Amway counters ED's fraud charge, says new direct selling rules bring clarity

Amway India has issued a clarification, saying it continues to cooperate with government authorities after the Enforcement Directorate (ED) provisionally attached its assets worth ₹757.77 crore.

"The action of the authorities is with regards to the investigation dating back to 2011 and since then we have been cooperating with the department and have shared all the information as sought for from time to time since 2011. We will continue to cooperate with the relevant government authorities and the law officials towards a fair, legal, and logical conclusion of the outstanding issues," the personal and home care brand said.

The recent inclusion of direct selling under the Consumer Protection Act (Direct Selling) rules, 2021, have brought in the much-needed legal and regulatory clarity for the industry, while again confirming Amway India's continuous compliance with the spirit and letter of all laws and regulations in India, it added.

"As the matter is sub judice, we do not wish to comment further. We request you to exercise caution, considering a misleading impression about our business also affects the livelihood of over 5.5 lakh direct sellers in the country," the company said.

ED has provisionally attached immovable and movable properties worth ₹411.83 crore and bank balances of ₹345.94 crore from different accounts belonging to Amway.

The attached properties include land and factory building of Amway in Tamil Nadu's Dindigul district, plant and machinery, vehicles, bank accounts and fixed deposits, the investigating agency said in a statement.

The money-laundering investigation by the probe agency revealed that Amway is running a pyramid fraud in the guise of direct selling multi-level marketing 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," ED said.

"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 upline members. Reality is that the commissions received by the upline members contribute enormously in hike of prices of the products," the agency added.

ED claimed that the company collected ₹27,562 crore from its business operations from 2002-03 to 2021-22 and out of the above, it has paid a commission of ₹7,588 crore to its distributors and members in India and in the US during FY 2002-03 to 2020-21.

The entire focus of the company is about propagating how members can become rich by becoming members, ED said, adding that there is no focus on the products.