Quixtar and its predecessor Amway have been controversial for years because of allegations that these companies are pyramid schemes. Critics claim that most of the products sold by Quixtar are to its network of IBOs for personal consumption rather than to retail customers. They claim that many IBOs practice the "buy from yourself and teach others to do the same" method of multi-level marketing. The sales made through the Quixtar website, however, does allow the IBO to distinguish personal consumption and retail sales but it is based on an honor system; in the sense that the IBO can label the goods purchased for personal use to retail sales at their discretion. This will ensure that the IBO gets a larger monthly check from Quixtar. By this loophole, Quixtar IBOs can bypass a 1979 Federal Trade Commission ruling that addressed this issue. See Litigation below.
There is also a great deal of controversy surrounding the "Amway/Quixtar Motivational Organizations" (AMOs or AQMOs) owned and operated by high level distributors. Quixtar and the AMOs, such as WorldWide Dream Builders and TEAM, claim that the business skills of IBOs are honed by the business support materials (BSM), or "tools", that are sold by the motivational organizations, and that the support material can be of help to an IBO if he wants to build a big business. Furthermore, during the registration process, IBOs are required to accept an agreement that is intended to make the new distributor aware that the BSMs - books, tapes, CDs, informational literature, seminars, etc. - are purely optional and that requires the above-mentioned AMO/AQMO's (also known as LOA, or Line Of Affiliation) to buy back any defective or unwanted business support materials within a reasonable time frame. New IBOs are also made aware that the producers of these "BSMs" are likely to make money selling them.
Critics, however, charge that many of the AQMOs do not provide reasonable terms for refunds and can exert pressure to induce participants into purchasing large amounts of these BSMs and to attend motivational seminars. The sale of the motivational tools to IBOs down the line is described as the "business within the business," of Quixtar from which the high level distributors allegedly make the majority of their income. However, many argue that it is no different than a movie theatre making additional income through the optional sale of popcorn and soda to patrons. Undercover investigations (like one done by MSNBC Dateline in 2003-04) also suggest that most the money being earned by the top-level distributors was coming from the "tools" business rather than through selling the products of Quixtar. The TEAM line of sponsorship, founded by Orrin Woodward and Chris Brady, offer profit sharing of tool money, with those achieving the Platinum level and above. Though Quixtar representatives declined to appear on the MSNBC special, the company did publish an official "Quixtar Response" website. Supporters claim that the Quixtar business model is the standard that the FTC uses as far as a legal network marketing business. Critics claim that although legal according to the FTC, the business practices that some AQMO's teach are unethical and immoral. This one point has been a focus of debate between its critics and supporters for the past 25 years.
