Dateline NBC investigation of Quixtar's "get rich quick" scheme

WOOD TV/May 7, 2004

Amway and Quixtar are about to make national news with a Dateline NBC investigative report that promises to expose how well known Amway success stories really make their money.

24 Hour News 8 learned of the investigation Wednesday and worked with Dateline NBC to obtain pieces of their report today. NBC's report calls Ada based Quixtar, the mother of all get rich quick schemes.

Every year, hundreds of thousands of people flock to arenas across the country, convinced they've found the true path to financial salvation. The people on stage are distributors for a company called Quixtar, which says it has had $3 billion in sales since 1999. They say the company's special formula for success has made them rich.

Dateline NBC says when it brought its hidden cameras to a recruitment meeting, they too were promised easy money. Eric Scheibeler told NBC's Chris Hansen he heard a similar pitch when he signed up. "What do you have today?" asked Hansen. "Financially we have nothing as a specific result of this," replied Scheibeler.

Quixtar tells NBC that this is not a get rich quick business. In fact, some of its own literature says the average distributor makes about $1,400 a year. But this former high-ranking insider told the network wealth is routinely dangled in front of the loyal followers.

"Is that actually achievable by selling Quixtar products?" Hansen asked. " "Based on my experiences, no," answered Bo Short.

Friday at 8:00 p.m., NBC is promising the culmination of a year-long investigation into the company. So far, officials from Alticor, the parent company of Quixtar, have refused to appear on camera.

Quixtar did send 24 Hour News 8 a statement late Thursday afternoon, saying, "Quixtar has had limited contact with Dateline about this story...and based on these exchanges...Quixtar is concerned about fairness, balance and accuracy, and because of this wants to reserve comment until viewing the story."

Part of that Dateline investigation is a lawsuit in Missouri, that includes claims of anti-trust violations and conspiracy charges. It also claims all those millions made by successful distributors didn't come from selling the company's products, but rather, according to the lawsuit, from selling dreams.

24 Hour News 8 spoke to several Amway and Quixtar distributors. They say they've made good money selling the products, and its enriched their lives. However, only one was willing to appear on camera. Tyler Damrom, a mid-level distributor, says he attended dozens of seminars and spent at least $6,000 a year on Quixtar promotional tools until, he says, he got smart.

"We would have two meetings a day, and we would pay. They would usher us out and then we'd come back and pay again," Damrom says.

At the same time, he feels it was a positive experience. He learned a lot about business and himself, but he didn't make any money.

"The money is in the tools, in the tapes, and the books and the seminars," he says.

In other words, according to Damron and Dateline NBC's own investigation with a high ranking Quixtar distributor, the money is in the hype not the products.

The Missouri lawsuit claims that in the 1980's high ranking distributors, diamonds they're called, began to create promotional materials and made all their money by selling a dream and recruiting people to buy that dream in the form of tapes and cassettes. That's a problem according to the lawsuit.

24 Hour News 8 asked Curt Benson, a local business attorney, to analyze the lawsuit's claims.

"If the allegations are true, and I certainly am not in position to judge whether they are, but the allegation is that the promotional tools are so far divorced from the product that they are running into the proverbial pyramid scheme again," Benson tells us.

These are allegations Amway has dealt with before and defeated. But this time, the lawsuit claims things have changed.

"They're also alleging that the Amway Corporation recognized the problem, took steps to prevent it, got sued a couple times, and fell back on 'if you can't beat 'em, join 'em,'" Benson point out.

The companies became conspirators according to the suit, stifling competition from others who wanted to make those tools and host those functions. And once the emphasis shifts from product to hype, according the lawsuit, the organization qualifies as a pyramid.

Alticor did send 24 Hour News 8 a written statement late Thursday. In it, the company states that, "The plaintiffs appear to be blaming our companies for the breakdown in their long term business relationships...We believe the lawsuit to be without merit and will provide a vigorous defense."

24 Hour News 8 does hope to interview Alticor leaders immediately following Dateline's story.

Once again, if you'd like to see Dateline's entire hidden camera investigation, it airs Friday on WOOD TV8 at 8:00 p.m.