JewelWay International Inc.

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When we were asked about another Jewellery Company back in the early nineties that no longer exists …. here is the context and our response.

Context

Back in the early nineties, there was a particular virulent jewellery multi-level company that prospered for some many seasons in Western Canada. As I recall, the initial fees to join were somewhere between $500.00 and $600.00 with additional levels going for $1,200.00. Each new recruit received a “buy-in” kit that included jewellery items. They were encouraged to sell to their friends and neighbours and were even told that the items were so well priced that the recruit could literally sell the items to their local jewellery stores. The company offered several buy-in levels and of course, additional financial benefit when others were brought into the business.On November 17, 1997, “The Federal Trade Commission” settled charges against the owners and the company “JewelWay International Inc.”, and it ceased to exist. Please refer to: http://www.ftc.gov/opa/1997/11/jewel-2.shtm . However, by the time the government stepped in, thousands of people had parted with their hard earned money, only to realize that at the very best, they had a box a over-priced, unsaleable jewellery merchandise. For a short while, the retail jewellery industry was swamped with folks attempting to get anything for their items, only to be told that there was nothing of real value in their selection. Time as always, allows people to forget. That is until someone decides to brush off the scheme again and run with it. I cannot comment on “Global Wealth Trade” personally as I know nothing about them. But the tip-off for you should be your senses telling you that this thing smells like a pyramid operation. If in fact it is, their goal as always will be to get the maximum amount of money from you, get you to quickly involve your loved ones and friends financially (sacrifice might be a more appropriate word here) and then, disappear before the authorities realize they are even operating.The onus remains on you as a potential investor to analyze and decide whether or not this company is legit or bogus. All past Canadian experience with pyramids shows us that the authorities are either reluctant to get involved or, simply don’t have the legal legs. Though this company operated in both Western Canada and the North Western United States, I should point out that the agency that drove the nail in “JewelWay’s” coffin, was a U.S. regulatory agency and not Canadian!

Our GWT Response

I did extensive due diligence when I first looked at the company and decided to become a member & especially a shareholder as well. I’ve reviewed all of this in detail, and discussed the specifics of Jewelway and even other companies with Ramin, our President as well – to make sure what he says is consistent with what I read in outside sources. I have to say that after all the reading I’ve done, I feel I’ve become somewhat of a lay expert in the rights and wrongs of network marketing companies. There are a lot of divergent opinions out there from vehemently against the whole industry of network marketing as a fraud, to fervent supporters who believe it can do no wrong. The reality, as always is somewhere in the middle. The industry can be very positive and help a lot of people – but unchecked, and taken to excess it can cause problems and even become fraudulent. Which is where the regulators and regulations step in to protect the consumer.

First off, Jewelway has no connection to GWT whatsoever, so this is not some new incarnation of the same company. Our founder was just getting started in network marketing in Ottawa when Jewelway was founded in Arizona. We are a Canadian corporation with a head office in Richmond Hill, Ontario which I have visited numerous times, and spent extensive time with all the executives. My wife Monica even worked in the head office for a while, which gave us an insider perspective that might have sent us running away if we saw irregularities, but instead we further reaffirmed our belief in the integrity of the principals involved, the products, and the compensation plan.

To the specifics of the case against Jewelway – if you read the details of the link, the FTC’s main complaints were:

1) The FTC alleged that the defendants were operating a pyramid scheme because their promotional efforts focused primarily on recruiting and not on retail sales to non-participants.

2) The FTC further alleged that the defendants made deceptive earnings claims in order to induce consumers to make a token purchase of jewelry and become a JewelWay representative able to recruit additional participants for the company.

With our company, we have a variable business plan that allows our members to focus on whichever method they choose – very flexible Retail sales, selling packages of products with Wholesale profits, or building the network of wholesale members with the Team Commissions and Bonuses. They can even become a retailer position and still get access to the product to sell Retail. There are many members who only do home parties, trade shows, and online sales to sell products at retail – but occasionally have someone ask them to become a member too. People want to buy jewelry – many buy a product package just to get wholesale access to the jewellery – which is no different from joining as a member of a buying club – like DirectBuy or Costco – in order to get access to wholesale prices.

Our company itself makes no deceptive earnings claims. Any claims they’ve ever made have been 100% factual – I know because recently those claims are about me, and I see and cash my cheques.

So in the specific areas cited by the FTC, GWT has no issues whatsoever.

If you read the following link by a well-known MLM lawyer, he shows how the complaints against Jewelway were fairly narrow, but because the FTC essentially put a gun to Jewelway’s head with the rules they imposed, they pushed the company out of business. They created new and arbitrary precedents that the company was forced to follow.

http://www.mlmlegal.com/jewelway.html

In Canada it is Industry Canada that sets guidelines, and the RCMP helps to enforce. Here’s their comments on the difference between a legal MLM and a pyramid scheme:

From Industry Canada’s Competition Bureau:
http://www.competitionbureau.gc.ca/epic/site/cb-bc.nsf/en/01278e.html#2

55.1(1) For the purposes of this section, “scheme of pyramid selling” means a multi-level marketing plan whereby
a) a participant in the plan gives consideration for the right to receive compensation by reason of the recruitment into the plan of another participant in the plan who gives consideration for the same right;
b) a participant in the plan gives consideration, as a condition of participating in the plan, for a specified amount of the product, other than a specified amount of the product that is bought at the seller’s cost price for the purpose only of facilitating sales;
c) a person knowingly supplies the product to a participant in the plan in an amount that is commercially unreasonable; or
d) a participant in the plan who is supplied with the product
i) does not have a buy-back guarantee that is exercisable on reasonable commercial terms or a right to return the product in saleable condition on reasonable commercial terms, or
ii) is not informed of the existence of the guarantee or right and the manner in which it can be exercised.

So to address these points – ALL compensation received in our plan is based on product sales. Retail sales are obvious, but the Wholesale profit is based on sale of a Product Package – all the Gold/Titanium/Platinum include product. All the Team Commissions and BDB are based solely on product sales. You can take advantage of portions of the compensation plan with just the Retailer position – where you don’t have to buy any product at all. There are more benefits to buying more product – but that is not prohibited. But in many cases people want more product either to sell – or for their personal use. They want the product for the product. And to get most benefits you are at the Gold Package at least – and no one would ever claim $100 in product is a commercially unreasonable amount. Even $3000 is not when you’re talking jewellery, when we have products for sale for far more than that. And our Policies and Procedures has very reasonable and clearly stated return policies. Our company and compensation plan was created from the beginning to be fully compliant with Industry Canada and FTC rules.

From the RCMP website: Sales Pyramid / Chain Letters

The pyramid scheme is a business opportunity whose main focus is on recruiting an increasing number of investors. A pyramid can appear similar to an MLM (Multilevel Marketing), which is where a company recruits people to sell their products and, if these new salespeople recruit more salespeople, they will get a percentage of their sales. MLMs are legal in Canada, whereas pyramids are not. The pyramid scheme focuses on getting money from the recruits not selling products, which is what differentiates them from an MLM. With a pyramid, recruits will be required to invest large sums of money (e.g. inventory fees) up front, whereas an MLM will never have large start-up costs. MLM profits are based on product sales, not recruit investment fees.
Inevitably, all pyramids will collapse which means that all the people who invested last lose their money.
http://www.rcmp-grc.gc.ca/qc/infos_gen/ … pyramidale

Again, in GWT its entirely up to the new member whether to join with no package – as a retailer to get access to products – or to choose freely to have more inventory in their package based on their needs. And all commissions are based on the sale of products.

It was through educating myself that I made the comfortable decision to not only become a member of GWT, but to become a Founding Member as well. I appreciate when people do the due diligence they should before jumping into an opportunity – and I’m always here to help answer any questions from anyone in my team – or prospective members.