The US-based firm collected around Rs.27,000 crores from India over the past 25 years
At last, US-based Multi-Level Marketing (MLA) company Amway was caught in India with the Enforcement Directorate (ED) attaching Indian assets worth over Rs.757 crore as part of a probe on money laundering and violation of Indian laws. The ED issued a statement on Monday, accusing the company was perpetrating a “scam” by running a pyramid “fraud” in the guise of a direct-selling MLM network. “The entire focus of the company is about propagating how members can become rich by becoming members. There is no focus on the products. Products are used to masquerade this MLM pyramid fraud as a direct-selling company,” said the ED.
Amway started operations in 1996 by attracting millions of people as their sales agents offering “the way to rich” by selling their products in an MLA chain and the majority in the end lost the money by taking their products. Amway is an American multi-level marketing company that sells health, beauty, and home care products. The company was founded in 1959 by Jay Van Andel and Richard DeVos and is based in Ada, Michigan. Amway and its sister companies under Alticor reported sales of $8.4 billion in 2019. India’s new Consumer Protection Act (Direct Selling) Rules, 2021 have put barriers to Amway’s operating style for the past 26 years without adhering to the laws of the country. Subsequently, the Government of India in December 2021, banned direct-selling companies from promoting pyramid and money-circulation schemes as it notified new rules for the direct-selling industry.
The ED issued a provisional order under the Prevention of Money Laundering Act (PMLA) for the attachment of assets worth Rs.757.77 crore belonging to Amway India Enterprises Private Limited. The agency said the company is accused of “running a multi-level marketing scam”. The attached properties include land and factory buildings of Amway located in the Dindigul district of Tamil Nadu, plant and machinery, vehicles, bank accounts, and fixed deposits.
Of the total attachment value, immovable and movable properties are worth Rs.411.83 crore, while the remaining amount of Rs.345.94 crore is deposited in 36 bank accounts “belonging” to Amway, the agency said. Amway said the ED action was with regard to an investigation dating back to 2011 and since then, the company has been cooperating with the agency and has shared all the information sought by it from time to time.
ED officials involved in the probe said the company had been operating in the country for years and many people were linked to its MLM scheme. The agency said the company collected a total amount of Rs.27,562 crore from its business operations during 2002-03 to 2021-22 and of this, “paid” a commission of Rs.7,588 crore to its distributors and members in India and the United States from 2002-03 to 2020-21.
“A money-laundering investigation by the ED revealed that Amway is running a pyramid fraud in the guise of direct-selling multi-level marketing network. Without knowing the real facts, the common gullible public is induced to join as members of the company and purchase products at exorbitant prices and are thus, losing their hard-earned money,” ED said.
The new members are not buying the products to use those, but to become rich by becoming members as showcased by the upline members. The reality is that the commissions received by the upline embers contribute enormously to the hike of prices of the products,” ED said.
The money-laundering probe found out that Amway brought Rs.21.39 crore as share capital in India during 1996-97 and till the financial year 2020-21, it remitted a “huge” amount of Rs.2,859.1 crore in the name of dividends, royalty, and other payments to their investors and parent entities. Companies like Britt Worldwide India Private Limited and Network Twenty One Private Limited also played a “major role” in promoting Amway’s pyramid scheme by conducting seminars for joining members under the guise of sale of goods by the enrolment of members in the chain system, it alleged.
“The promoters are conducting mega conventions and flaunted their lavish lifestyle and used social media to lure gullible investors,” the ED said.
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