Amway responds to pyramid scheme joke in House of Cards

Admin   |   14 March, 2015   |   2502   |   3980

Amway responds to 'pyramid scheme' joke in 'House of Cards'

ADA, MI - A joke about Amway in the popular Netflix political drama "House of Cards" didn't get any laughs at the Ada-based direct sales giant.

Todd Woodward, Amway's vice president of marketing, says the problem with the reference is that it perpetuates the contention that the nearly $11 billion global company is an illegal racket.

"We spend a lot of time trying to educate people what a pyramid scheme is, and why Amway is not one of those," Woodward said.

Amway comes up in the first of episode of recently-released Season 3 when Kevin Spacey's character, President Frank Underwood, is being interviewed by Stephen Colbert on his now defunct political satire show, as one of Underwood's former employees watches the program.

Underwood is on the show to promote his ambitious agenda, America Works, which he has shortened to AmWorks. Colbert mocks the moniker, responding: "Is that like Amway? Is it a pyramid scheme? Is that what you are selling the American people?"

The line did generate some laughs at Amway's expense, and sparked some snarky tweets. But so far, it hasn't launched worried calls from distributors, or triggered any other fallout for the company, according to Woodward.

Amway is hoping to capitalize on the joke by using the attention as a springboard to again explain the difference between an illegal pyramid scheme and its business model that sells vitamins, cosmetics and household products through a network of independent distributors instead of in stores.

"What makes a pyramid scheme is circulating money without ever selling any product," said Woodward. "That's a ponzi scheme. We have manufacturing all over the world. Nobody makes any money in our business unless you sell an Amway-made product. We are by definition not a pyramid scheme. We hope people understand that but we have to be more on the offensive about explaining that."

It can be difficult to quantify the value of a business' reputation. But companies trusted by the general public tend to be more successful than those that are not trusted -- which is why it is important to Amway to clarify misperceptions about the company, Woodward said.

Amway's tie to the phrase "pyramid scheme" dates back decades to when the company was investigated by the U.S. Federal Trade Commission in the late 1970s. The federal agency ruled Amway was not an illegal pyramid scheme, but was guilty of price fixing and overstating income potential.

The direct selling giant has survived similar investigations in other countries in subsequent years. Amway operates in more than 100 countries and territories, including China, which is its biggest market.

In 2010, Amway agreed to pay $56 million in cash and products to settle a class action lawsuit brought by distributors in California who alleged the company and high-level distributors committed fraud, racketeering and operated as an illegal pyramid scheme.

While denying the allegations in the suit as "sensationalist claims that remain unproven," Amway said that as part of its settlement the company would make changes to improve distributor education and expand its money-back guarantee.

Naming real entities in fictitious drama happens a lot. It can be problematic for companies when viewers can't distinguish fiction from reality, or they think the fictitious portrayal is based on truth and not a point of view or exaggeration for dramatic effect, said Tim Penning, associate professor of advertising and public relations at Grand Valley State University.

"Viewers of 'House of Cards' may have their mind made up about Amway, or never have heard of them," Penning said. "Either way, it's an opportunity to engage in social media and elsewhere to state what Amway's business model really is."

Still, Amway is taking a departure from the path usually followed by companies after unflattering references in the media. The traditional response is to ignore the reference and move on unless the attention turns negative and explodes in social media.