The world of business/franchise opportunities is fraught with hucksters and con artists. Along with 900 numbers, vending machines, rack merchandising, and pyramid schemes, pay phones are one of the more common scams used to separate the unwary from their cash. "It's easy...just buy and install these pay phones and then sit back and count your cash." In 1995 and 1996 the Federal Trade Commision took enforcement actions against 59 vendors of business/franchise opportunities; 6 of these involved the sale of "business opportunities for pay telephones" or "pay phone franchises." (You can find this data on the FTC's web site.)

You would think Amway's owners would have been satisfied with their tried-and-true method of sucking money out of the bank accounts of distributors by selling them starter kits, sales aids and overpriced products. Apparently not, as this lawsuit would indicate.

I don't know if Amway is still trying to sell the Amway Telecharge phone. If anyone has any more information on this, I'd be interested in hearing about it.

According to plaintiff's attorneys, this case is scheduled to go to trial on October 1 of 1997 (the previous trial date of August 13 was changed).

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN

ALL-TECH TELECOM, INC.,
a Wisconsin corporation,

                          Plaintiff,    Civil Action File:

     vs.                                COMPLAINT

AMWAY CORPORATION,
a Michigan corporation,

                          Defendant.
 

   Plaintiff complains of the defendant as follows:

l. In February of 1988, representatives of All-Tech Telecom,
Inc. ("All-Tech") attended an Amway Corporation ("Amway") meeting
in Kearney, Nebraska conducted by Stan Evans, one of Amway's
distributors/representatives.

2. At this meeting, Amway's representatives informed
participants of a new product line which Amway was introducing to
the market.

3. The new product being marketed by Amway was the Amway
Telecharge Phone. The telecharge phone is a private coinless long
distance phone which allows callers to charge a call on a credit
card; make collect calls; or make third party calls.

4. At the meeting, it was represented to All-Tech that,
among other things, Amway had completed extensive research in the
long distance telephone market. It was further represented that
Amway was releasing a product, Amway Telecharge Phones, which was
projected to be the best phone program in the United States.
Additionally, it was represented that any existing business phone
line could be used; the phone works in any location; all states are
approved for use; the quality of the phone is the best in the world
because they were Amway products; and that no approval was needed
from AT&T to install the phone.

5. Amway further represented to All-Tech that International
Telecharge, Inc. ("ITI") was the largest Alternative Operator
Service Company in the United States, and was to act, and still
continues to act, as the phone company utilized by Amway for
programming the phones and handling the calls and billings of the
telecharge phones.

6. Amway represented to those in attendance that as
distributors they could market the telecharge phones by one of two
ways. First, Amway told them that they could sell the telecharge
phones to customers and share in a small monthly percentage of the
revenues obtained form all the telecharge phones sold.
Alternatively, Amway told them that they could purchase phones from
Amway and retain ownership of the phone and take a large percentage
of the revenues as owners. This marketing plan was termed
"vending" the phone and the distributors would pay certain
businesses for allowing them to install the telecharge phones at
that location. Both the distributor and the business owner were to
share in the revenues based on the number of calls made from that
location.

7. Amway represented to All-Tech that the Amway Telecharge
Phones had a one-year limited warranty and that Amway guaranteed
customer satisfaction.

8. Based upon the representations of the Amway's
representatives, All-Tech purchased phones from Amway on various
dates for installation throughout the United States.

9. As a result of the representations made by the Amway,
All-Tech was induced to enter into contracts with numerous
individuals and businesses for the installation of Amway's
telecharge phones.

10. The representations made to All-Tech by Amway's
representatives pertaining to the telecharge phones were not
accurate, and as a result, plaintiff encountered various problems
from the initial installation of Amway's telecharge phones up
through the time of the filing of this action.

11. In all the locations that plaintiff had contracts,
Amway's telecharge phones worked improperly and did not accurately
reflect the exact revenue produced from the use of said phones.
Both All Tech and the various businesses where the phones had been
installed received numerous customer complaints, all relating to
the quality of the phones, the service, and the missing calls. As
a result, these businesses lost customers and revenue.

12. In response to these complaints, plaintiff contacted
Amway on numerous occasions requesting its assistance with these
problems. Each time All-Tech was assured that Amway would correct
these problems. To this date, these problems have not been
resolved.

13. As a result of Amway's failure to perform as promised,
plaintiff has lost a significant amount of time, effort and money
in attempting to resolve the problems with the telecharge phones
and in trying to generate new business to pay for the losses
incurred to their customers. All-Tech has lost and continues to
lose the use of its property and its projected revenue as well as
existing and potential business relationships.
 

                                          JURISDICTION
 

14. All-Tech is a Wisconsin corporation with its principal
place of business in the State of Wisconsin.

15. Amway is a Michigan corporation with its principal place
of business in the State of Michigan.

16. The complaint alleges that plaintiff has suffered damages
in an amount in excess of $50,000.00 exclusive of costs or interest
as a result of the defendant's actions and for which defendant is
liable.

17. The court has jurisdiction over the above described civil
action pursuant to 28 U.S.C. sec. 1332.
 

                                      FIRST CAUSE OF ACTION
                                  (Breach of Contract/Warranty)
 

18. Plaintiff incorporates by reference paragraphs 1-13 of
the Complaint as though fully set forth herein.

19. Plaintiff entered into written agreements with Amway to
act as its distributors in marketing Amway's products.

20. Amway represented that its products were quality products
and that customer satisfaction was guaranteed.

21. Amway breached its agreement to furnish plaintiff with a
quality product as promised and instead provided plaintiff with
phones that among other things had poor connections, produced
noise, required extensive reprogramming, were used as opposed to
new, inaccurately recorded calls and were, overall, defective.

22. Amway further breached its agreement by failing to
resolve the problems with the telecharge phones and provide
customer satisfaction as promised.

23. Amway breached both express and implied warranties by
providing phones to plaintiff which were not fit for their intended
purpose.

24. As a result of Amway's breach of contract with the
plaintiff, plaintiff has suffered damages in an amount in excess of
$50,000.00.

25. Prejudgment interest is claimed from the date of breach.
 

                                     SECOND CAUSE OF ACTION
                                 (Intentional Misrepresentation)
 

26. Plaintiff incorporates by reference paragraphs l-25 of
the Complaint as though fully set forth herein.

27. Amway's representatives made untrue representations of
fact to plaintiff, including but not limited to, representations
and statements pertaining to the quality and condition of the
telecharge phones, regulatory approval, the Amway's research and
development, the program's profitability, and the Company's
warranty.

28. Amway's representations were made knowing that the
representations were untrue or recklessly without caring whether
the representations were true or false.

29. Amway's representations were made with intent to deceive
plaintiff and induce it to act to its pecuniary damage.

30. Plaintiff reasonably believed the representations to be
true and relied upon them to its detriment.
 

                                      THIRD CAUSE OF ACTION
                              (Strict Liability Misrepresentation)
 

31. Plaintiff incorporates by reference herein paragraphs 1-
30 of the Complaint as though fully set forth herein.

32. Amway's representatives made representations of fact,
including but not limited to, representations and statements
pertaining to the quality and condition of the telecharge phones,
regulatory approval, the Amway's research and development, the
program's profitability, and the Company's warranty, to plaintiffs
based upon its own knowledge and in circumstances in which they
ought to have known the truth or the untruth of the statements.

33. Amway and its representatives had an economic interest in
transaction and stood to gain financially if plaintiff entered into
transactions with Amway.

34. That the Defendant had a duty to fully and accurately
disclose all relevant information concerning the telecharge phone
product to All-Tech.

35. Plaintiff reasonably believed the representations to be
true and relied upon them to its detriment.
 

                                     FOURTH CAUSE OF ACTION
                                  (Negligent Misrepresentation)
 

36. Plaintiff incorporates by reference paragraphs 1-35 of
the Complaint as though fully set forth herein.

37. Amway's representatives were negligent in making
representations of fact to plaintiffs, including but not limited
to, representations and statements pertaining to the quality and
condition of the telecharge phones, regulatory approval, the
Amway's research and development, the program's profitability, and
the Company's warranty.

38. Ron Schumacher , acting as an agent of Amway , made some of
the representations referred to herein.

39. Plaintiff reasonably believed the representations to be
true and relied upon them to their detriment.
 

                                      FIFTH CAUSE OF ACTION
                                  (Section 100.18, Wis. Stats.)
 

40. Plaintiff incorporates by reference paragraphs 1-39 of
the Complaint as though fully set forth herein.

41. Amway's representations and statements, including but not
limited to, representations pertaining to the quality and condition
of the telecharge phones, regulatory approval, the Defendant's
research and development, the program's profitability and Company's
warranty were untrue, deceptive and or misleading.

42. As a result of Amway's false representations, plaintiff
suffered damages in an amount in excess of $50,000.00.

43. Amway is liable to plaintiff for these false
representations pursuant to sec. 100.18, Wis. Stats. Plaintiff is
entitled to the remedies afforded by the statute, including an
award of reasonable attorneys, fees under sec. 100.18(11)(b)2.
 

                                             DAMAGES
 

44. Plaintiff incorporates by reference paragraphs 1-39 of
the Complaint as though fully set forth herein.

45. Amway's actions were outrageous and in willful, wanton
and reckless disregard of plaintiff's rights entitling plaintiff to
punitive damages.
 

WHEREFORE, plaintiff requests judgment against defendant in
accordance with the allegations of the Complaint, together with
costs, disbursements and reasonable attorneys' fees and any other
relief the court deems just and proper.

Dated: May 18, 1994.

                           DOAR, DRILL & SKOW, S.C.

                           Matthew A. Biegert (#1000368)

                           P.O. Box 69
                           103 North Knowles Avenue
                           New Richmond, WI 54017-0069
                           (715) 246-2211

                                    and

                            Thomas S. Reavely
                            Suite 203
                            100 Court Avenue
                            Des Moines, IA 50309
                            Attorneys for Plaintiff
 

A TRIAL BY JURY IS DEMANDED.