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Disclaimer: This is not an offical transcript of the 60 minutes show. It was made by a friend of mine from a video tape of the broadcast.
WALLACE: Soap and Hope is the story of Amway. Amway, short for "the American Way", is a national phenomenon. It got it's start as a shop-at-home company dealing mostly in soap and soap products and has now become a one and a half billion dollar a year enterprise. But there is more to Amway than soap. What they're really selling is HOPE. The hope of getting rich beyond your WILDEST dreams. Others insist, however, that Amway is just a clever marketing scheme to enrich a few lucky people. Whatever it is, it has gotten a million people into selling soap and it begins with some old-fashioned motivation.
[cut to a distributor working other distributors into frenzy at function]
DISTRIBUTOR: Some of you, right here this weekend, you're gonna leave this weekend and for the first time in your life, you're gonna stay and realize [screaming] "I've got WIIIIINGS!!!!! I can FLYYYYYYY! I am a WINNER! I'm gonna DO it because I have FREEDOM in AMERICA!!
[shots of frenzied audience]
WALLACE: This is the world of Amway. A world where a business meeting is not just a business meeting but a celeBRAtion.
[more shots of frenzied distributors]
[a distributor's wife can be heard in the background: "you're witnessing a dream come true.
It really is a dream come true"]
WALLACE: What are all these people so worked up about? What's going on here that causes 10,0000 distributors to behave like teenagers at a rock concert? The people on this stage are Amway distributors who made it to the top. The one's who've gotten rich climbing the Amway ladder of success. But their main purpose here is to tell these thousands of hopeful Amway distributors in the audience that THEY can earn six figure incomes too. How does it work? Amway manufactures hundred of products. Mainly items like soap and floor cleaners. Vitamins. Cosmetics. Amway distributors buy these products from the Amway Corporation and then sell them mostly out of their homes at a profit. But selling the soap is not how the real money is made in Amway. The real money that an Amway distributor can make comes from recruiting other distributors to sell Amway products too. In return that first distributor gets from Amway a percentage of business generated by his or her recruits. And when his recruits sponsor recruits of their own, he gets a percentage of their business too. And if he can motivate enough of his recruits to go out and recruit more recruits, each sharing a percentage of their business with him, THAT'S how he gets rich. How rich? Amway talks of luxury cars. Of lavish homes. The Amway elite can use the company's jets planes. Go on trips aboard one of Amway's super yachts. Trips to Amway's own carribean island. All of this for those who succeed in Amway.
[cut to Wallace in front of Amway headquarters]
This is the center of free enterprise - Amway's world headquarters in Ada, Michigan. It is a kind of shrine to the capitalist system and a monument to the two men who founded Amway 23 years ago, Jay VanAndel and Rich DeVos.
[cut to early photo of Devos & Vanandel]
Back in 1959, the two young entrepreneurs conceived Amway in the shell of an abandoned gas station. Just the two of them with about $500 in cash. Today they are two of the wealthiest men in America. Each with a fortune estimated at between 200 million and 500 million dollars. In 1981 Amway did business of about one and a half billion dollars. And it has more than a million distributors worldwide.
Jay Van Andel told us just how easy it is for a person to get started in Amway.
JVA: This business opportunity does not cost a fortune to get into. You don't have to spend 50 or a hundred thousand dollars. You buy a little sales kit. Twenty, fifty dollars worth of products. Whatever. You can return them if you decided to quit. You can return 'em back to your sponsor or the company will made good on it so, you know, the RISK is very LOW.
Rich DeVos: Amway is that one unique organization that makes it possible for the man who's only got $50 to start in a new career path, not abondon his present job and make a new beginning.
[cut back to scenes at function]
[zoom in on DEXTER Yager]
WALLACE: This man made a new beginning. Dexter Yager is just one of Amway's distributors. He began as a beer salesman. Today, in Amway, he has achieved the status of Crown direct ditributor, which is about as high as you can get in Amway. And these 10,000 distributors at this rally in Charlotte, North Carolina are the Yager recruits.
[shots of thousands acting crazy]
It is from a percentage of THEIR business that Dexter Yager makes his living. What kind of living?
[cut to wide shot of Yager's mansion]
WALLACE: This is Yager Estates. His 300 acre home, his business headquarters and family compound.
[cut to a row of Rolls]
These are Dexter's 5 Rolls Royce's. His Cadillac. His $350,000 motorcoach. His stache of antique cars. His horse farm. His tennis court. Dexter is a multimillionaire and all of it comes from Amway. To Dexter, Amway is pure free enterprise.
[cut to the soft spoken former beer salesman]
We gotta keep the free enterprise system alive because that is what made America great. It's the PEOPLE. And, and, and AMway's the people. America's just land and dirt and rivers and trees but its the PEOPLE that made America better and greater than all the other nations in the world. And that's the same thing with Amway. It's the PEOPLE.
[cut to wife of soft spoken former beer salesman]
WALLACE: [voice over] His wife Birdie idolizes him. I read back to her something that she had said about her husband. [Wallace quotes her] "He's the greatest person I've ever known. When I look at him", you said "I see JESUS. I want you to listen to him. I know that you'll see Jesus too."
[Wallace asks] Do you really feel that way about your husband?
BIRDIE: Uh, huh.
WALLACE: When you see him, you see [pause]
BIRDIE: I see what Jesus stood for. What he beLIEVED in. His giving and loving spirit.
[cut to throng of Yager groupies stradling the fence around his home]
WALLACE: But Birdie isn't the only one to idolize Dexter. Amway distributors come from hundred of miles around to gawk at his home and his Rolls Royces. They treat him almost like a GOD.
DEX: I'm not a god. I'm not somebody to worship. There's a big difference between worshiping and LOVING. Some people are gonna love me because they wanna do what I'm doin'. I'm not one of a kind. Anybody can do what I'm doin'. They've just gotta want ta.
[cut to a man and woman walking through a park]
WALLACE: [voice over] But CAN anybody? Nancy and Valiss Johnson of
Conway South Carolina were Amway distributors for 8 months when they
finally QUIT. They say not only didn't they MAKE money, they ended up
losing money for all of their efforts.
[cut to Nancy Johnson]
NANCY JOHNSON: Uh, when you go to these rallies you have to PAAAY to get in 'em. You have to PAAAY your expenses to GET there. You have to get off of your REGULAR work to get there and that's a lot of money going OUT just for some motivation to come back in.
[cut to shot of distributors entering function]
WALLACE: Beyond that, people who want to make it in Amway are told to buy the books and tapes and other motivating tools [shots of Yager wannabes buying books and tapes] that will teach them how to do it. The marketing these items runs into the millions of dollars a year. And that cash goes not to the Amway Corporation but to the high level distributors who run these rallies - paid for by the hopeful Amway novices who come to those rallies by the thousands.
[back to Nancy Johnson]
NJ: And then when you get back home and you knock on the door, it's slammed in your face each time you say Amway because people are SICK or hearing it.
WALLACE: Why then do so many people go to work with Amway?
NJ: Well, there are plenty of weak people that you can convince 'em that you can do most ANYthing while you've got 'em under your spayell.
[cut to Mr. Johnson]
Mr. JOHNSON: They get people so motivated and so enthused at these rallies. Those people only hear what the WANNA hear. These people hear "You CAN make a million dollars." Not if you work 23 hours a day 367 days a YEAR. They heard they could make a million dollars s. Period.
[cut to Female distributor]
SHE SAYS: I would like to make $500,000 a year.
[cut to a Male distributor]
HE SAYS: We're exCITed. We're goin' straight to the TOP.
[cut to Female #2]
SHE SAYS: People WANT something better in LIFE than what they've GOT.
[cut to Male #2]
HE SAYS: I wanna be a pilot. I wanna travel. I wanna have more vaCAtion. Than my company gives me after 10 years.
WALLACE: And so you think Amway can DO that?
Male #2: AbsoLUTEly.
[cut to closeup of FTC document regarding Amway]
WALLACE: But IS it that EASY? The FTC, the Federal Trade Commission asked that question when it investigated Amway on charges that it was an illegal pyramid operation.
[cut to shots inside Amway manufacturing plant]
And while the FTC had come to the conclusion that Amway is NOT a pyramid because the money in Amway comes from selling real products. The FTC DID say that Amway misrepresented the kind of money that could be made by the average distributor. But the FTC isn't the ONLY skeptic about Amway.
[cut to shot of Bruce Craig, assistance Attorney General from the state of Wisconsin]
CRAIG: We're charging them with deceptive business practices because of the use of those hypotheticals because they so vary from what we feel is REALITY.
WALLACE: [voice over] Bruce Craig investigated some examples used in Amway literature. Examples that said that Amway distributors could make in excess of $1200 a month. Money that some Amway distributors could be earned with just a few hours a week. But after looking at the average income of the 20,000 Amway distributors in Wisconsin, Craig came to the conclusion that such a claim was outlandish.
WALLACE TO CRAIG: Surely, SOMEbody's making that kind of money.
CRAIG: Yes. That's correct.
WALLACE: How many? Percentage wise.
CRAIG: About one percent.
WALLACE: [voice over] Amway DID make the disclaimer that $1200 a month was ONLY hypothetical but that still doesn't convince Bruce Craig.
CRAIG: If the figure of successful distributors was 1 out of 5 as opposed to 1 out of 100 we wouldn't be in court right now.
WALLACE: [voice over] And, Craig says that even the distributors who, on paper, earn an average of $14,000 dollars a year in Wisconsin actually earn a lot LESS. How much to they actually make?
CRAIG: After business expenses, a net income of minus $918.
WALLACE: WAAAAIT a MINute! The direct distributors who make a gross income on average of over $14,000 wind up losing almost $1000 after business expenses?
CRAIG: On average. Yes.
[cut to zoom-in on bronze statues of Devos & Vanandle]
WALLACE: [voice over] We wanted to know what the founders of Amway had to say about the odds of making it in Amway and when we asked Rich DeVos how much money Amway distributors make on the average [cut to tight shotof Devos] we were surprised to find out that Amway doesn't KEEP those kinds of records.
RICH DEVIOUS: I don't know what they make. They don't tell me what they make. Some of them will make nothing And they will have DONE nothing. Some will make a hundred bucks and they will have done a hundred dollars worth and some will make a thousand dollars and some of them will begin to make a thousand dollars a month.
WALLACE: Can you make $1200 a month on 6 to 8 hours a week?
DEVOS: Not that I know of.
WALLACE: [voice over] But if the founders of Amway are painting a realistic picture of just how much work it takes at least some of Amway's distributors in the field say something quite different.
[cut to couple sitting at kitchen table]
WALLACE: [voice over] Bill and Julie Greenwood had 120 distributors beneath them in Amway and Julie Greenwood says that she and Bill routinely painted a pie-in-the-sky picture of how easy it is to make to the top and that their sponsors counselled them to keep that story going.
JULIE GREENWOOD [visibly angry]: It was an outright LIE!! Because we weren't doing it [succeeding] ourSELVES! And Bill said "What I wanna do is, in my meeting, I wanna tell the people just how much time it takes, I wanna tell them just how much money it takes to build a successful business" and they said "Well, Bill, you can no longer work with your group if you're gonna tell 'em those things." Bill said, "But they're the TRUTH!" and they said "But people don't need to KNOW those things."
[cut to close up of Bill]
BILL GREENWOOD: If you told a person when they got in the Amway business that they were gonna have to sponsor into their group somewhere between 300 and 800 distributors before they were gonna be able to go fulltime do you think very many would get in?
[cut to frenzied function audience]
WALLACE: [voice over] Why are all of these people so exCITed when they go to these rallies in Charlotte North Carolina?
JULIE: [voice over] When you show 'em these luxuries [cut to Dexter's mansion/cars, etc]. These homes and these motor homes and these cars and these planes and you keep telling me that you wouldn't want it too.
[cut to distributor giving spiel on state]
DISTRIBUTOR: We're gonna make a special trip to New York to buy custom made jewelry. Something for each one of our fingers and we're exCITed about that.
JULIE: Everybody has dreams. Everybody has dreams. And see, that's what they BUILD it on. They get you dreamin'. They get you WANTING these things.
BACK TO DISTRIBUTOR: We also dreamed of ownin' a couple Cadillacs. We just got through buyin' our first one and we're gonna buy another one here in another 2 or 3 months.
JULIE: They get us all psyched up and ready to go and we go back and we lose money for ANOTHER month.
[cut to Rich DEVOS]
DEVOS: [refering to Julie Greenwoods's statements] She was distressed. She SHOULD have been. She just didn't MAKE it
[cut back to shot of The Johnsons]
WALLACE: [voice over] But what about all of the others who say that the system DOESN'T work? That they FAILED with Amway.
[back to Devos]
Devos: They have NOT failed. They have CHOSEN not to work this business as they were told to do. And whenever WE interview them and nail them RIGHT down and ask them how many nights they REALLY gave up, how many meetings they REALLY went to, you will find that those who complain haven't REALLY paid the price to achieve in Amway.
[back to the Greenwoods]
JULIE: We continued to be excited and listen to tapes and buy tapes and go to functions and we're NOW $8,000 poorer.
[back to Devos]
WALLACE: We've heard it over and over and over again. They've tried and tried and tried and they just said "You can't do it on 6 to 8 hours a week. You've gotta spend you LIFE doing it if you're gonna MAKE it!
Devos: We have never said you could get rich working 6 or 8 hours a week. Amway talks in terms of modest incomes based on modest amounts of time and effort.
WALLACE: [voice over] But, again, we told DeVos that at least some of Amway's distributors paint a TOTALLY different picture. And we play a tape recording of one Amway distributor talking to other Amway distributors and to some others thinking of joining Amway.
[Wallace plays a tape recording of one of Jack Daughery's plan showings]
DAUGHERY: What we're talking about is you're making $1200 on your basic business, $400 times 6 is $2400, that would be $3600 in a month, let's put that times 12 months during the year, that's $43,200. We'll pay you a profit sharing bonus of at LEAST $7000 bucks in a year so we're talking about part time makin' $50,000 a year. This is over and above your job.
>WALLACE TO RD and JV: That's an Amway meeting. He's talking about $50,000 a year within the first 2 years and that's just part time, mind you.
RD: That's pretty GOOD.
WALLACE: Reaction from the top 2 men in the company to that kind of pitch.
RD: He is PAINTING you a REALLY GOOD picture and it's a far cut from what we would hope they'd be saying.
[cut to Amway's code of ethics document]
WALLACE: Amway does publish a strict code of ethics that says just how distributors should behave in the field. But because Amway's one million distributors act as independent businessmen, Amway is POWERLESS to control them.
VANANDEL: They're NOT our employees and we can't tell them or enforce things beyond a certain degree.
WALLACE: [voice over] So while they admit problems, they stand by the principles on which Amway was founded. And to those who remain skeptical:
[cut to Devos]
RD: We don't mind those critics out there. But let's don't get carried away that they speak for all the people in America who say "I'd LIKE to make an extra hundred a month. I'm falling behind $100 a month. Maybe I WON'T make $10,000 but maybe I'll get into a new frame of mind, I'll get in with some new people, and just maybe I'll be able to make my car payment because I'm NOT makin' it NOW. We got, at this point in time, they say 10 or 11 million people unemployed. Most of them are sitting around saying "Isn't it terrible." Well, wouldn't it be marvelous if they went out and made 50 bucks? They might discover some self-worth if they got involved with an Amway organization. And if you've ever listened to OUR presentation and done it as the Amway Corporation tells you, you will know that the work will be hard but, the disappointments will be many, but if you're willing to pay the price, there's a chance for you to improve your lot in life. A CHANCE. And that's all we've ever presented to people.
[cut back to screaming distributor on stage]
Distributor: I BELIEVE WE ARE EAGLES!!!! I BELIEVE YOU CAN FLY!!! I BELIEVE THAT IN AMERICA YOU CAN BECOME ANYTHING YOU WANT TO BECOME
WALLACE: Since we filmed this report Amway has been caught up in another controversy. This time, its founders, Jan Van Andel and Rich DeVos, face criminal charges brought by the Canadian government which accuses Amway of defrauding Canada of more than 28 million dollars in import duties. Amway's reply, says Rich DeVos: "We don't think they have a case. In no way whatsoever are we crooked."