So it’s not surprising that headlines about Amway bearing the words “pyramid scheme” and “lawsuit,” along with multimillion-dollar figures, pop up prominently online.
But, to quote a line that radio legend Paul Harvey made famous, there’s also “the rest of the story.”
For starters, the class action lawsuit ended in a settlement. No wrongdoing was proven. Second, the settlement that sought to make Amway (or Quixtar, as it was known for about a decade) pay for alleged abuses by training organizations has been greeted by a collective yawn.
Only about 5 percent of former Independent Business Owners (IBOs) supposedly injured by those organizations have even bothered to file a claim. (Note: 97 percent were documented as having received due notification shortly after the settlement.)
So rather than let the majority of the settlement sit unclaimed, now a much bigger pool of former IBOs can get their piece of the class-action pie until March 15.
The court has relaxed the standards so much that a former IBO doesn’t even have to provide documentation of having purchased business support materials to submit a claim—just “their own signed statement,” according to court documents.
Even among those who filed a claim, surely some followed a similar line of thinking as I did a few months ago. That’s when I participated in a class-action lawsuit against Costco over some butter that I bought that wasn’t as organic as was advertised.
I figured, “I’m entitled by law to get some money, I suppose I’ll get it.” Then I headed back to Costco to go pick up some more items on my shopping list.
In other words, I was hardly an “aggrieved” party in anything beyond the strictly legal sense of the word, and neither, I suspect, were a bunch of those who have already laid claim to some Amway products or cash.
The amount of time and effort that the corporation has had to devote to defending against the suit must be annoying to them. But that’s the cost of doing business these days, as it only takes a small percentage of people to perpetuate society’s drop-of-a-hat litigious leanings.
Take lead plaintiff Jeff Pokorny, a former IBO in World Wide DreamBuilders who six years ago launched a suit that morphed into a much more profitable class-action lawsuit.
It’s no secret that class action lawsuits are Big Business for firms like the one representing the plaintiffs in this case, Boies, Schiller & Flexner. Forget about baseball—class action lawsuits appear to have taken hold as the new American Pastime.
Lately, my mailbox has been littered with correspondence soliciting me to join one class action after another. The most recent was one pitching me to jump on a bandwagon against our garbage hauler.
Can you make a lot of money with the Amway Business? Yes.
And can you make a whole heck of a lot of money suing Amway Corporation? Absolutely.
Consider the $750-an-hour attorneys representing the plaintiffs are in line for a $15 million payday. This nearly 500-page court filing from November 2012 lays it out in detail.
The lead counsel for this class action lawsuit was David Shapiro, who touts an impressive resume.
The law firm boasts of winning a $155 million settlement against Amway. Misleading, considering that the actual amount being offered in cash and products is one third that–$54 million. And so far IBOs have claimed only a few million bucks’ worth of products and cash.
Do you think Mr. Shapiro and the other partners will update their website with the rest of the story? Doubt it. Not only would it not be good for business, but it doesn’t make for nearly as sensational a headline.