former Amway distributors, and a`
`self published anti-Amway book "Fake it til you make it" being featured`
`in Oregon newspaper reviews and on broadcast talk shows.`

`At this point, we don't know if New Jersey authorities are`
`following up on the WABC-TV reports and investigating Amway. There`
`has been an unconfirmed report from Connecticut that authorities`
`there are checking us out. However, that seems unlikely since this`
`state's Attorney General has a father who is a distributor.`

`Certainly the name of Amway is being bandied about on the`
`circuit linking the nation's attorney's general and it seems [unreadable]`
`more and more of them will be looking at Amway.`

`HANDLING COMPLAINTS AT AMWAY--Currently, the situation is`
`unclear. As many as five separate departments or divisions may be`
`involved in the case of a complaint reaching an Attorney General's`
`office. They are Legal, Sales, Special Handling, Government Affairs`
`and Public Relations.`

`To illustrate the problems with so many involved, consider what`
`happens if a distributor has a complaint about activities seemingly`
`in violation of Amway's rules. Presumably, that distributor's complaint`
`would go to his or her regional sales team. However, many of these`
`come directly in letters to you or Rich. On the other hand, a`
`complaint from a member of the general public could come to your`
`offices or to Public Relations. Complaints about Amway being checked`
`by reporters normally come to Public Relations. A complaint serious`
`enough for the offended party to seek legal help probably goes`
`directly to Legal. In virtually all these cases, the original complaint`
`winds up being turned over to Special Handling for investigation and`
`any of the other groups may be called upon to help. A complaint that`
`is filed directly with the offices of a state's Attorney General`
`presumably is turned over to Legal or Government Affairs.`

`ANALYSIS--Because Amway has been blitzed by Canadian provincial`
`authorities, that issue is preoccupying us all. However, that is`
`not the only "war" that Amway currently is waging. We're fighting on many`
`fronts--publicly in New York, Wisconsin and with the Federal Trade`
`Commission. All these negatives are part of Amway's file with both`
`reporters and law enforcement authorities at the state and local`
`levels. Assaults upon Amway's credibility stemming from irresponsible`
`activities by some distributors threaten Amway's key market--the`
`United States. In today's climate, the likelihood of`
`ambitious or merely curious reporters and prosecutors taking aim at`
`Amway is escalating almost daily. It is likely to become an even`
`stronger trend once 60 Minutes profiles Amway activities to this`
`countries largest television audience. Amway currently is not`
`set up to fight a multitude of legal challenges in a variety of`
`states. The harsh fact is that if the number of these challenges`
`increases significantly, Amway is bound to lose some of them.`

`RECOMMENDATIONS--There are a number of steps Amway can take`
`to reduce the danger. The include:`

`1) Obtaining a speedy resolution of the Wisconsin challenge.`
`A motion to dismiss is scheduled to be hear in Milwaukee January [unreadable]`

`2) Distributing the news widely (including personal telephone`
`calls to 60 Minutes and WABC-TV) if Amway succeeds in having the`
`Wisconsin case dismissed.`

`3) Clearly assigning responsibility to accept and investigate`
`complaints received by Amway about distributor activities. This should`
`be done in considerable detail (perhaps even through a Standard [unreadable]`
`Bulletin in addition to a Policy Committee action) so that everyone`
`within the corporation understands clearly what should be done with`
`complaints.`

`4) Set up a special telephone number to received such complaints`
`once they are assigned to one department or division. That number [unreadable]`
`be publicized at least once annually through Newsgram and the Amagram.`
`We want to clean our own house before some outside agency does it [unreadable]`

`5) Create an Amway "truth squad" or internal audit type group to`
`get into the field and monitor distributor performance in case of`
`complaints or in areas where we know law enforcement agencies are`
`investigating. Only through such on-site monitoring can Amway really`
`know how its Plan is actually being presented to prospects, what`
`advice they are being given, and the pressures being exerted upon`
`distributors to purchase books or tapes and attend upline rallies.`
`This might well require employees with a combination of sales, [unreadable]`
`public relations, and investigative talents.`

`6) This group should also be assigned to monitor and follow`
`distributor advertising since many complaints about supposedly`
`"deceptive" practices originate from those responding to ads. [unreadable]`
`of interest situations should be another responsibility.`

`Events of the past three months demonstrate clearly that need`
`for planning prompt action if Amway is to respond to challenges`
`of this type. The same persons or group doing the actual investigating`
`should be the ones involved in dealing with law`
`enforcement officials checking into distributor activities. Amway`
`simply doesn't have much margin for error any more in dealing with`
`investigating, and publicly responding to improper distributor`
`activities.`

`Exhibit "A", Directly Speaking, January 1983, Rich DeVos`
`Amway Cassette Series VA-2160`

`Side A`

`Well, this is Rich DeVos in Ada, Michigan, coming`
`forth once again to chat a little bit with you, and to`
`share a few ideas, and a little information and some of`
`the things that are going on. The primary purpose to this`
`tape is to communicate to you some of the things that went`
`on at the Diamond Club in Hawaii, and I guess partly to`
`make sure we have the least amount of rumors and the most`
`amount of facts running around as to where we're coming at`
`you from.`

`I guess another reason to talk to you right now`
`has to do with what we've seen on "60 Minutes" -- what`
`we're seeing on other television programs around the`
`country, and some of the challenges that seem to be coming`
`our way at this time.`

`At the Diamond Club, I -- referred to them as`
`"warts." Randy Preston said, "Maybe you ought to call`
`them 'blemishes,'" but I do not think that's strong enough.`
`Now let's first of all understand that I am not talking to`
`new Distributors -- this is not a sponsoring meeting -- I am`
`talking to you as Direct Distributors, as the heads of your`
`organizations, as the ones that this company deals`
`with and looks to to carry on the leadership role in this`
`organization. Now I recognize there are other awards,`
`and every award level, by the way, claims that they are`
`the true leadership, but as I told you when I was on the`
`road with you, this Plan gears around the simple fact that`
`every Direct Distributor is in charge of their business,`
`they are the owners of it, they run it and they are the`
`level to which we look to meet the day-to-day responsi-`
`bilities in the field organization.`

`So I'm talking to you as the leaders of the organi-`
`zation. I hope you have all due respect for all the people`
`below you and all the people above you, and that's just`
`super. I must emphasize to you, however, that you're the`
`leadership, on a day-to-day in dealing with your organiza-`
`tion. Therefore, it's important you know some of these`
`things, and so, maybe we can give 'em to you straight and`
`maybe share some of our concerns with you.`

`Every since "60 Minutes" appeared, we have been`
`innundated by mail. Both pro and con. I think in all`
`honesty I must tell you that the outside world, the people`
`who are in business, the people who are in government, the`
`people who watch "60 Minutes" quite regularly and critically`
`and have a knowledge of media and so forth -- generally feel`
`we came out very, very well.`

`Paul Harvey called me the other day and said, "You`
`guys did a great job, I'm proud of ya. And he wanted to`
`call just to congratulate us. The head of a major univer-`
`sity's business school, I talked with him yesterday, and`
`(unintelligible) "Boy, you guys did as good as anybody's`
`ever done. I was proud of ya. In fact, I had a bunch of`
`people in just to watch ya, because I knew you'd do well."`
`Well, that's fine, but the inside report from Distributors`
`goes all the way from frustration to outright anger.`
`People who say they distorted us, they didn't show anything`
`good about us, all they could do was find a few failures and`
`show the extremes and why did ya pick those people, and why`
`didn't ya pick somebody else -- and all those rumors you got`
`in your mind, and some of those frustrations also.`

`Well, let me give you the background on "60 Minutes,"`
`it might help you a bit. We were first approached a long`
`time ago. We tried to put it off, we told them we didn't`
`think we were a good subject for the show, but they said`
`they were going to do a show, with or without us. And we`
`finally took it upon ourselves to say that if they're going`
`to do it anyway, then we're not going to dodge it -- even if`
`it's a disaster, we're at least going to stand for what we`
`believe and if they don't put our thoughts on the tape, well`
`that's up to them. But we're not going to run from it.`

`We had no control over the people they used. They`
`took tape from all over the country. They taped people on`
`the West Coast, they taped people on the East Coast and they`
`chose to run the portion they ran. Now, you may not have`
`liked, or I may not have liked it -- it's unimportant.`
`That was their choice. The fact of the matter, however,`
`is that watcha saw is what was being presented at an`
`Amway meeting. And I'm not goin' to knock it and say it`
`was so bad -- it's just that when you take a little piece out`
`of a big meeting, it can look not as good as you'd like to`
`have it. You know, if you and I sit in a meeting for three`
`or four hours and we hear somebody say a few things like that,`
`we'd applaud. We'd say "Yeah, right on, and soar with the`
`eagles -- why not?" But when ya suddenly see that little`
`section, one minute long, take out of contexted and flashed`
`on a screen, it doesn't look quite the same, does it? When`
`a person stands up and says "I'm going to have a ring for`
`every finger..." You know, I say sometimes at a Direct`
`Distributor meeting where we're on a talk about getting ahead`
`in life and having some of the finer things in life, that`
`sounds pretty good. But when it's on a national television`
`screen, as though it represented all of us, and that all we`
`think about is greed, or money, or rings, or cars, or buses,`
`or whatever, then it doesn't look very good.`

`Now, let's face it -- you and I know that's not the whole`
`story -- they know it's not the whole story -- and those that`
`don't like us come to their own conclusion. But you see, when`
`you grab thirty seconds or a minute out of a whole meeting, you`
`get a distorted view. That wasn't the whole meeting - there was`
`a lot more to the meeting, and probably much more balanced in the`
`meeting, but that isn't what they chose to show, and so it comes`
`off that way.`

`Now let's, therefore just -- not get excited about it, figure`
`we came out of it 50-50, 60-40. We wish it had been a 15 minute`
`ad but it wasn't. It wasn't all bad, it wasn't all good, but it`
`did show a presentation of how we sometimes look.`

`Now, we also have got -- some of you know -- some problems in`
`other states with legal authorities, we -- who -- also say we're not`
`saying it right, we're not presenting the Plan correctly, we're`
`overclaiming and understating what'cha have to do.`

`We have guys in the -- Legal field -- uh, Attorneys General`
`-- who don't like our curiosity approach, and -- and, so we've`
`tried to -- lay before the Diamonds and I'm trying to lay`
`before you and -- and -- really asking for your help.`
`We've got to find a way to make a better image.`

`You know, one of the reasons we use the curiosity approach`
`is because people have preconceived ideas of what Amway is.`
`You and I know what it really is, but they have a distorted`
`or warped view; and therefore, if they thought they were`
`coming to an Amway function, they would probably say "No"`
`because of their preconceived ideas. Therefore, would we`
`do is use the curiosity approach, but when it's used`
`indirectly, all we do is give a further bad image for`
`the organization. And people begin to say, "What's the`
`matter, are you ashamed of what you're in? Do you have`
`to be tricky, deceitful, lie to get me to come to a`
`meeting? Tell me it's a fund-raiser, tell me it's a`
`-- it's a how to save money on taxes -- it's a social`
`event" -- whatsa matter with you people, what happened`
`to your ethics? And I have to tell you, that what`
`we're running in to. And that's why we're asking for`
`your total help to stamp out the curiosity approach.`
`If you can't use it correct, then don't use it at all.`
`Then invite them to an Amway meeting, and when they`
`tell you they know all about that, then ask them`
`some questions, such as, "If you know all about it,`
`how does the Diamond Bonus work. How does the Emerald`
`bonus work? Do you know how how profit-sharing works."`
`When they say, "No, I don't know that," then you jump`
`right on them and say "You don't know about Amway,`
`you better come to the meeting.`

`(Unintelligible) . . . that's how you overcome that,`
`but I'd rather have you have to go through that little`
`verbal battle rather to deceive a person and tell them`
`it's not an Amway meeting and then when they get there`
`an hour after they sat down they discover it is an`
`Amway meeting. You know, that's deception, that`
`infuriates people, and that gives this company,`
`and you, a bad image. And so we need your help on`
`some of that stuff, we just got to clean it up.`

`I get too many letters in here from people who`
`are still being told, "You don't have to sell products,`
`we're in a marketing group, we're just in a marketing`
`outfit. No selling is necessary." Now you know, that's`
`a lie. (Unintelligible) . . . you can't stay in this`
`business and be a liar and expect us to have a`
`decent image, and I need your help.`

`Those aren't big things, those are just little things,`
`but you know, we're a big company and we no longer can`
`afford to do little things wrong, because everybody's`
`watching what we do, and therefore we got to do even`
`the little things right -- now, I know you're growing`
`up in business and you're -- you're just trying to get`
`business and you don't know all of the legal ramifications,`
`you don't know all the complications, you just do things`
`because you think you're -- you're doing them right,`
`but that's why we insist that you must do them our`
`way, not because you're dumb or inept or a jerk, we`
`ask you to do 'em our way because this is a compli-`
`cated business and this is a complicated world, and there`
`are certain ways that are right and other ways that are`
`wrong. And I need your help -- when I say, "Do it our`
`way," that not to take your creativity away, it's just`
`that with a million of us out there and each got their`
`own little twist or turn or idea, and they think it's`
`cute, it may be cutely illegal, possibly improper`
`and could be creating a bad image that we were`
`talking about. Now we addressed all that stuff`
`at Diamond Club and I -- I told all the Diamonds`
`I need their help, I'm telling you I need you're`
`help on cleaning up some of these situations.`

`Now, I got -- as we said -- I got stacks of letters`
`that came in -- I -- I can't tell you how many of people`
`have written. Hundreds and thousands -- and here's --`
`here's -- just one letter from one dear lady from the`
`East -- and I won't give her name, I didn't do it for`
`that reason, she's talking about "60 Minutes:"`

`Please don't misunderstand, but a number of`
`people not even in the business stated to me`
`that you did not come out strong enough`
`against the hype, hoopla, exaggerated claims`
`and obvious mixing of born-again, fundamenta-`
`list revivalism with business that was shown."`

`Then she goes on to say:`

`I have no idea, of course, why they edited`
`it that way, but, they did.`

`Now, I can . . . (unintelligible) . . . I can . . .`
`her letter is many pages long, and she told how -- she`
`finally switched groups because she was so tired of that`
`sort of treatment. Still in the business, but still got`
`a bad taste in her mouth.`

`You know, I got another one over here. And this is`
`the stuff I am receiving, and it comes in the backwash`
`of "60 Minutes." Somebody said`

`I consider myself to be the victim of`
`aggressive Directs and their upline. I`
`got caught in an ambitious and aggressive`
`group.`

`If this was an exception letter, you guys and gals, I`
`wouldn't beat it at ya. I got too many of 'em, and`
`therefore I'm going to share it with you, although I`
`know that it's a little negative, but I have to get`
`to you, I have to get your attention that we have`
`to do some things to change our image, and we need to`
`the help of all of you.`

`(Unintelligible) . . . I consider myself to be an --`
`ambitious, aggressive group. Directs, that was (sic)`
`determined to reach their set goal at the expense of`
`the Distributors, come hell or high water. Their`
`philosophy, "Mortgage your home, cash in your`
`insurance, get a bank loan and borrow from whosoever`
`will loan you.`

`We were told in our, and I'll leave the name out`
`because it would identify the organization, in our`
`so and so meeting, certain things discussed were to`
`remain within the walls wherein discussed or suggested.`
`Then the goes on to tell how he was harassed at this job.`

`Whoever was teaching that, and it was not some`
`little new Direct, was teaching an illegal, immoral,`
`improper system. I can't tolerate it.`

`You know, we've been talkin' to you for years that`
`you don't buy a position in Amway, you earn it, and,`
`here, blatantly, being taught inside a meeting, and`
`then being told don't tell anybody, are methods that`
`go contrary to everything we've heard.`

`We've always said you earn your position in Amway`
`and you don't buy it. And here I see it being done,`
`and I want to tell you, we're -- monitoring new Directs,`
`we're monitoring anybody who gets a higher award, we`
`have a whole department today that is monitoring,`
`just because we have some people who got abusive`
`with it.`

`Now, I just got to lay these things on you, I --`
`I need your attention, and I -- some of you guys who`
`are doing it is the one (sic) I am talking to. I'm`
`not talking to the rest of you. But some of you continue`
`doing things that we are not going to tolerate, and we`
`are in the process of establishing a whole new policing`
`department in this company, because we have been`
`unable to voluntarily get you to decide to do the`
`things that are right and will improve the image`
`that we have.`

`Here's another person, and that's the last one`
`I'm gonna read to ya, but she -- she chew me out.`
`And, so -- uh, you know, turn-about's fair play, they`
`say, and I don't doubt that. She said, "I'm painfully`
`that I'm very insignificant cog in the big company`
`wheel. But for what it is worth my opinion is that`
`our president, Rich DeVos, for whom I have the greatest`
`respect, is now obligated to bite the bullet and act on`
`his own voiced beliefs. I recall two of the very`
`impressive statements which punctuates (sic) my point.`

`The first is a quote from a 1965 recording of the`
`"Four Winds," where he told the Junior Achievers,`
`"Before you go out to clean up the world, you had`
`better learn how to clean up your own room." Boy,`
`how's that for having' it thrown back at you?`

`And how right it is, and how right-on it is,`
`that a person would do that.`

`She goes on to say -- I had another quote, which`
`I put on a tape right after the Manifesto came out:`
`"If we are allowed to pick and choose the rules by`
`which we will abide, and ignore the others, then`
`we have chaos."`

`Wow, that's a direct quote, from another person.`
`As I told you, they come in by the stacks. I take 'em`
`home by the pile at night, and just sit there are`
`read through them, wishing I could answer all of them,`
`but many of them carry this message, that we've got`
`some things to do.`

`Well, that's partly what we addressed when we were in`
`Hawaii. By the way, I do have one more here, I see it`
`on the bottom of my list, and . . . and he's gettin' on`
`my case, he says, "You gotta do something to change`
`this image of this company." Well, I wish I could`
`tell you that we're gonna buy Bob Hope, and he's`
`gonna be on television, he's going to be sponsored`
`by Amway, and that that's gonna change it. Well,`
`it's not going to change it. It will help, 'cause`
`he's willing to come on the line for Amway and`
`talk about Amway -- you'll love the ads, by the`
`way, they're great, and it will get to a lot of`
`people.`

`There's only one thing we can do the change`
`the image, you've got to do some things about`
`the way we are conducting ourselves in this business`
`to correct them. Therefore, what I got down to at the`
`Diamond Club, by the way, and this sort of fell out`
`afterwards, you know -- one of the things that we`
`announced at the Diamond Club -- and it -- Amway has`
`been working for three years on the matter of how to`
`cope with the tape business. Should the company get`
`in it, should it stay out of it, how far should it`
`get in it, should it have -- uh, uh -- dollar amounts`
`paid to certain levels, pin levels -- should it --`
`should it -- have BV -- shouldn't it have -- we have`
`just put it off all these years.`

`But you know, we finally concluded, and that's`
`what I announced at Diamond Club, that we are going`
`to put BV on tapes. By the ways, our tapes in the United`
`States will sell for $2.50 and in Canada they'll be`
`$2.95, we will pay full BV -- now understand, no PV --`
`so you'll get the Business volume. The reason for`
`that is a very simple one, so that you get the Point`
`Value out of this business by doing your regular`
`Amway business. However, because of the cost`
`of doing some of the motivational materials and`
`handling tapes, you can get business volume on it.`

`In other words, you can't make Direct by selling`
`tapes. You make Direct by selling the regular line`
`Amway products, but you will get Business Volume`
`on the other. Now, from our standpoint, that's the`
`kind of a simple things, you know, that's absolutely`
`consistent with the Plan, it awards everybody`
`fairly in relationship to what they do in it, it`
`protects the upline, it protects the downline,`
`and it was kind of a simple thing.`

`Uh -- primary reason was because we got a lot of`
`people in this business who don't have a tape program`
`and they're saying, "Why don't you put something out;`
`that's legal and proper," and we finally said fine.`
`We're going to put out legally clear tapes that give it`
`straight, and that you can rely on, we're going to put them`
`out at a price we think it right, we'll put a`
`little BV on 'em so that you recover some of the costs,`
`and -- we have a little hooker in there, by the way --`
`the BV on tapes can never exceed twenty percent of your`
`total Business Volume. Now, I haven't figured out what`
`to do if you go to twenty-one percent, but we will,`
`we may just not pay you on it -- because when your tape`
`volume becomes so great in relationship to your regular`
`business, then you are no longer in the Amway business --`
`you're in the tape business.`

`Now, the tape business, if it is not used as a`
`support for the Amway business, will oftentimes be an`
`illegal business -- in fact, it could be called a`
`pyramid -- because, d -- does not get sold to the`
`consumer. Which means that all the tape business does is`
`take money out of the organization, and because the final`
`person can't retail it, it never brings money into the`
`organization. Now, I'm not arguing about the value of`
`it -- we accept the fact that motivation is vital to this`
`business. Good, honest motivation is important to the`
`business. But, it must be motivation that builds the`
`business -- not become a business in itself.`

`And some of you have made it a business unto itself.`
`And you're making a lot of money on it, and all I'm saying`
`to you, well, I can't tell you whether you can or you can't,`
`I can't tell you whether it's legal or illegal, I'm not`
`checking on your business right now. But we have to provide`
`an alternative to the Direct Distributor in this business`
`in a fair and legal and honest manner as a support device`
`for the main business. And so we decided to put BV on tapes.`

`We really didn't think it was a big deal. I was a`
`little surprised, and I am surprised today to the reaction of`
`some people to our doing this. (Unintelligible) . . . "You're`
`cutting into my tape business, you can't do that." Listen,`
`we've been putting out motivational materials in this`
`company for 23 years. We've been putting out tapes longer`
`than anybody in the business. The mere fact that we decide`
`to put BV on it is a corporate decision, we make corporate`
`decisions everyday to make a product a sales aid, or to`
`put it in BV. We do those things everyday. So our doing`
`this was not a big deal from the corporate standpoint,`
`and so we're a little surprised. We never really considered`
`it being confrontational, we considered it as a way to take`
`care of all the good, Direct Distributors in this business`
`and letting him share in some of the dollars in it, for`
`motivation, as long as it didn't get out of control and`
`become their main business, and that's why the controls are`
`placed in it.`

`I really find it hard for anybody to argue with Amway`
`putting some profit in tape -- uh -- for the Direct Distri-`
`butors -- uh -- even though I've gotten some of that reaction,`
`but that's a whole subject, and -- I just, we just`
`dropped the tape thing there, and -- and we'll move on to`
`the -- the bigger picture, you know, the bigger thing --`
`by the way, that's effective March 1, and uh, you'll be`
`getting price lists and notifications on it, and those of`
`you that don't have a good tape program or any tape program`
`it's -- we think we're going to begin to offer you a`
`good program you can offer to your organization in`
`balance to motivate your people, uh -- I'm not trying to`
`push them, I'm not trying to jam 'em at ya -- I'm just`
`saying that if you feel there is a need for more tapes`
`in your group for motivational reasons, we're going to have`
`some available. Uh, and so -- uh -- we don't call it a`
`program or a system, we just are adding BV to our tapes`
`and going to expand our tape library to better serve those`
`of you that have a need for such a thing.`

`SIDE B`

`Another upshot of everything else, therefore, at the`
`Diamond Club, and all the discussion, led me to challenge the`
`Diamonds, and I -- I want to challenge you with 'em today. I`
`may have sounded a little angry to you. I'm not really angry.`
`I'm just -- I'm concerned. I -- I am vitally concerned about`
`the image that this Company is portraying. And I think we've`
`got some bad actors in this business, and you know we have. And`
`I am imploring all of you to do two things. Number one, clean`
`up your act. And number two, if you know people who are`
`continuing to do things improperly after all of this, then I`
`want you to write us a note and just tell us who's doing it.`
`Don't -- I don't need 419's right now. I just want to know so`
`we can track the improper ones: And if we find somebody is`
`cross-grouping, and if somebody's coming to you and asking you`
`to buy their system or their tape program, then you let us know,`
`'cause that's cross-grouping. And just put it in a letter.`

`Say, "so-and-so came in to see me today to try to get me to sell`
`their stuff." And, you see, then we can put a quick track on`
`anybody who is violating one of the basic principles of this`
`organization. And we'll begin to spot them; and we'll get to`
`them. And then we can take our action from there. But we need`
`your help on getting us some of that information. But, more`
`than that, we need your help in making sure the way you're doing`
`it is proper in your own group.`

`These are the ten things I put before the Diamonds,`
`and let me just put 'em before you. I asked the Diamonds, by`
`the way, that if they agreed with these Ten Points to write me a`
`letter or to stick it on the note pad that was in front of them`
`in the meeting room. All they had to say to me was, "Rich, I`
`agree with you. We support those Ten Points, and we will teach`
`them to our people. And, you know, I received such letters from`
`almost everybody who was there. Not everybody, but I did`
`receive them from most of the Diamonds. So I have them in my`
`file, and I know who has pledged their support to uphold these`
`things. And while we're not in a meeting and I can't ask you`
`exactly the same thing in the same way, to hand it to me when`
`the meeting's over with, and scribble it on a piece of paper, if`
`you feel so inclined, you might want to write a note and say,`
`"Rich, I support your Ten Points, and I'm gonna uphold them in`
`our group, and I'm gonna teach them to our people and see if we`
`can't clean up our business so we can present a better image to`
`the world." So, I'm not -- I'm not necessarily going to take a`
`role call on it, but if you feel that way, sometimes, you know,`
`it helps your own commitment, and it might make you feel a`
`little better to let us know where you stand. Just say, "I am`
`with you." Just stick it on a postcard. I don't care. Just`
`say, "Rich, I stand with you on the Ten Points," and we can go`
`from there.`

`Now, here they are. They're not very complicated, but`
`they do get down to some of the nitty-gritty, and I'll explain`
`them to you as I go.`

`Number One: I will unplug from any group, up or down,`
`Which is not in my line of sponsorship. You know, a lot of you,`
`got your fingers dirty. You got your hands a little bit into`
`somebody else's group, or you're dealing into somebody else's`
`group that's not in your line of sponsorship, or you're getting`
`stuff from somebody. I'm just asking you to unplug it. Tend to`
`your own business; stay in your own line; deal only with the`
`people you sponsor. The other people are not in your group;`
`they are not your business; and if you are a believer in this`
`Plan, then you'll believe in the principle. If it's okay for`
`you to intrude somebody else's group, then it's okay for them to`
`intrude yours. If it's okay for you to intrude somebody else's`
`group; then it's okay for somebody above you to go around you`
`and intrude your distributors below you. You and I know you`
`can't tolerate that. We can't stand it, and you've got to agree`
`to stand on it. If you do, send me a note. I know, there are`
`some old, historical associations. Some of you had 'em goin'`
`back ten years. I'm not going to come running over and try and`
`police it; but I'm saying you should start to think in terms of`
`unplugging and gettin' your act cleaned up.`

`Number Two: I will only use Amway-produced literature`
`in the presentation of the Plan and will use only the figures`
`Amway gives. We have a major lawsuit going right now with an`
`attorney general in one of the states based on people making`
`what they say are excess claims and telling people they hardly`
`have to work at all, telling them you can make $50,000.00 a year`
`and you only have to work twelve hours a week. Now, you and I`
`both know, you know; that -- that just can't be put up with.`
`And, therefore, I have a very simple statement to you: Don't`
`create numbers of your own. You use the numbers and the`
`literature we give you, and nobody else's. You don't have any`
`tapes in your group to teach you how to present the Plan other`
`than the one Amway has. That's what I mean by following Rule`
`Two.`

`Number Three: I will not make my willingness to help`
`a distributor conditioned on their purchasing my Tape of the`
`Week or anything else I sell, which is beyond the basic`
`Amway-supplied material.`

`I tell you why that's in there. I got too many`
`letters from people who have told me that they were told that if`
`they didn't support their upline and buy his or her tapes, then`
`they would not give them any help. I can't put up with that.`
`It is a sponsor's responsibility to train, motivate and supply`
`their people. That's for the privilege of being the sponsor;`
`not whether they buy some extra things you've decided to sell.`
`If you have people in your group that you don't want, then let`
`us know and we'll reassign them to somebody else; because if`
`you're unwilling to take care of them because you are willing to`
`sponsor them, then let me know. There are no conditions on`
`servicing distributors. All of your distributors are serviced`
`the best you know how, whether they buy a tape of the Week from`
`you or not.`

`Number Four: If I offer tapes, books and rallies,`
`they will always be presented on a voluntary basis. No strings,`
`no pressure, and no force, and by 'force' I mean such as saying`
`to somebody in your group that "You must take ten tickets. You`
`must take a hundred tickets. Here's your hundred tickets. Pay`
`me for 'em. You better get rid of 'em. We're going to fill`
`this hall. Or saying, "You must subscribe to Tape of the Week,`
`or I won't work with you." That's force. You know, you offer`
`these things, but you do that voluntarily. If you do it that`
`way, fine. It doesn't diminish your willingness to work with`
`them. Pure, voluntary use of support materials. By the way,`
`you ought to be very careful, because the moment you do anything`
`more than what I am saying to you to do, which is voluntarily`
`offer them, you are going to run the risk of having an`
`employer/employee relationship. That's the last thing you need.`

`Number Five: If I teach the curiosity approach, it`
`will be in accordance with Rule Six, as passed out at the end of`
`the meeting. Well, I can't pass it out to you today, but Rule`
`Six really says if you're going to use curiosity, you must tel1`
`them they are coming to a business-type opportunity meeting.`
`You may not tell 'em it's a social event or a coffee or a church`
`event or a fund-raising event or a how-to-save-money-on-taxes`
`event. All that is deception. You must tell 'em it's a`
`business opportunity meeting. If they ask you if it's Amway,`
`you say 'yes.' That's what the Rule says. If I were doing it,`
`I would say to people ahead of time, and I wanted to use`
`curiosity, "I'm not going to tell you what it is, but I want you`
`to come." If they said to me, "If that's the way it is, I'm not`
`going to come," I'd say, "Well, fine, then, say home: You spent`
`all your life telling me that you wanted to get ahead, you`
`weren't happy with your conditions in life, you don't like your`
`job; and now I ask you if you'll give me two hours to come and`
`hear about something and you tell me you're not going to come.`
`(inaudible) stay home." See? Don't beg people. Finally, you`
`get down to challenging them to come or not come.`

`Number Six: I will not produce any literature or`
`tapes about the Plan or the products. I know you present the`
`Plan magnificently, but what you don't always know are the fine`
`points that we have to cover in all fifty states, plus`
`satisfying the government, to make sure we say it exactly right.`
`And that's why we cannot permit you to produce any such`
`materials.`

`Number Seven: I wil1 not hide behind group names. We`
`are proud of our group and like our own identity, but we will`
`not use it as a subterfuge to say we are not in Amway. This`
`really is a hot one, folks. People are saying, "Oh, we're in`
`X-Y-Z organization. We're not in Amway." If you are signed on`
`an Amway application form and if you have anyone you sponsor`
`who's linked to you, then you are in Amway. I don't care what`
`other name you want to run under: By implication, you are`
`saying you're not in Amway: If you are asked, then you must`
`say, "I am in Amway." And if you're not willing to say that,`
`then don't send me any letters.`

`Number Eight: We will work together to build our own`
`businesses while creating an organization that truly cares about`
`every distributor in it. We will talk about the big picture --`
`no problem -- while making sure we do not diminish those who`
`choose to do less or make them feel like losers. I hear that`
`very often. "There's winners and losers. Are you a winner?`
`Are you a loser?" Almost insulting people who don't sign up.`
`You even got bad terminology. "We're the winners. Over here`
`are the losers in life." They're not losers. They may have a`
`richer, fuller life than those of you that got fancy cars and`
`new clothes or big rings have got. You know, they -- Life is`
`not geared by materialism. You do not decide who's a winner or`
`a loser. There's too -- Life is too complicated for that. We`
`must make sure we always speak of everybody being a winner, even`
`though they may have different goals. My plea here is that when`
`you have a program, you make sure you have people on there who`
`are making $100.00 and thrilled with it, as well as those who`
`make more. Present it as a plan so that everybody can realize`
`their goal, whatever it is.`

`Number Nine: While recognizing the importance of`
`financial goals, we will attempt to use tact, t-a-c-t, and`
`dignity so as not to create an image of just money, money,`
`money. Together we will create an organization which loves and`
`cares for each distributor, regardless of level, and an`
`organization which will be of service in our communities. I`
`don't mind your making money. I don't mind your enjoying the`
`things that money wil1 buy. But I do have a problem of`
`presenting an image of an organization that has nothing in it`
`but greed, that has no concern for the poor or the hungry or for`
`what's going an in their community. It is time, folks, we`
`changed our image and showed an image of a company and of`
`individuals who care about other people, no matter where they`
`are economically. And that while you may want to quietly talk`
`about your new cars or your fancy rings, you also talk to people`
`about the other values that the Amway business brings, such as`
`the wonderful idea of being associated with people who are`
`positive, the great and good things that happen by -- by making`
`an extra $100.00 a month, the fun of -- of being in an`
`organization that is in a positive frame of mind. All the`
`other, little things we don't talk about: the joy of bringing`
`up our children in an atmosphere of positive thinking; you know,`
`have our kids hang around people -- the joy of having our kids`
`see something else other than the back yards of their neighbors'`
`houses and never get more than fifty miles out of town, to be`
`able to open your children's minds to music and to the arts.`
`All of that is what we got to talk about, not just whether we're`
`making some more money.`

`And, Number Ten: I agree with the principle and will`
`observe the rules relating to PV/BV transfers. We will do all`
`we can to make sure no PV/BV is transferred to anyone who did`
`not honestly buy it and who was complying with the seventy`
`percent rule. In other Words, I need a pledge that you will not`
`inventory load, that you will not push a bunch of stuff on`
`somebody to win a pin or to earn a trip; but that they will,`
`indeed, have not only bought the Amway products, but have, in`
`turn, sold them so that they got retail and the money came back`
`in. In direct contrast to what I read to you in a letter`
`earlier, "go out and borrow the money to make it." I could tell`
`you horror stories about every company I've ever lived with and`
`fought against, who did inventory loading, asking people to`
`borrow money to make a pin level. We have watched at least a`
`hundred such companies come, and we have watched all of them go;`
`and they are all broke and long gone. We cannot tolerate this`
`business. We must stick to the principle that the people we`
`hang pins on did so because they built a strong, Amway-centered`
`business, built on what they did conforming with the rules of`
`rewarding people an the basis of performance, not on the basis`
`of their ability to beg, borrow or steal money.`

`Well, that's quite a Directly Speaking tape. Heavy?`
`Well, maybe. But, you know, folks, this is a serious time.`
`What you saw on "60 Minutes" was probably not all to your`
`liking; it was not to mine. But the beautiful part of it is`
`that Mike Wallace, when he was here, said, "You know, this is`
`the most phenomenal thing." He was intrigued with the lives we`
`were touching and the things we were doing. He was intrigued`
`with the motivation, the lifting up, the spirit of the people.`
`He was convinced; when he went to shoot those pictures at that`
`meeting in North Carolina, that he would find nothing but`
`Bible-belt Baptists, all white, only to find blacks and Jews`
`from New York City, all mixed in. He said, "We couldn't believe`
`it. This was a cross-section of America, people trying to get`
`ahead, and we were impressed." Well, they may not have shown`
`that in their programming, but, you see, we know that they could`
`have done a lot worse for us. And, so, we're grateful to them`
`for showing us our warts and for helping us to remind ourselves`
`that we got to "clean up our own room," as the one lady wrote`
`and placed it so well. That if we are really going to go out`
`and impact this world, we got to do it with clean hands. And`
`right now, some of you have got to ask yourself these ten`
`questions. Some of you have got to ask yourself whether you're`
`really in the Amway business or whether you're in the tape`
`business. You got to ask yourself whether you're really in the`
`rally business or in the Amway business. You must ask yourself`
`if everything you're doing is to support your Amway business or`
`is it really for a secondary motive. We are, of course, a`
`little prejudiced. But, you see, it is the Amway Plan that you`
`run under, and we really cannot tolerate people running under`
`the Amway Plan and then doing such things that destroy the image`
`of all other Amway distributors.`

`And, so, we're off and running. We're on to the`
`subject, and I hate to confront you with it. But I think for`
`most of you, you'll recognize that if we aren't careful with our`
`image, some day it'll be so bad, you won't be able to sponsor`
`anybody. And then there won't be any sense in talking about it`
`anymore. But right now, this night, at the meetings you have`
`today, with the people with whom you talk today, is the time to`
`make sure you present the Plan as a plan that offers opportunity`
`geared on hard work and that you approach people honestly and`
`straight-forward and don't try to deceive them, and then you`
`don't try to push stuff on your nice distributors because you`
`make money on it when it may or may not be totally necessary for`
`them.`

`I know some of the tapes are magnificent. I know`
`they're important, and I know rallies are important, and I know`
`books are important. I know all that's important -- all`
`important within balance. Out of balance, it can destroy us.`

`And so, we're on the road. Thanking you again for a`
`great year and thanking you ahead of time for your cooperation`
`because it is my belief that each one of you, when you realize`
`what's really going on in this business, will say, "Rich, you're`
`right. I'm with you. We do got to clean up our act. And it`
`isn't just in the other guy's group. I got some stuff to do`
`with my own group." And if all of us will take that to heart`
`right now, we will begin to build the new Amway, based on`
`sponsoring people in a very simple, straight-forward manner, to`
`join the fastest-growing, most magnificent outfit in the world`
`that offers people at the bottom of the rung a chance to make a`
`beginning. And we will focus our attention on selling products.`

`Expo is just hitting the road. It will be in Atlanta`
`next week for its opening thing.`

`Dick, my son Dick, and Roger just came back from`
`Cleveland where they built it; and they said it is absolutely`
`magnificent; it is going to stun them when they see this new`
`traveling show. We have two new semi's that are traveling`
`across the country, carrying this from city to city. Bring`
`every customer you get. In fact, go get ten of your friends who`
`think you're nuts for being in Amway. Invite 'em over for`
`dinner and say, "We're going to go to the Amway Expo." Or tell`
`'em you're going to take 'em out to show 'em the Amway Expo and`

`[page of transcript missing]`

`So we'll be in touch with you. We'll see you all, and thanks`
`for being great people.`

`This is Rich in Ada with great gratitude for all of`
`you. Bye-bye.`

`CERTIFICATE`

`STATE OF OHIO )`
`) SS:`
`COUNTY OF HAMILTON )`

`I, KATHLEEN M. McCLELLAN, a Court Reporter and Notary`
`Public for the State of Ohio, commissioned and qualified, do`
`hereby certify that the foregoing twenty-nine (29) pages`
`constitutes a true, correct and complete transcript of Directlv`
`Speaking, Rich De Vos, Amway Cassette Series VAL-2l50, which was`
`transcribed by me and/or under my direction.`

`IN WITNESS WHEREOF, I have hereunto set my hand and`
`notarial seal at Cincinnati, Ohio, this 29th day of March, 1985.`

`Directly Speaking, data unknown (probably Feb. or March 1983), Rich DeVos`
`Amway Cassette Series VA-2160`

`SIDE A`

`Well, here we are again in Ada, Michigan, and this is`
`Rich. You might not know it, but today is my birthday. It's`
`the 4th day of March, and I'm 57; so you won't have to spend a`
`lot of time discussing it. And since it's the second Directly`
`Speaking tape dealing with some of the real challenges that this`
`organization faces right now, I thought maybe we ought to kind`
`of get back to some fundamentals a little bit and then see if we`
`really can't answer a lot of the questions that have come to me.`

`My mailbag, since the last Directly Speaking tape, has`
`been very heavy. Many, many of you have written letters,`
`saying, "It's about time," "Thank goodness," "Hallelujah," and a`
`few other joyful expressions. My desk became piled high with`
`people saying, "I support you in your Ten Points." And if you`
`haven't written such a letter and you feel that way, I'd still`
`urge you to write it. We are down to a point of trying to find`
`out who really supports this Amway program; and, if after`
`listening to the last Directly Speaking tape you felt like you`
`wanted to stand and yell and say, "We stand with you," and never`
`bothered to write, it's important that you do.`

`Let me just see if I can't reiterate a few of the`
`important things that I think are facing us right now, some`
`principles that are involved. And it is, of course, the reason`
`that I am writing, or, why I'm talking to you, as -- as Direct`
`Distributors.`

`Someplace along the line, we lost sight of the fact that`
`the Direct Distributor is the operating head of their`
`organization. All due respect to the upline. I don't care who`
`they are; I don't care what pin level they are. Many of you`
`have heard me talk over and over again about the fact that if`
`your sponsor did nothing more than tell you about Amway, they`
`opened a door of opportunity for you; but only you can walk`
`through it. And those of you that I'm talking to today are`
`Direct Distributors; you took the challenge; you walked through`
`that door, and you became a Direct Distributor in the world of`
`Amway. In our book, that makes you the head, the star the`
`outstanding performer, who, unlike many others who looked at it`
`and listened and either turned it down or did nothing with it,`
`you did, and you are to be commended.`

`I'm disturbed, because I find too many people are putting`
`Directs down and saying, Oh, what are you? "You don't know`
`enough," a Diamond's where it's at. And you know, it's true; we`
`have a lot of awards at Diamond. But we decided a long time ago`
`in this company that Direct Distributor is where it's at. After`
`all, a Diamond is only a person who has six Direct Distributors,`
`and a double Diamond is one who has twelve; but this whole Plan`
`revolves around the leadership of the Direct Distributor. And`
`that's, of course, why we're talking to you.`

`I'd like to get through some of the kind of negative`
`stuff that's come on my desk, also. As I told you, I've a lot`
`of positive responses. I also have a lot of horror stories,`
`stories that must have been swept under the rug or hid behind`
`the curtains, that should have been brought to our attention a`
`long time ago -- and I know, in some of the cases, they were`
`brought to our attention, and we did nothing about it; and I`
`apologize to you for that. Maybe we overlook some things,`
`maybe we are blind and maybe we swept some things under the rug,`
`too, and thought it would just sort of go away. Only some of`
`these things did not go away; they just got worse.`

`And, so let me see, now, if I can just take some of the`
`questions that you've sent to me, some of them in anger, very`
`mad at us for doing a simple thing, like putting BV on tapes.`
`None of us here ever realized that we would cause to come out in`
`the open all that has now come forward; but I must assure you`
`that now that it is out in the open, we have no alternative but`
`to move forcefully and directly on all the things that are now`
`before us here. We cannot turn our back. We cannot sweep it`
`under the rug. We must deal with it; and deal with it, we`
`will. And we are developing the resources inside this company`
`to attack it on a one-by-one basis.`

`One of the complaints that we received was, "Why do you`
`always act as though we are all guilty when it's only some who`
`are guilty? Why don't you praise the rest of us?" And, you`
`know, I think that's a marvelous idea; and I do try to praise`
`you. I -- I would praise you now for being who you are and`
`where you are. But, you see, it's sort of like trying to find`
`out where the problem is, only you don't know where the problem`
`is; and, so, you sort of have to swing wide. And, in the`
`process, yes, indeed, you do sometimes harm those you really`
`should be loving. But I also found out that in the past, when`
`we have done work to resolve specific problems and we didn't`
`tell everybody about it, we got accused of not doing anything.`

`So, on the one hand, if I talk openly to all of you about`
`some of the challenges, I am accused of painting everybody with`
`a broad brush and making them feel quilty. On the other hand,`
`if I don't talk to you openly about all of these problems, great`
`numbers of you think we are doing nothing. And, therefore, as`
`adults, as leaders of the business, which is what you are, as`
`the operating heads, as the responsible party, we must share`
`with you the problems of the business, as well as the challenges`
`and the joys of the business. And, I guess, I must trust that`
`you are big enough to cope with both of those; so that on the`
`one hand, you don't get all bent out of shape because there are`
`problems in the business and lose your excitement for it, and on`
`the other hand, that you don't get carried away with your own`
`power and greatness if we don't challenge you with some of these`
`issues. So, I don't want you to get to where it goes to your`
`head; and, by the same token, I -- I don't want to put you down;`
`but I feel all of you must know what is happening, so that you`
`can react intelligently to it. If you don't know what the`
`problem is, sometimes you don't even know when you're being done`
`in; and you should know some of those things that are happening...`
`And so, we'll kind of lay it on you.`

`Let me take some of the kind of nasty ones first. They`
`kind of come in groups, by the way. You can always tell when`
`some person in the business -- perhaps in a leadership position`
`-- has called together his Directs and given them the word,`
`because a whole bunch of letters or telegrams come in; and they`
`all say exactly the same thing. And, so, my first reaction to`
`those kinds -- and I have a little stack of those in front of me`
`is that obviously these people never thought the problem`
`through. They are mouthing what somebody else has told them to`
`say, and they run along the line like this: "What happened to`
`your trust?" I don't know if I can trust you anymore," "You put`
`BV on tapes," "You cause me great concern." Maybe -- let me`
`read you one. "Disturbed by Directly Speaking tape. Lacks`
`mutual trust and respect. Need two-way communication. Consider`
`bonus increase at level price to cover inflated building cost at`
`distance." Interesting. I don't have one of those; I have`
`several of them. They go in a slightly different vain; but`
`they're all saying, "You broke your trust when you put BV on`
`tapes."`

`Well, let's just talk about trust a little bit. How can`
`we be accused of breaking trust when all we did was do what they`
`are asking us to do in the next sentence, put some more money in`
`the Plan? You know, the first sentence says, "You've broken`
`your trust;" the second sentence, "Put more money in the Plan."`
`You know, you shouldn't have sent the telegram. We just did; we`
`put more money in the Plan for the Direct Distributor and`
`everybody who earns BV. Now, how can that break trust? I can`
`see where, if we had decided to eliminate a bonus, to remove`
`items from BV and ask you to handle them without anything, that`
`you could accuse us of such a thing. I don't see how I can`
`possibly be accused of breaking trust when we have, indeed,`
`enriched the Plan and exactly in the form in which the Plan has`
`always operated, which is a principle I think those who have`
`written such telegrams have forgotten.`

`This Plan was geared around the sharing of the`
`opportunity with everybody in the line of sponsorship.. I think`
`what some are saying to me is that we had a nice system that`
`shared it with only certain, selected people in the Plan; we`
`split the money amongst the Diamonds and the Emeralds; we didn't`
`give it to anybody else. Trust? Whose trust? Whose trust was`
`betrayed? All those good sponsors who brought you all those`
`other people who were walked over, stepped on and bypassed? Do`
`they deserve your trust? And then to question whether we should`
`be trusted, who have protected the Plan, is really an insult to`
`me.`

`I am further fascinated, by the way, with this whole idea`
`of "put more money in the Plan, but don't raise the prices."`
`I've heard that, you know, for a long time. I guess, what that`
`says to me, from a person who hasn't thought it through, "Give`
`us more. Take it out of the company's coffers; but don't charge`
`more to the customer." Sounds good, doesn't it? Sounds like`
`the same kind of a problem that got the automotive industry in`
`trouble; like the same kind of a problem that got the steel`
`company in trouble; like the same kind of problems that have`
`seen businesses go down the drain forever, which is, "Oh, just`
`raise the prices; give us more money." No way, folks. There`
`just is no way to continue to pay people more money for doing`
`the same amount of work.`

`In one of the telegrams, it said, "But we have to travel`
`great distances." Oh, do you? Who said you have to travel`
`great distances? Who said you have to go from one side of this`
`country to the other to sponsor someone? You know, Jay and I`
`started in this business in Grand Rapids, Michigan. We built`
`our business in Grand Rapids, Michigan. We lived off the volume`
`we generated in this town. We lived with the people we`
`sponsored; we lived with the ones who chose not to be sponsored.`
`But we developed a reputation in our own community of operating`
`an honorable business, and we were able to sponsor people in`
`this town regularly. And when, finally, others developed in`
`leadership roles in our Nutralite business, we went fifty miles`
`away to Lansing, Michigan, or we went to Holland, Michigan, or`
`we went to Detroit, a hundred and fifty miles away. And I`
`remember driving those nights; I remember coming out of Detroit`
`after a midnight meeting and driving home because it saved the`
`twenty bucks of a hotel room, and we did it every week, year in`
`and year out. We didn't talk about suites; we just wondered`
`where there was a cheap hotel to stay in.`

`You know, folks, it's time we got back to the`
`fundamentals of this business. There is no way to put a lot of`
`money in this Plan, other than a very simple one. I can show`
`you how to double your income; and that is by doubling your`
`volume. Somebody says, "Put an extra one percent in at all`
`levels." And those who don't know should know that a one`
`percent payout in the Plan at least is a four percent increase`
`at the retail level. And somebody glibly says, "Put some more`
`money in at every level." Do you think Direct Distributors are`
`going to do flipflops over getting twenty-six percent instead of`
`twenty-five? I don't think so. But I can show 'em how to get`
`an extra fifty or sixty percent if they'll get out and sell some`
`merchandise. I guess if I'd been told all these years you don't`
`have to sell the product, all you have to do is wholesale it to`
`people, then I guess maybe I wouldn't pay any attention to`
`pricing, either. But that's an illegal business. And those of`
`you that preach it and foster it and talk about it are operating`
`illegally. I don't know how often I have to tell you that. I`
`don't know how long I have to keep insisting that you talk upon`
`people retailing the product and gaining customers and servicing`
`them faithfully, only to have some of you just throw it up in`
`the air and say, "That's not our way. We don't teach that`
`method." I got to tell you, you're running the wrong method.`
`You see, once you'd accept the fact that you must sell the`
`product at retail to have an honest business, then you suddenly`
`are very concerned about the pricing of the product. And once`
`you understand that, you don't just glibly say, "Oh, take it out`
`of the corporate coffers; just raise the price a little bit;"`
`because those dollars do not exist there.`

`Somebody says, "You guys make a lot of money." That's`
`right. And when you have a billion dollar a year business,`
`you'll make a lot of money. But I'll tell you, We didn't make a`
`lot of money by operating a hundred thousand dollar a year`
`business and seeing how we could suck it dry. We built a`
`billion dollar a year business. And when you work towards`
`getting products retailed at that level, I'll tell you, we'll`
`make money in this business. The problem is, some of you are`
`trying to figure out how to make a lot of money without gettin'`
`the volume that you need.`

`Somebody said, "I want to make more money." Let me tell`
`you how. I don't have an extra one percent for you. I got an`
`extra fifty-five to sixty-five percent for you. I'll tell you,`
`folks, you can't beat that. But some of you have got a warped`
`viewpoint of what makes a business operate; and once you get`
`back to the idea that your business will grow in direct`
`relationship to your ability to retail products, then you'll`
`overcome the biggest mental handicap you have right now. And,`
`maybe -- Let me tell you something. Maybe it's time you trusted`
`the old, fifty-seven-year-old man instead of some people who`
`been in this business a few years and have never worked it at`
`the fundamental level, and they're telling you all about it.`
`Well, let me tell you, maybe they don't know all about it. And`
`I'll make some more comments about that as I go along:`

`The other question always comes up, you know, and it's --`
`it's a -- it's a good question: "Why didn't you bring it to the`
`Board?" And maybe as I develop that theme for you a little bit`
`you'11 catch on to a few other things and maybe there'11 be`
`some applications to your own operations that you better start`
`to think very seriously about.`

`Here's one of those letters: "We thought we voted on the`
`Board to represent us." Well, you voted for people on the Board`
`to do certain things and, indeed, to represent you and, indeed,`
`to present your viewpoints and, indeed, to bring your opinions`
`to us on all legal issues. But, whoever told you, and all those`
`of you who say, "It should have come to the Board," whoever told`
`you that doesn't know the law. Oh, they're experts. But`
`they're -- You know, it's like a -- like this old, western`
`cowboy used to say, you know -- He used to say, "All of us are`
`ignorant, only on different subjects."`

`Now, you know, this is a very complex business world we`
`live in, so let me put it to you real fast and straight. The`
`Board is, indeed, an organization that represents your`
`viewpoints. It indeed does visit with us on this business. But`
`some of your so-called experts, who are telling you that it`
`should have gone to the Board, don't know, is that for this`
`company to discuss with the Board pricing on any product is a`
`federal offense. It is known as price fixing. And we have a`
`little experience with that and the FTC, by the way, that maybe`
`your leader didn't tell you about or he forgot about it.`

`Maybe you've been reading in the papers lately about the`
`president of a major airline, who casually said to his`
`competitor, "Why don't you raise your prices twenty percent, and`
`I'll raise mine?" And he has now been charged with a federal`
`crime. Simple little statement. And, so, whoever told you that`
`you must insist we bring it to the Board doesn't know what`
`they're talking about.`

`But, you know, there's problems beyond that one. Let me`
`just bring up another little side issue for you, and not too`
`incidental. Some of you are screaming at us on the twenty`
`percent. Some of you self-righteously say, "Oh, we have less`
`than twenty percent in tapes and books and side issues in our`
`other business." The Amway Corporation does in excess of a`
`billion. If we only did ten percent -- not just in books and`
`tapes; but let's talk about rallies and all the other things we`
`tell our people to pay for; put it all together.`

`Let's assume we're taking out a hundred million dollars a`
`year. We have placed a maximum on tapes and books at two`
`hundred million that we would allow. I don't know what you`
`might allow. But when you get into those kinds of numbers, if`
`you want to hear a scandal, just read about it in the papers.`
`You present wonderful numbers on the blackboard about all the`
`money they can make. Maybe you ought to tell them about all`
`you're going to take from them before they make any. Maybe that`
`would be the rest of the story. But, you see, those are`
`fantastic numbers. Our legal people tell us, "Boy, if it gets`
`over ten percent!" Finally, they agreed, that maybe somewhere`
`between ten and twenty is acceptable. Maybe that would be`
`considered reasonable by governmental authorities. We assume it`
`will be. We really hope it never gets to those numbers.`

`We didn't start out with BV on tapes to get to those`
`numbers. We didn't start out with it to capture the market. We`
`put it in, by the way, to be a competing force and to draw your`
`attention to the kind of potential abuse that we thought was`
`there, which we now know is there, with a kind of power and`
`pressure I never believed; and I am not going to take all`
`afternoon to read you the horror stories of the people who say,`
`"I'm connected with such and such a system. I have $8,000 worth`
`of their tapes in my basement. They will not take them back,"`
`and the others who were told to mortgage their houses, cash in`
`their life insurance, told to go to the bank to borrow because`
`this big weekend seminar was so important. Well, that's`
`extracting money.`

`Let me talk to you about the legal side, beyond price`
`fixing, that deals with pyramids, that deals with the illegal`
`operation of a business that does not have an end consumer,`
`where the product is not retailed. That would include all books`
`and tapes. The sad news, folks, is that when those things go`
`out that way and they become excessive, beyond my ten or twenty`
`percent theoretical guideline, hopefully acceptable, to where`
`it's a reasonable support system, but not beyond the reasonable`
`element, then it becomes an out and out illegal pyramid. Why BV`
`on tapes? That's why. It was time to bring some reasonableness`
`to all of this. We also didn't take it to the Board, by the`
`way, because we didn't really want to put a Board member on the`
`spot. We have Board members who operate pretty big systems. It`
`would have been a kind of an embarrassment to put him in the`
`crossfire; so we just decided not to even discuss it at that`
`level. Despite the fact that it would have been illegal to do`
`so, we just decided it would have been the wrong place to talk`
`about it, because we had to move to tend to some of the problems`
`that I've just been discussing with you.`

`Well, let me pause a minute and look through my grab bag`
`of mail a minute and see if I can't find if what -- a few other`
`good examples for you and then plead with you to do some very`
`simple things. It's time to get on track. That's all. It's`
`time to do some very simple things, and they are ail outlined in`
`the Ten Points that I gave you in last month's tape. And if you`
`haven't listened to it, listen to it again; because there's no`
`sense in my going all through it now. But, in truth, those Ten`
`Points embody all the elements of what we want to talk about.`

`And, now, let me give you some of the other expressions`
`that I've received and -- without trying to be negative on it;`
`just trying to touch the high points here. Here's a little`
`list. I'll kind of run through some of 'em. "You just want the`
`tape business, you greedy monster." That's a great question,`
`isn't it? I really don't want the tape business. As I told you`
`before, if the tape business becomes a big business, I'm going`
`to have to cut it down to size. I'm going to have to restrict`
`it. I don't want it to be a big business. I want it to be`
`exactly what it should be; and that is a reasonable, economical,`
`for the industry bitter support system to the saleing (sic) and`
`sponsoring in the Amway Plan. That's all I want.`

`If the tape business becomes substantial and earns`
`substantial dollars, I have a couple of choices, one of which is`
`to lower the prices; because we want to keep it at a reasonable`
`level. Why? Because the goal of Amway has always been one, and`
`that is to give the average guy on the street, who's scared to`
`death of his mother-in-law, a chance to make a new beginning.`
`That's the principle. We didn't start this business to see what`
`we could take from him. We started this business to see what we`
`could help them achieve; and I'm afraid some of you got the`
`business backwards. I'm not sure some of you are in the Amway`
`business. You really don't care whether that guy achieves. You`
`like to think you do. You give me long letters about how -- I`
`got one here, and, you know, it says, "Before I got in using`
`tapes" my business was so much. Now that I'm using tapes, it's`
`doubled." Now I'm a Diamond, and I have done so well; and it's`
`all because of the tapes." I -- I'm -- I'm glad it -- it`
`worked for you, Diamond. I'm proud of you. Why don't I have a`
`hundred thousand Diamonds if all it takes is the tapes? Why,`
`it's so easy. Just give 'em the tapes, and they're Diamonds`
`next week. Or does it take four years? Who you kidding? Who's`
`been telling you that stuff? Do the tapes help? Sure, they`
`help. Do meetings help? Sure, they help. Are they the answer`
`between winning and losing? No, they are not.`

`Our achievement numbers haven't changed at all with this`
`tremendous burden of systems. I and you cannot prove an any`
`higher ratio of achievement than you had before. Are they`
`better people for it? Possibly. Is it a good way of`
`communication? Absolutely. Does it help get good ideas through`
`he organization quickly and effectively? You bet your life it`
`does. And, therefore, it is a helpful device.`

`Don't get me wrong. Don't say I said tapes were bad. I`
`have never said tapes were bad, because we sold 'em long before`
`you did. We think they're a super means of communication. Do I`
`have a problem with big meetings and rallies? Lands no. I was`
`putting on big meetings and rallies before some of you ever got`
`out of your diapers. I made speeches on that stuff thirty years`
`ago, before huge meetings. Some of you act like that's all new`
`stuff. That's not new stuff. It's only a question of how you`
`operate it and where you price it and whether the people feel`
`it's worth it. And I've got to tell you, you got to review that`
`carefully. And a little competition will help keep you in line,`
`too.`

`SIDE B`

`We11, let's try another one, since I am so greedy. "Why`
`didn't you do it sooner? Why do it now? It will be devisive."`
`Now, those are good questions. We been lookin' at it for three`
`or four years. Three years ago we talked about it. Some of you`
`sent letters, said, "Why don't you put BV on tapes?" I can`
`remember some of you guys who were in big tape programs begging`
`us to put BV on tapes years ago. We considered it. We kept`
`thinking the problem would go away. We thought competition`
`between the people and the field would keep the pricing down.`
`But it didn't work that way.`

`There was a subtle pressure put into this organization`
`that I never felt would exist. I watch people being`
`intimidated, threatened, coerced, scared. My mail has got in it`
`letters from people who didn't sign it. One man started, "This`
`comes from John Doe. If I told you who I was, I would be`
`threatened; because I have been told never to talk to the`
`company. My upline is my source of all guidance and`
`information." Hey folks, that's scary. That is intimidation.`
`If I only had one letter like that, I might have dismissed it;`
`but I had many more than one. And I have many others who signed`
`their name, but spoke of the same pressure, fear.`

`You know, we didn't put BV on tapes to really get into`
`all this; but I'm sure glad we did, because it brought a lot of`
`things out in the open for us to deal with today that really`
`need tending to. And you will find that, by the way, as one of`
`my Ten Points, in not putting on pressure. Why do it now?`
`Because now is the hour. Because if we waited longer, in our`
`opinion, the problem would have gotten worse.`

`And, then, the next one: "What will you do next? You`
`act like a dictator" You know what? I don 't know what I'm`
`going to do next. We haven't discussed our next step, other`
`than policing the abuses in this business. What will I do next?`
`Whatever it takes to clean up this business. That may well`
`represent a loss in volume. We may be seeing some of that right`
`now. But that's okay with us. We accept that..`

`It is our firm belief that unless we clean up our abuses,`
`we won't have to worry about what's next; we won't be here to`
`worry about it. At this point in our history, we will either`
`take charge of this business and operate it correctly, according`
`to the rules and regulations that the Amway Corporation has`
`given you, or we will not deserve to exist. I do not wish to`
`control your actions, your day-to-day work; but I don't want`
`anybody else out in the field controlling them for you either.`

`You know, when you became a Direct, we offered you a`
`chance to be free and independent; and then I read your mail,`
`and I find out you've lost your freedom. And all we want to do`
`is give it back to you, to be as big or as small in Amway as you`
`want to, to make as much or as little as you like in the Amway`
`Plan by working it, and to go to whichever meetings you want to,`
`and to feel comfortable to stay home if you don't want to,`
`without being branded a loser. Winners go to the meetings;`
`losers stay home. Would you help me get rid of such`
`terminology?`

`There are no losers in Amway. There are people who`
`choose not to do it; but who are you to tell some teacher that`
`chooses to spend the rest of his life as a dedicated teacher`
`that he's a loser? Who are you to tell a truck driver that`
`chooses to spend more of his time doing things other than Amway,`
`and maybe just drivin' his truck, that he's a loser? Whoever`
`gave you a license to brand people? This business was designed`
`to make everybody a winner, to do as much or as little as they`
`wanted to; and if they chose to do nothing, to make them feel`
`better for having had the experience. We only have winners in`
`this business; and then we have some other winners who choose`
`not to do the business. They just might be bigger winners in`
`life than some of you that have branded them losers. I stand in`
`awe of all people, and I hope you do, too.`

`Well, then, some more comes. "Most of us don't make`
`money on tapes or rallies." Maybe that's true. Maybe that's`
`the problem. Maybe only a few do. But the Amway business was`
`designed so that everybody shared in the profits of the`
`business. That's why we have a Plan that has balance to it.`
`That's why there's three percent when you sponsor a Direct,`
`because the Direct does the bulk of the work, and they get the`
`bulk of the money. We do pay our bonuses forever, you know.`

`Somebody says, "Tapes can confuse us with different`
`ideas." Yep. That's possible, I guess. Maybe if we all`
`preached and taught the one Amway Plan, we wouldn't have any`
`confusion. Maybe if we took it straight from the top, like it's`
`supposed to be said, we would be busy motivating, not treating`
`or dealing with cute technique that varies from the truth or the`
`fundamentals. You know, one of the Ten Points deals with the`
`curiosity approach. I've listened to a lot of you defend the`
`curiosity approach for a long time because you said it worked --`
`just like that's the only criteria, huh? "If it works, use it!`
`If it feels good, do it" That's the slogan of the day. Not`
`good enough, folks. Because it works does not justify it unless`
`it's honest; and we have gross indications of dishonesty in that`
`presentation. I need your help, folks. We must clean it up;`
`and we must come back to you in all of the things I've talked to`
`you about.`

`I guess I'm overwhelmed at the reaction to a simple`
`action; but apparently we hit a hot button. What I hear some of`
`you saying is that, "our other business is more important than`
`our Amway business, and you better not touch it." Well, maybe`
`you ought to get out in your other business; get out from under`
`the cover of Amway and see how well you do. Sell motivation;`
`get on the road; see who shows up. Virtually every company that`
`tried it has gone broke, or at least disappeared. But I got to`
`tell you, we got to get back to the fundamentals in the Amway`
`business.`

`The thing I want most for you is to increase your income;`
`but I don't know any way to do that, other than by increasing`
`your volume. And I don't know any way to do that, other than by`
`sponsoring some new people who get some customers and retail`
`products on a regular basis. But I watched you skirt the`
`issues. First you got afraid of selling; told people they`
`didn't have to. Then some of you came along, and you didn't`
`dare own up to the fact you were in the Amway business; so you`
`had some cutesy names you contrived and kind of flew the Amway`
`flag upside down, hidden under the basket someplace, snuck it in`
`about an hour later, after the meeting began.`

`You know what I need to do? You know what we need to do?`
`We need to get up front. We need to come up (to) people and ask`
`them if they'd like to get in the Amway business. And if they`
`say they know all about it, you and I know they don't know all`
`about it, and we ought to get 'em down and give the Plan exactly`
`the way Amway's givin' it to you to present. It's worked for`
`twenty-three years; it'll work today; but it's got to be done in`
`a new, honest and straight-forward method.`

`I've not tried to say to you, you can't sell tapes or`
`books or motivational aids to your people; but I am telling you`
`that if your secondary business is other than a support`
`mechanism in a reasonable volume level in relationship to your`
`Amway business, it may very well be an illegal business. And`
`that tells you one thing. If you believe in Amway, as we do,`
`and all the work that's gone into it for all these years, then`
`it's time to get back to protecting it.`

`And before I get too negative with all the people who've`
`written me on the bad stuff, let me just thank all of those of`
`you who said, "Hooray," "Hip Hip," and "Cheers." We need your`
`help to preserve one of the greatest things that's ever happened`
`in the last twenty-five years -- that is the development of a`
`business that gave an opportunity for a guy or a gal who never`
`felt they had a chance.`

`There are fundamentals that work in this business. It`
`will not hurt your people to hear somebody else's way of doing`
`it. Maybe you're afraid they'll hear a little different story`
`than you been saying; because maybe what you been saying hasn't`
`been right. It reminds me of the people who come and say,`
`"Well, our people come home from the DD seminar all confused."`
`And I kind of laugh, and I say, "Maybe you sent them confused,`
`and we sent them home with the straight stuff." And I got to`
`tell you, that's true.`

`I don't want all of you to feel guilty, but I hope those`
`of you that are following the Ten Points feel good about knowing`
`that Amway is on to it. We are dealing with it one by one. We`
`are in contact, on a personal basis, with every person who's`
`operating a system. We are pointing out to them their`
`liabilities and their responsibilities and the legal`
`implications of what they're doing, and asking them to correct`
`it and change it immediately. We are finding some encouraging`
`signs. I will wait and see, before I really am comfortable that`
`the changes are being taken place.`

`When I wrote the Ten Points early one morning, sitting in`
`Hawaii before a Diamond club, I wasn't quite sure whether I`
`touched all the bases. It is now six weeks later; and whatever`
`caused me to write those Ten Points convinces me today that we`
`just about got 'em all. One guy says, "You need an eleventh`
`point." He says the eleventh point is to separate business and`
`religion. He said that would complete the list. Well, maybe`
`that is a good eleventh point, because it did all get mixed up;`
`and we need your help straightening it out.`

`And, so, before I sign off, let me just read through my`
`pack a minute and see what I'm missing; and then we'll turn you`
`loose so you can go back tending to your Amway business, which`
`involves sponsoring people and selling the products.`

`Let's just see if I can't pick up on a few of the items`
`we may have missed and -- and not belabor all of this, other`
`than to convey to you the urgency of this matter. The twenty`
`percent BV on tapes, by the way, is in relationship to the total`
`amount of your Amway business volume; and the maximum that you`
`can have in audio, visual or support material will be twenty`
`percent -- at least in the items that have BV on them and are`
`designed for sale in your system. That is so we do not get`
`unreasonable in the volume we have on that -- not that we think`
`twenty percent is good. We have some nervousness about that;`
`but, nevertheless, that's the way we're doing it right now.`

`We had talked a little bit, you know, about pricing and`
`why we didn't go to the Board with it, and I explained that to`
`you, I think, legally. But, you know, this company has always`
`done the pricing and the placing of BV. It has never, in all of`
`its history, been a Board decision, and certainly, under today's`
`climate, could not be so.`

`I do read some letters, here, that talk about 'us' making`
`money on all of these things. We really have designed and`
`priced a great many of our materials to where we cover our`
`costs, and that's about it. All of our sales kits are sold`
`exactly at what it costs us. Then I receive a letter here from`
`some Distributor, who operates with one of you, told he cannot`
`get an Amway kit until he buys their starter pack. Let me just`
`read it to you.`

`He says, "My concern lies in two areas. The most recent`
`event occurred last evening. Our sponsors told us that (and`
`it's and an 'Emerald' under 'so-and-so') -- said that, "My wife`
`and I were considered inactive and could no longer receive BV`
`from our legs." Wow. "Therefore, our BV check for January was`
`$2.69, based on the BV of the products we use personally." Who`
`said you have the right to cut anybody out because they don't`
`follow you? Unbelievable abuse of power, arbitrarily deciding`
`who's active and who's inactive and who is entitled. We will be`
`following up on that one personally.`

`Here's another one that says, "I am also stating certain`
`procedures that occurred in the (so-and-so group). Only Crown`
`tapes were available at the center. You could not purchase`
`starter kit until you purchased starter pack one on product,`
`product pack two and product pack three. You could not purchase`
`a starter kit until you had someone to sponsor. You could not`
`purchase a starter kit until you purchased the Crown's flip`
`chart." Who says so? Sombody's writin' the rule book to force`
`merchandise under what they think is a very good system, I'm`
`sure. It's not the Amway Plan. The Amway Plan says you, as a`
`new person, have a right to do whatever you like.`

`Somebody else, in a letter here, said, "I love your`
`tapes... However, because I expressed a desire to use only`
`Amway-produced tapes, combined with a select few Distributor Y's`
`Organization tapes, I have been forbidden to acquire Amway`
`materials by my Direct Distributor. The claim is made the`
`Distributor Y's Organization tape (sic) are better than`
`Amway-produced material and that the sponsorship line from`
`Distributor Y and Distributor X do not recommend using Amway`
`tapes. But, if you do, we'll disown you.`

`Something's gone wrong; and I need your help, as a Direct`
`Distributor, to agree to come back on those simple fundamentals.`
`help me do these things, will you? Let's get rid of all the`
`illegal literature that misrepresents this Plan; burn it; throw`
`it away; hide it. I don't care what you do with it. Get rid of`
`it. All the things that you have that tell how to present the`
`Plan, whether tapes or books or pamphlets or -- or manuals are`
`to be burned. There's only one way to present this Plan. It's`
`the Amway Plan. It's presented and delivered as this company`
`delivers in our 214 and our other literature. That is the`
`presentation, and no other is authorized; and that is the way it`
`is to be given.`

`Unplug. I get a lot of questions, now, about unplugging.`
`"Well, I'm hooked up with so and so." You just deal with your`
`upline. But as a Direct Distributor, take charge of your`
`business. That's what you're supposed to do. You run your`
`business as you think is right. And if you want to have some`
`joint meetings with other Directs, have them. They'll be very`
`helpful to you. Don't let anybody brow-beat you and tell you`
`what you have to do.`

`Do not force books or tapes or tickets on anybody. Offer`
`them, and if they want them, fine. Encourage them; do not force`
`them. Be careful of high entry fees that you deliver on people`
`when they join this business. Make sure you don't overstate or`
`overclaim when you present this Plan. And don't tamper with BV.`

`Well, I would just encourage you to look back at the`
`whole list and the Ten Points. But I did want to give you this`
`special tape to bring you up to date. The Amway business is`
`probably at a critical point. In our opinion, we will go`
`through that new adjustment period, deciding whether we really`
`want to be in the Amway business or whether our other things are`
`more important to us. And each of you will have to make that`
`decision.`

`The Amway organization has been here for twenty-three`
`years. Our history goes back ten years beyond that. There is`
`no way a company can arrive at a billion-dollar level of`
`business, and do that year after year, unless it's doing`
`something right. And, right now, we need to ask you to get back`
`to tending to your Amway business and focus in on the tools and`
`the methods that we have given you. And I am sure there's a lot`
`of good leadership in the field; but, you know, remember who the`
`real leader is, and that's you. And we are counting on you for`
`your support to present this Plan according to the Ten Points`
`and with all due respect for your upline and your line of`
`sponsorship; but we look to you as a leader and as the head of`
`your organization. And you have to do the things that are best`
`for you and your Distributors.`

`And if there's anything we can do to help you, let us`
`know. We're going to be on the road. We're going to be holding`
`a lot more functions in the field. And we'll be trying to help`
`you do the greatest job you can in presenting this Plan,`
`honestly and with a great deal of integrity to everybody,`
`everywhere.`

`We're going to look forward to seeing you at the meetings`
`in the years ahead. And, someday, we'll all sit down and say,`
`"Remember in 1983 when we had everybody going off in different`
`directions, and nobody knew where they were going, and everybody`
`was cross-grouping and seeing who they could sell a system to?`
`And remember when you guys got tough then and told people they`
`ought to get back to the Amway business and the principles and`
`the fundamentals?" And we'll all have a good cup of coffee over`
`it, and we will know that we will have passed a critical point`
`and that we decided to get back at it. It's time. We need your`
`help. I'm counting on each of you to do that.`

`Don't get mixed up in inter -- And I've seen rivalry`
`between your group and other groups or with your upline or your`
`downline. Just quietly go about getting your Distributors to`
`service their customers well and get new ones and quietly share`
`this Plan with everybody you meet, so that they, too, can avail`
`themselves of the opportunity. If you do that, your business`
`will grow. It will grow legally and properly. And if you use`
`tools in balance, you won't have any troubles. But we need you`
`to stand tall right now and get back to work.`

`I'm counting on you. We're lookin' forward to continued`
`growth for you. And I'll be lookin' forward to seeing you on-`
`the circuit .`

`This is Rich, finishing off another version of Directly`
`Speaking. Bye-bye.`

`CERTIFICATE`

`STATE OF OHIO )`
`) SS:`
`COUNTY OF HAMILTON )`

`I, KATHLEEN M. McCLELLAN, a Court Reporter and Notary`
`Public for the State of Ohio, commissioned and qualified, do`
`hereby certify that the foregoing fifteen pages constitutes a`
`true, correct and complete transcript of Directly Speaking, Rick`
`De Vos, Amway Cassette Series VA-2160, which was recorded in`
`stenotypy and transcribed by me.`

`IN WITNESS WHEREOF, I have hereunto set my hand and`
`notarial seal at Cincinnati, Ohio, this 15, day of November,`
`1984.`