Directly Speaking

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 & establishment 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)