The Fair Trade Commission (FTC) issued corrective orders against Amway Korea (CEO Park Sae-joon), the country's largest multi-level marketing company, for violating the rules governing multi-level marketing enterprises. The Federal Trade Commission, on the other hand, has been criticised for imposing a too lenient penalty. - Check out this article:
Arrogance on a single side Park Se-joon, the CEO of Amway. According to the Federal Trade Commission (FTC) on July 29, Amway forced its salespeople who resell Amway items to refrain from selling products at a lower price than the advertised purchase price. The violation of this order resulted in the salesperson being temporarily barred from engaging in any sales activities.
Disqualified salespeople are ineligible for support allowances, which are often provided based on each individual's sales performance as well as the performance of their subordinate salespeople. Salespeople who have been disqualified from their positions are also unable to recruit new employees. A obvious breach of the Monopoly Regulation and Fair Trade Act has occurred here (Section 21). Amway salespeople are not considered to be employees of the multi-level marketing organisation, but rather as independent retail distributors who work for their own businesses. As a result, salespeople are legally permitted to dispose of things they purchase from the corporation in any manner they choose, including through price reductions. Consumers may benefit from this by being able to purchase daily requirements at a lesser cost.
The Federal Trade Commission issued corrective measures against Amway, ordering them to cease their price-fixing actions and to remove the relevant phrase from their sales instructions. Amway, according to the Federal Trade Commission, "denied consumers the option to purchase products at inexpensive costs by limiting the sales price." - Check out this article:
Allowances that are lower than the top ten average
Amway salespeople already make a pittance compared to the national average. According to an examination by the Federal Trade Commission, the average yearly income of salespeople in the top ten multi-level marketing businesses in Korea is only 1.08 million won, or US$1,045 per year. Nonetheless, salespeople at Amway, the sector's number one sales business, received an average of 770,000 won (US$745) per year, which was less than the average of the other top 10 companies in the market.
The top one percent of Amway sales employees earned on average 56 million won (US$54,150) per year, whereas the remaining 99 percent earned only 470,000 won (US$455) per year on average. “Because of the limitations of the pyramidal multi-level sales strategy, income disparities between top selling and non-top salespeople are unavoidable,” according to an industry source.
The majority of allowances are taken by the top sellers.” Amway was also fined for hiring 103 instructors and public officials to its workforce, which was considered excessive. According to the applicable legislation, national, local, and educational officials are prohibited from being members of multi-level sales organisations because they may be able to coerce civil petitioners or parents into purchasing products based on their social status. - Check out this article: Despite its measures, the Federal Trade Commission (FTC) is now being held responsible.
The actions taken against Amway have sparked a firestorm of criticism. According to its website, Amway began officially controlling sales pricing in September 2008 and has continued to do so since then. Despite the fact that the Federal Trade Commission analyses multi-level marketing organisations on a yearly basis, they were only discovered in October 2012. It took another two years before the Federal Trade Commission (FTC) issued corrective orders.
“It took quite some time for us to implement corrective orders,” the commission stated in response to this. We have limited personnel resources, as well as internal policies and processes, which prevent us from conducting thorough investigations every year.” The punishment meted out to Amway is also considered to be a slap on the wrist at this point. Aside from the FTC's order to eliminate the relevant clause, there were no further punitive measures, including fines, taken against the company. Regardless, the Federal Trade Commission stated that "this lawsuit will serve as a warning to other businesses." -
Check out this article: http://www.businesskorea.co.kr/article/5734/multi-level-shady-amway-korea-flaunts-regulations-received-wrist-slap#sthash.k9X6r8Nn.dpuf for more information:
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