I encourage you to read the complete article as it appears this is based on facts and actual numbers and is also recent as of February, 2009.
Quoted from http://www.skepdic.com/amway.html:
Amway® (Quixtar®) (Team of Destiny®)
(TEAM®) (Network 21)
Amway is the largest multi-level marketing (MLM) organization in the world. It is a multi-billion dollar a year company based on the sale of products as varied as soap, water purifiers, vitamins, and cosmetics. Amway proponents are fond of asserting that their products are of the highest quality, their company is very large (several million distributors and several billion dollars in annual sales), and does business with such giants as Coca-Cola and MCI (bought by Verizon).
In Amway, one is recruited as an "independent" distributor of Amway products by buying a couple of hundred dollars' worth of the products from the one who recruits you, known as your "upline." Every distributor in turn tries to recruit more distributors. Income is generated by sales of products by the distributor plus "bonuses" from sales of his or her recruits and their recruit-descendents.
Here is a description from an Amway distributor as to how it works.
It goes like this:
If I buy $200 of stuff from Amway this month, I'll get a 3% bonus check (3% of $200 = $6). If I share the opportunity with nine others, and we each buy $200 of stuff from Amway this month, they each were responsible for $200 and will get $6, but I'm responsible for $2000, moving me to the 12% level. I get $240. However, I'm responsible for paying the bonuses of the people right below me - $54 - so I keep $186. I make more because I did more, I found nine people who wanted to buy at a discount and get a bonus for doing it. After I reach the 25% bonus level there are other bonuses that kick in, but they're all based on the volume of product flow, not on signing people up or having lots of people (Bob Queenan, personal correspondence). [April 7, 2004. Gary Elliot Murway writes: Please correct: distributors/IBOs no longer need to pay downline bonuses. Quixtar can pay each IBO directly.]
Amway defenders take offense at describing this method of sales and recruitment as akin to a pyramid or chain letter scheme. It is true that MLM as practiced by Amway is not an illegal pyramid scheme. Amway has been taken to court for being an illegal pyramid and the courts have ruled that since Amway does not charge people either for joining Amway or for the privilege of recruiting others as distributors, it is not an illegal pyramid. Illegal pyramids and chain letters have no product. Amway has lots of household products: from laundry detergent to vitamins, from cosmetics to water filters. Amway is a legal pyramid scheme.