ED Attaches Amway India's Assets Worth Rs757.77 Crore for Running Pyramid Fraud
Moneylife Digital Team 18 April 2022

The enforcement directorate (ED) has attached assets worth Rs757.77 crore belonging to Amway India Enterprises Pvt Ltd, a company accused of using products to masquerade a multi-level marketing (MLM) fraud under the disguise of a direct selling company.

In a statement, ED says, "Immovable and movable properties worth Rs411.83 crore and bank balances of Rs345.94 crore from 36 different accounts belonging to Amway attached."
"The attached properties include land and factory building of Amway at Dindigul district in Tamil Nadu and plant and machinery vehicles, bank accounts and fixed deposits," the ED says.

According to the investigation agency, the company has collected Rs27,562 crore from its business operations from FY02-03 to FY21-22 and, out of this, the company has paid commission of Rs7,588 crore to its distributors and members in India and in US.

"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," ED says.

Amway has brought Rs21.39 crore as share capital in India in 1996-97 and up to FY20-21, the company has remitted huge amount of Rs2,859.10 crore in the name of dividend, royalty and other payments to their investors and parent entities.

A money laundering investigation by the ED revealed that Amway is running a pyramid fraud in the guise of direct selling MLM network. It is 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 new members are not buying the products to use them, but to become rich by becoming members as showcased by the up line members. Reality is that the commissions received by the up line members contribute enormously in hike of prices of the products," ED says.

According to ED, Britt Worldwide India Pvt Ltd and Network Twenty One Pvt Ltd also played a major role in promoting pyramid scheme of Amway by conducting seminars for joining members under the guise of sale of goods by enrolment of members in chain system. The promoters are conducting mega conventions and flaunted their lavish lifestyle and used social media to lure gullible investors, it added.
Last year in December, the Indian government notified the Consumer Protection Rules, 2021, and asked the direct selling companies to comply with these rules within 90 days.
According to the ministry of consumer affairs, food and public distribution, the new rules will be applicable to all goods and services bought or sold through direct selling, all direct selling companies offering goods and services to consumers in India, including a direct selling entity, which is not established in India, but offers goods or services to consumers.
Under the new norms, all direct selling companies and sellers are prohibited from promoting a pyramid scheme or enrolling any person on such scheme or participating in such arrangement, in any manner whatsoever, in the garb of doing direct selling business or participating in money circulation scheme in the garb of doing direct selling business.
The ministry says, "Direct selling entity and a direct seller shall not induce consumers to make a purchase based upon the representation that they can reduce or recover the price by referring prospective customers to the direct sellers for similar purchases."

"Direct selling entity and direct sellers are prohibited from, promoting a Pyramid scheme or enrol any person to such scheme or participate in such arrangement in any manner whatsoever in the garb of doing direct selling business and participate in money circulation scheme in the garb of doing direct selling business," it added. (Read: Indian Govt Bans Pyramid or MLM Schemes under New Consumer Protection Rules)
2 months ago
We were also duped by them and their marketing agents. Similar MLM was promoted by Hindustan Lever also. Govt has done well in taking them to task.
2 months ago
There are still several Indian as well as foreign based companies are operating such businesses in India. I don’t think it should take so much time for the authorities to close or seize their businesses before they inflict irreparable damage to the society in general.
2 months ago
It is really very surprising to note that after completing more than 25 years in India , the government is now waking up and saying that the business of the Company has been in to pyramid fraud. It was doing the Multilayered Marketing since it’s inception . It’s an astonishing fact that our regulators be it SEBI , NSE , BSE and RBI they all wake up after the damage has been done . I think it’s high time these regulators’ accountability has to be fixed . In China this sort of businesses have been totally banned since last few years . However, better late than never .
Free Helpline
Legal Credit