In a significant development, the Enforcement Directorate (ED) has filed a charge sheet against Amway India Enterprise Pvt Ltd, a renowned direct marketing company, unveiling startling allegations of money laundering and fraudulent practices. The agency asserts that Amway generated proceeds of crime amounting to a staggering ₹4,050 crore through deceptive tactics, leading to an extensive investigation dating back to 2011.
The probe initiated by the ED was prompted by multiple First Information Reports (FIRs) lodged by the Telangana police, accusing Amway of engaging in an illegal ‘money circulation scheme’ camouflaged as product sales. The company, with a substantial network of 5.5 lakh direct sellers nationwide, allegedly enticed individuals with enticing commissions on overpriced merchandise, contingent upon continuous recruitment of new members.
ED’s findings unveiled a startling revelation: Amway purportedly operated a pyramid scheme under the guise of direct selling. Instead of emphasizing product sales to end consumers, the company allegedly fostered a multi-level marketing structure heavily reliant on enrolling new members. The commission structure favored those at the top of the hierarchy, incentivizing continuous recruitment and creating a cycle where substantial earnings depended on enlarging the network.
The agency stated, “Amway has been operating a multi-level marketing scheme and money circulation scheme, collecting substantial sums from the subscribers.” They further indicated that the alleged proceeds of crime, totaling ₹4,050.21 crore, were generated through fraudulent activities, primarily cheating unsuspecting individuals.
Highlighting the purported diversion of funds, the ED alleged that a staggering ₹2,859 crore collected from members was siphoned off and channeled into overseas investors’ bank accounts under various pretexts such as dividends, royalties, and other expenses.
Responding to these allegations, an Amway spokesperson reiterated the company’s commitment to legal and regulatory compliance. They emphasized their cooperation with investigative authorities since the commencement of the investigation in 2011 and maintained the company’s dedication to compliance and integrity over its 25-year presence in India.
Amidst the ongoing legal proceedings, the spokesperson conveyed confidence in the Indian legal and judicial system, affirming their pursuit of legal recourse while following due process.
Earlier in April, the ED had seized Amway’s movable and immovable properties valued at ₹757.77 crore. Notably, the agency revealed that the company amassed ₹27,562 crore from its business operations between 2002-03 and 2021-22. Out of this sum, commissions amounting to ₹7,588 crore were disbursed to distributors and members in both India and the United States during the period from 2002-03 to 2020-21.
The unfolding developments in the Amway case underscore a growing scrutiny of multi-level marketing practices and raise concerns about the protection of consumers from potentially exploitative schemes. As legal proceedings continue, the repercussions of these allegations on the direct marketing industry and consumer protection laws remain subjects of keen observation.
Sources By Agencies
