Woodward et al. v. Quixtar Fact Sheet

• There are 15 former Quixtar distributors involved in the class action suit.
• The lawsuit was filed on August 9, 2007.
• The plaintiffs seek a declaration that the distribution contracts with Quixtar, and the non-competition and non-solicitation provisions in particular, are unenforceable as a matter of law.
• Many of the plaintiffs had been distributors since the 1990s, and one had been an Amway and/or Quixtar distributor since 1974.
• The lawsuit is not seeking damages against Quixtar or trying to shut the company down. It is merely seeking a judicial declaration that the non-competition and non-solicitation provisions are unenforceable, so distributors who choose to do so can extricate themselves from continued forced participation in Quixtar’s illegal pyramid scheme and pursue legitimate business opportunities instead.

• Quixtar is an e-commerce sister company of Amway that was founded in 1999.
• Amway attempted to use Quixtar as its chance to make a second, and this time good, first impression on the network marketing industry in the U.S.
• Quixtar is a unit of Alticor, Inc., which is owned by Amway’s founding DeVos and Van Andel families. It essentially is the U.S. operation of the old Amway operation, which no longer operates under that name in the U.S. Alticor is also the parent of Amway.

• The company sells vitamins, cosmetics, hair care, water filters, cookware and home care products, among others.
• According to the lawsuit, the company has been marketed as a business opportunity, promising retail saleability, to get unsuspecting distributors to purchase products at exorbitant prices while investing their time and energies promoting the business opportunity. It offers monetary rewards to incentivize distributors to recruit new distributors who also buy the company’s products and it teaches all distributors to consume the products that cannot be sold, which is all of the products. The model also traps the distributors, a.k.a. the consumers, from leaving the company with a non-competition clause.
• In international news, recently police in India’s sixth-largest city briefly closed down the offices of Amway, claiming the company’s business model is illegal. In addition, three former Amway Corp. Asian subsidiary investors asserted that Amway executives cheated them and others out of more than $1 billion seven years ago. In the U.K. a complaint was filed in which the “objectionable” practices revolve around a persistent problem for Amway's parent company, Alticor. Distributors were more focused on selling their motivational books, tapes and seminars to salespeople than peddling Amway merchandise.
• As cited in the Complaint, IBOs have been complaining to Quixtar since at least 1997 that its products are not sellable.
• A pyramid scheme is a business model in which participants attempt to make money solely by recruiting new participants into the program. In the case of Quixtar, only 3.4 percent of its sales are made to customers outside Quixtar’s distributor network.