According to the federal government, Amway has been operating a "multi-level marketing scheme," supplying products at prices that are "exorbitant" when compared to the prices of similar popular products accessible on the open market, among other things.
ED claimed in a statement dated April 18 that assets belonging to Amway India Enterprises Pvt Ltd, which has been accused of operating a "multi-level marketing (MLM) fraud," have been attached. The assets are valued at Rs 757.77 crore.
Land and an Amway manufacturing building in Tamil Nadu's Dindigul district, as well as plant and machinery cars, bank accounts, and fixed deposit accounts, are among the assets acquired by the government-sponsored venture, according to a statement released by the enterprise.
It went on to say that the seizures were taken out in compliance with the Prevention of Money Laundering Act and that "immovable and moveable properties valued at Rs 411.83 crore and bank balances valued at Rs 345.94 crore from 36 distinct accounts belonging to Amway have been attached" (PMLA).
According to the ED, the majority of Amway products are "exorbitantly expensive when compared to alternative popular products from well-known manufacturers that are freely available on the open market."
It is estimated that the corporation collected a total of Rs 27,562 crore between fiscal years 2003 and 2012, according to the government agency in question. According to the statement, they also handed a commission of Rs 7,588 crore to their affiliated members and distributors in the United States and India.
"Without being aware of the true facts, the general public is persuaded to become members of the company and to purchase products at exorbitant costs, resulting in the loss of their hard-earned money." The new members are not purchasing the products in order to use them, but rather in order to get wealthy by joining, as demonstrated by the upline members. "The reality is that the commissions obtained by upline members have a significant impact on the increase in the price of the products," the ED stated.
According to the agency, Amway's business model is based on aggressively spreading information about how the general public can get wealthier by becoming a member. This "MLM pyramid fraud" is concealed by the company's products, which are marketed as direct selling brands, according to the company's press release.
"The action taken by the authorities is in connection with an investigation that began in 2011, and we have been cooperating with the department since then, sharing all of the information that has been requested from time to time since 2011." "Amway India made the announcement on April 19 in response to the development. "We will continue to work with the appropriate government agencies and law enforcement personnel in order to reach a fair, lawful, and logical resolution to the lingering issues."
Nevertheless, the recent inclusion of direct selling under the Consumer Protection Act (Direct Selling) rules, 2021, "have provided much-needed legal and regulatory clarity for the industry, while once again affirming the continuous compliance of Amway India's with the spirit and letter of all laws and regulations in India," the company stated. "Amway has a long history of maintaining the highest levels of probity, honesty, corporate governance, and consumer protection, all of which are far ahead of the curve and in the best interests of the general public."
"We do not intend to speak further on the subject because it is still under consideration in court. We ask that you proceed with caution since a false picture of our business might have a negative impact on the livelihood of over 5.5 lakh direct sellers in the country," Amway India stated.
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