Directly Speaking

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.