You have eloquently and succinctly covered every angle of this scam.
If you were in Amway (or whatever the hell they're calling themselves nowadays) for long enough, then you probably know that the founders are Dick DeVos and Jay VanAndel.
These two are from the Grand Rapids, Michigan area. While I admire their philanthropy, imagine how much money these two must be making off this gig considering the following:
I graduated from GVSU. I took many of my classes at a campus that is named after Dick DeVos, because he put up a huge chunk of the money to build the beautiful structures that comprise the campus.
My daughter received surgery at DeVos Children's Hospital.
Across the street from the hospital is the VanAndel Research Institute (they do medical research, I'm pretty sure they're not developing energy drinks there).
The largest sports/entertainment venue in the area is the VanAndel Arena. My graduation ceremony was held there, as was a kickass Rush concert.
Fine arts (operas and what not) are usually conducted in DeVos hall.
The finest hotel in town is the Amway Grand Plaza.
Basically, about half of the buildings in downtown Grand Rapids have either "DeVos," "VanAndel," or "Amway" in the name. Without the money these guys pump into the local economy, Grand Rapids would look alot like Detroit.
Again, I admire their philanthropy. But sometimes I think it may just be a means to keep local officials off their backs. The last I heard, they had a combined net worth of roughly 6 billion dollars.
I've studied Amway for many years, after my brother-in-law tried to sell me on it during my first year of law school. I could tell right away that it was a scam.
VanAndel and DeVos were childhood chums who, about fifty years ago, developed what was basically a granola bar. They were run of the mill snake oil salesmen, and marketed their product as a cure-all. This venture was somewhat successful at first.
However, when the FDA stepped in and told them that they had to stop making false claims about the health benefits of their treats, they devised a new plan: get other people to sell the product and "encourage" them to tout the health benefits that the FDA already said were a no-no.
These recruits would be independent contractors so as to shield VanAndel and DeVos from any liability. To make the prospect more attractive, these independent contractors were allowed to recruit other independent contractors and share in the commissions. Nowadays, people who are not a part of this enterprise, refer to this as a pyramid scheme.
This paradigm began lining the pockets of our Dutch friends in a BIG way. So they initially expanded the operation to other health and beauty products, and the program has evolved to where, nowadays, you can buy pretty much anything through Amway.
In the 1970s, a federal court declared that Amway was an illegal pyramid scheme. They have gottten around this ruling by getting rid of "front end loading" (read up on it, it's too complicated to get into here).
The gist of the ruling was that, if less than 70% of sales were not made to non-Amway distributors, the operation is illegal. This is still the standard today.
However, most who have analyzed Amway product flow will tell you that FAR more than 70% of end consumers ARE Amway distributors, meaning that the vast majority of Amway sales are made to IBOs, not to people outside of the organization.
So, technically, Amway is likely still in violation of the law, but its just too hard to track effectively, and believe me, these guys have some GOOD lawyers.
Long story short: the OP is right on the money, and I'm glad he figured this out before he got in too deep. Amway makes its money from its own distributors. Distributors who are making money are not profiting from the sale of Amway products, they're making money off the motivational materials!
And, in closing, NEVER, NEVER, NEVER follow the advice of Robert Kiyosaki. He's more full of shit than a KOA outhouse.
Best regards!