Scamway loses a round in court.

[Archae]

:woohoo:

Two former Quixtar distributors have filled a class-action suit charging that Quixtar and several of its high-level distributors with fraud and racketeering. Quixtar markets nutrition, beauty, and cleaning products in the United States and Canada through a multilevel marketing system in which independent business owners (distributors) sell products and recruit distributors. The parent company, Alticor Inc., does business as Quixtar in the U.S. and Canada and as Amway Corp. throughout the rest of the world. The allegations of the complaint (shown below) include:

Quixtar is an illegal pyramid scheme because most of its sales are to distributors rather than to retail customers.

The defendants recruit distributors by making false or misleading statements.

Quixtar products would be difficult to sell to unaffiliated consumers because they cost much more than similar products at retail outlets.

Quixtar's lowest level distributors are instructed not to waste time on marketing and retailing the products, but instead to focus on consuming the products themselves and recruiting others to be distributors.

Most products are purchased by Quixtar distributors for their own use, and any profit is eliminated by the costs of buying instructional materials.

Quixtar has "unconscionable" arbitration policies that prevent most distributors from recovering their losses if problems arise.

http://www.casewatch.org/civil/amway/class_action_complaint.shtml

Court permits suits against Quixtar to proceed.

A federal court judge has ruled that three suits against Quixtar and
several high level distributors can go forward. The suits charged
Quixtar and several of its high-level distributors with fraud.
http://www.casewatch.org/civil/amway/class_action_complaint.shtml

The
defendants asked the court to dismiss the suits on grounds that
Quixtar's distributor agreements call for binding arbitration of
disputes. However, the judge concluded that the terms of the
arbitration process were "unconscionable" and therefore
unenforceable.

http://www.casewatch.org/civil/amway/arbitration_ruling.pdf

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1. K&R