Amway Exposed, Part Three: Dick DeVos Doesn't Believe in Workers' Rights

Dick DeVos not only allowed the exploitation of Amway/Quixtar IBOs during his tenure with Amway and Alticor, but he also used unfair arbitration agreements to silence unhappy distributors and prevent them from seeking justice. The Business Support Materials Arbitration Agreement, or BSMAA, forced unhappy distributors into arbitration sessions administered by hand-picked, Amway-trained mediators instead of allowing them to go to court. In other words, Amway distributors were forced to sign their rights away if they wanted to participate in the system.

Since 1998 (while Dick DeVos was the President of Amway), Amway told its distributors that they had to sign the BSMAA if they wanted to keep their downlines. Remember those tools we were talking about? By signing the agreement, distributors waived their right to take complaints about the tools business to court and instead agreed to arbitrate disputes through the "Amway Arbitration Rules". From the text of the agreement:

Binding arbitration. At least 90 days after the notice referred to in the paragraph above is received, or after the conclusion of the Amway conciliation process, whichever is later, any remaining controversy or claim, including any claim a party to this Agreement may make against any publisher, author, speaker, distributor, manufacturer, seller, reseller or marketer of Business Support Materials, or against Amway Corporation or any of its officers, directors, agents or employees, shall be settled by binding arbitration in accordance with the Amway Arbitration Rules contained in the Rules of Conduct for Amway Distributors (emphasis added)

I HAVE CAREFULLY READ AND UNDERSTAND THE BUSINESS SUPPORT MATERIALS ARBITRATION AGREEMENT, AND IN EXCHANGE FOR THE RIGHT AS AN INDEPENDENT AMWAY DISTRIBUTOR TO BUY, SELL, DISTRIBUTE, RECEIVE, AND USE BUSINESS SUPPORT MATERIALS, AGREE TO ABIDE AND BE BOUND BY THE TERMS SET FORTH HEREIN AND TO ARBITRATE ANY DISPUTES UNDER THE AMWAY ARBITRATION RULES. (emphasis added)

Given all of the problems with the "tools" aspect of the Amway business model, it is unsettling that Amway newcomers would be required to sign these agreements. It seems even more unfair that already existing Amway distributors could either sign their rights away with this agreement, or give up years of hard work developing their downlines. However, after examining another portion of the agreement, it becomes more apparent why these agreements were required:

Confidentiality. Once a notice of claim has been sent, the dispute resolution process, including conciliation and any binding arbitration, shall remain confidential. No party to the claim shall disclose to any person not directly involved in the conciliation or arbitration process (a) the substance of, or basis for, the claim; (b) the content of the testimony or other evidence presented at an arbitration hearing or obtained through discovery; or (c) the terms or amount of any arbitration award.

Much like the DeVos campaign's recent endeavors, it appears that Amway just couldn't stomach all of the negative press that they were getting about the hidden tools business. Although Amway touted the agreement as a superior way of resolving disputes, in reality their BSMAA seems aimed to avoid the negative attention and costs that came from frequent lawsuits over the Amway tools. As amquix.info notes, if their arbitration system were truly the most effective way to resolve disputes, they would give their distributors a choice about whether they wanted to use it or not.

Shockingly, Amway's supposedly neutral "arbitrators" aren't even actually neutral. Amway contracted out to an alternative dispute resolution company called JAMS to handle its arbitration. These arbitrators were required to attend an "Amway Cultural Training" before dealing with any conflicts. On top of that, Amway reserved the right to decide whether the arbitrators got to keep their jobs or not. Its no surprise that most cases were resolved in favor of Amway. As LawBlawg notes:

What kind of company would do business this way? Seriously. They include an arbitration provision that requires absolute secrecy and confidentiality to protect a business (tools) they claim NOT to be in and claim NOT to be endorsing. The arbitration is rigged because the company's rules allow the people who run the tools businesses to choose the arbitrators and meet in secret with them for "training." And then they pass the BSMAA off as something they've done to "help" their distributors. What are they hiding?

Thankfully, the BSMAA was eventually seen for what it really is. In an antitrust case brought against Amway by "tools" manufacturers outside of the kingpins, here is what U.S. District Judge Richard Dorr said about the BSMAA:

Although this court has found that none of the Plaintiffs have submitted to arbitration, the court also finds that, in the alternative, arbitration with pre-selected JAMS arbitrators as presently set up by Defendants is unconscionable.

While there can be basic education of arbitrators regarding specialized subject matter, there is a point where basic education can be extended to subtle manipulation on issues which could be expected to be considered by the arbitrators. This limit has been passed by Amway’s preparation of the arbitrators at JAMS. While JAMS may be a respected organization, the Defendants have called the neutrality of this particular arbitration arrangement into question. Also telling is the fact that Defendants have never lost in arbitration, with the exception of a few counterclaims. (for more information, see a September 20, 2005 article entitled "Judge declines to dismiss Amway case" in the Kansas City Star)

It is possible that Dick DeVos was so oblivious to the inner workings of his company that he didn't realize that this was going on. More likely, he knew about this immoral agreement and allowed the exploitation of Amway distributors to occur anyway.

Mark my words: If elected governor, Dick DeVos will work as hard as he possibly can to destroy measures that protect employees in Michigan. Through these arbitration agreements, DeVos has shown that his own image and his company's profits are more important to him than the welfare of the countless distributors under the Amway/Quixtar system.

(cross-posted on Michlib... front paged!)