The former USA Today Coaches poll is now being referred to as the “Amway Coaches Poll.” An undisclosed sum was paid for the naming rights in conjunction with the American Football Coaches Association and USA Today Sports Media group. Amway will also have naming rights to a new fan based poll and “The Symbol of Supremacy in College Football™, the AFCA Coaches’ Trophy.” So what's the big deal you ask? Lots of companies are involved in the naming rights of sports organizations so why is Amway's entrance into the college football world any different? Let's dive in to what Amway is, their history and why the naming rights to the Coaches Poll could be of some concern.
Amway is what is referred as a Multi-Level Marketing firm. The FTC sued Amway back in 1979 alleging it was a pyramid scheme but Amway settled for a fine when a judged ruled they were not an illegal pyramid scheme but did engage in price fixing and illegal marketing practices by inflating the average distributor profits reported. In 1986 they were fined again for illegal marketing practices. Most recently Amway settled a lawsuit alleging illegal business practices for $56 million dollars in which the plaintiffs accused Amway of running an illegal pyramid scheme. They have also been sued by the RIAA for $9 million for illegal use of music and in a stranger lawsuit, Procter and Gamble won a $19.25 million lawsuit against Amway when some affiliated “IBOs” accused P&G CEO of being a satanist and using a satanic trademark. Regardless of one's views on multi-level marketing it is apparent that Amway has run into consistent legal issues due to their business practices.
According to Amway's own brochure (2012) fine print only .32% of their IBO participants achieved a median income of $55,042 to achieve their elite Q12 status. That means over 99% of participants were making less than the U.S. median wage. Such a low success rate they legally were obligated to disclose is not a business opportunity that is appropriate for most individuals, in particular low-income college students who can not reasonably afford the investment risk to get started. Back in 2004 when Amway was doing business as Quixtar, Chris Hansen with Dateline NBC did a hidden camera expose of the tactics used to lure in new participants. The shady tactics used by Quixtar are the same tactics that Amway uses today (Quixtar brand was “retired” in 2008).
Amway is also a major contributor to political campaigns. According to opensecrets.org Amway ranked 54th (as of this writing) of over 17,000 companies who have donated to candidates and PACs with over 4.3 million dollars donated this election cycle. This is part of their overall strategy to keep their version of multi-level marketing legal. This has become a more pressing issue for Amway as a similar company, Herbalife, continues to face scrutiny from the FTC that Herbalife is operating as a pyramid scheme. This was recently highlighted in a Slate article how the Direct Selling Association, of which Amway is a major part of, is using political muscle to influence legislation in their favor to continue business practices many still find questionable.
So what does all this have to do with the Amway Coaches Poll? Speaking with expert, Robert Fitzpatrick, who has been an expert witness in legal cases against MLM companies, Amway may be looking to gain more influence over potential targeted demographics of the company. Buying the naming rights to the Coaches poll gets the brand Amway more publicly known and helps legitimize their business in the public's eyes through their association of the trusted American Football Coaches Association. Amway may potentially be targeting college students in their naming rights effort. According to Fitzpatrick, this would make a lot of sense for Amway to target a college-aged population. As younger generations are less aware of the Amway's legal troubles, they may look more favorably upon becoming one of Amway's “IBOs” or Independent Business Operators not having known others who have already lost money in this MLM enterprise. Amway's business model relies on the constant absorption of fresh recruits into their fold. College students deep in debt and looking for extra money may be attracted to what is pitched as a lucrative business opportunity. Unfortunately, the statistics for success for Amway distributors is extremely low. The average distributor lost $1,176 in 2010. That may not seem like a lot of money to some individuals but that is a steep sum to a college student who generally has very little incoming cash flow. Thus, vulnerable college students may find themselves deeper in debt pursuing an opportunity that is pushed on them using high pressure tactics that are well documented among past participants. If you google an impartial term like “Amway reviews” countless blogs and stories document the people feeling scammed in the wake of becoming an Amway distributor.
Those associated with college athletics should take a deep look into who they are partnering with and ask some tough questions. Is Amway the kind of company the NCAA and college athletics should be associating with? Those of us on the outside looking in should also take part in this discussion. Whether a journalist, athlete or fan we all have a big stake in making sure students and athletes are not being targeted when they are most economically vulnerable by brands looking to take advantage of those vulnerabilities.
To contact the AFCA to voice your opinion on this matter please see contact info sourced from the AFCA website below.
Contact By Mail:
American Football Coaches Association
100 Legends Lane
Waco, TX 76706
Contact By Phone:
Contact By Fax:
Contact By E-Mail:
Links to materials used in this article
https://en.wikipedia.org/wiki/ (for FTC, RIAA and P&G lawsuit information)
https://www.youtube.com/watch?v=xL6QHHO4-6Q ( Dateline NBC expose)
http://www.slate.com/articles/ (Slate article regarding Herbalife)
http://www.mlive.com/business/ (2010 California lawsuit)
http://www.finance-guy.net/str (average IBO income)