Pyramid Schemes

I've been reading and rereading Cory Doctorow's now-three-book Marty Hench series. The newest book is called Picks and Shovels, and it's Marty's origin story in the 1980s, at the dawn of the modern computer era. He's a forensic accountant who uncovers financial malfeasance in the tech world. I know, sounds fascinating, but it is!

As in most Doctorow books, there are passages of the book that I can only describe as short lectures on some topic he thought was needed to understand what the book is about. (In his Little Brother books, one topic I remember is public and private keys used in creating secure communications. I confess I skimmed that part.)

In Picks and Shovels, a topic that comes up is pyramid schemes, which is relevant to a character who's a forensic accountant. The book is in first person, so this is Marty narrating:

One of my accounting profs had worked for the FTC when they'd gone after Amway, and he was still bitter that Amway's founder, Rich DeVos, had gotten Gerry Ford to lean on the FTC to shut down their prosecution of his company. Ford had been DeVos's congressman before Nixon's resignation catapulted him into the White House, and DeVos's partner, Jay Van Andel, was the head of the U.S. Chamber of Commerce, the most powerful lobbyist in America, so the FTC buckled. 

There was only one problem: Amway was guilty as hell. 

Checking into this, I see that the Amway case was filed in 1975...heard in 1978...and decided in 1979. In the context of the novel, that decision date would not have been long before Marty had his class with the professor. 

From the Wikipedia page about the case:

In the Final Order, issued on May 8, 1979, Amway and its representatives were ordered to:

• cease allocating customers among their distributors;
• cease retail price fixing;
• print a specific disclaimer on any suggested retail price list; and
• cease misrepresenting profits, earnings, or sales; and stop implying other than average results, unless the average results or the percentage of distributors actually reaching those figures is also conspicuously disclosed.

In 1986, Amway agreed to pay a $100,000 penalty in a consent decree for violating the 1979 ruling, after Amway placed ads that represented higher-than-average distributor earnings without stating the actual average results or percentage of distributors who actually met the represented claims.

But, as Doctorow's book says, the Final Order somehow — in the midst of all that — also explicitly said that Amway is not a pyramid scheme. 

In the middle book of the Marty Hench series, The Bezzle, the Amway pyramid scheme and FTC are also mentioned, this time in less detail. But in some ways it answers my question about how the case was found to not be a pyramid scheme. In this book, Marty says in narration, that through the intervention of Gerald Ford,

...they crafted anti-pyramid-scheme rules that were so loose that almost any scam could fit comfortably inside of. 

Essentially, they wrote the rules to exclude the things Amway was doing, then declared that Amway was not doing those things. So therefore it was not a pyramid scheme. Neat!

The name DeVos is probably familiar. Rich DeVos's son is still the head of Amway. His wife is Betsy DeVos, was head of the Department of Education in the first Trump administration, and head of the Michigan Republican Party before that. Her brother is Erik Prince, head of Blackwater, the shadowy mercenary company.

Amway is still in business, making the people at the top very rich so they can fund right-wing (and evangelical Christian) causes. Meanwhile, "the Federal Trade Commission requires Amway to label its products with the message that 54% of Amway recruits make nothing and the rest earn on average $65 a month" (source).