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Why ED attach Amway India's assets worth crores?

Amway Pyramid Scam in Name of Direct Selling

Why ED attach Amway India's assets worth crores?

The Enforcement Directorate (ED) on Monday attached assets worth Rs 757.77 crore of Amway India Enterprises in connection with a marketing scam. The attached properties include land and factory building of Amway at Dindigul district, Tamil Nadu, plant & machinery, vehicles, bank accounts, and fixed deposits. ED had provisionally attached immovable & movable properties worth Rs 411.83 crore and bank balances of Rs 345.94 crore from 36 different accounts belonging to Amway. "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," a statement by ED said.

The probe agency observed that the prices of most of the products offered by the company are exorbitant as compared to the alternative popular products of reputed manufacturers available in the open market. "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," the statement added.

It further highlighted that the new members are not buying the products to use them but to become rich by becoming members as showcased by the upline members. The reality is that the commissions received by the upline members contribute enormously to the hike of prices of the products, it added.

ED attaches Amway India's assets worth crores?


The ED had provisionally attached immovable and movable properties to the tune of `412 crore and bank balances of Rs 346 crore from 36 accounts of Amway. “The prices of most products offered by Amway are exorbitant as compared to alternative popular products of reputed manufacturers in the open market. People are induced to take membership. New members are not buying products to use them but to get commission money, as showcased by upline members in the chain. Upline members receive commissions from the money generated due to the hike in prices of products,” the agency said in the attachment order.

ED revealed company collected Rs 27,562 crore from its business operations from 2002-03 to 2021-22. Of this, Amway paid a commission of Rs 7,588 crore to distributors and members in India and US.

“There is no focus on products. Products are used to masquerade MLM pyramid fraud as a direct selling company,” it alleged. “Amway brought Rs 21 crore as share capital to India in 1996-97. Its outward remittance, however, crossed Rs 2,859 crore till 2020-21 by way of dividend, royalty, and other payments to investors and parent entities,” it said. “Britt Worldwide India Pvt Ltd and Network TwentyOne Pvt Ltd played a major role in promoting a pyramid scheme by conducting seminars for members under the guise of sale of goods by the enrolment of members in a chain system. Promoters are conducting mega conventions and flaunting their lavish lifestyle and using social media to lure investors,” ED said.

Amway India said it complies with laws and regulations in India. “The action of authorities is with regard to the investigation of 2011. We are cooperating with probe agencies and sharing all the information as sought from time to time since 2011. We will continue to cooperate with the relevant government authorities and law officials towards a fair, legal, and logical conclusion of all outstanding issues,” the company said. It also said the recent inclusion of direct selling under the Consumer Protection Act (direct-selling) rules, 2021, brought about the much-needed legal and regulatory clarity for the industry. “We have a rich history of maintaining the highest levels of probity, integrity, corporate governance, and consumer protection. We request authorities to exercise caution, considering a misleading impression about our business as it also affects the livelihood of over 5.5 lakh direct sellers in the country,” it added.

The Enforcement Directorate accused Amway India of running a pyramid fraud in the guise of a direct-selling multi-level marketing network Enforcement Directorate attached assets worth ₹757 crores belonging to Amway India.

Amway India, one of the country's renowned multi-level marketing companies on Monday had its assets worth ₹757 crores attached by the Enforcement Directorate in a money laundering case. The central agency accused the company of running a pyramid fraud in the guise of a direct-selling multi-level marketing network.

What is the case all about?


The Enforcement Directorate alleged that Amway brought ₹21.39 crore as share capital in the country in 1996-97 and till the financial year 2020-21, it remitted ₹2,859 crores in the name of dividends, royalty, and other payments.

According to the probe agency, two companies namely Britt Worldwide India Private Limited and Network TwentyOne Private Limited played a key role in promoting Amway's scheme by conducting seminars to induct members under the guise of sale of goods through chain system membership.

The agency said the company collected a total amount of ₹27,562 crores from its business operations during 2002-03 to 2021-22 and of this, "paid" a commission of ₹7,588 crores to its distributors and members in India and the United States from 2002-03 to 2020-21.

ED: Amway duped gullible members.


The probe agency alleged that the common public was lured into joining as members of the company and purchasing products at exorbitant prices and lost their hard-earned money. Adding further, the agency claimed the new members were not buying products to use but to become rich after getting a membership as portrayed by upline members.

What assets has ED attached?


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 ₹411.83 crores, while the remaining amount of ₹345.94 crores is deposited in 36 bank accounts "belonging" to Amway.

Amway's defense?


Facing heat from the central agency, Amway said it is cooperating with the authorities "towards a fair legal and logical conclusion of the outstanding issues". The company said the ED action was with regard to an investigation dating back to 2011 and since then, it has been cooperating with the agency and has shared all the information sought by it from time to time.

"Amway has a rich history of maintaining the highest levels of probity, integrity, corporate governance, and consumer protection, which are much ahead of time in the interest of the consumers at large," the spokesperson said.

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.

"As the matter is sub-judice, we do not wish to comment further," the spokesperson said.

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