Beware of Amway – Review

Amway is being investigated by Indian authorities for pyramid fraud.

During the early stage of the inquiry, assets worth Rs 757 crore (USD 99.1 million) were frozen.

The Enforcement Directorate in India has launched a new probe into Amway. The case also involves money laundering.

The Enforcement Directorate accused the firm of operating a multi-level marketing “scam” in which most of the company’s items were “exorbitant when compared to alternative popular products from reputable manufacturers accessible in the open market.”

According to the ED, “a money-laundering investigation found that Amway is operating a pyramid scheme under the pretext of a direct selling multi-level marketing network.”

Amway’s business strategy is described by the ED as a traditional product-based pyramid scheme.

“Without understanding the facts, the general public is enticed to join the firm as members and purchase items at excessive costs, resulting in the loss of their hard-earned money.”

The new members are not purchasing the items to use them, but rather to get wealthy by becoming members, as the upline members have demonstrated.

The reality is that the commissions paid by upline members have a significant role in the increase in product costs,” it continued.

“The company’s whole concentration is on disseminating how members may get wealthy by becoming members.”

The emphasis is not on the products. The agency stated that “products are utilized to disguise this MLM Pyramid scam as a direct selling organization.”

This is the most vehement criticism of a bigger MLM organization I’ve seen in India thus far.

William Scott Pinckney (right), the then-CEO of Amway India, was arrested in 2013 on allegations of “financial irregularities.”

Pinckney and many Amway officials were accused by the Economic Offenses Wing of pyramid fraud, which resulted in “illegal money circulation.”

Pinckney was granted bail but was arrested again in 2014 on identical accusations. A few months later, he was freed on bond once more.

Amway India Enterprises Private Limited is the company’s name in India. Anshu Budhraja is the company’s current CEO.

The arrests of Pinckney are linked to an Amway investigation that began in 2011. Amway confirms that the 2011 investigation is connected and ongoing in response to the new asset seizure.

“The authorities’ action is about the investigation that dates back to 2011,” Amway India stated. “Since then, we have been cooperating with the department and have supplied all the material as requested from time to time since 2011.”

We will continue to work with appropriate government officials and law enforcement agencies to get a fair, lawful, and rational conclusion to the lingering concerns.”

Surprisingly, Indian officials have been examining Amway for thirteen years.

According to NDTV, India’s pyramid fraud rules were toughened in December, when the government outlawed direct selling organizations from advertising pyramid schemes.

The Consumer Protection (Direct Selling) Rules of 2021 were created to safeguard customers’ rights while also prohibiting direct selling corporations such as Tupperware, Amway, and Oriflame from pushing money circulation schemes.

The Amway probe was probably put on hold as investigators waited for the law to catch up with them.

The Prize Chits and Money Circulation Schemes (Banning) Act of India, established in 1978, was grossly inadequate for controlling pyramid schemes for the most part.

Let’s see how the new, more stringent laws fare. So far, a $99 million seizure is light years ahead of anything we’ve seen under the old regulations.

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