Home Finance DemystifiED: What Is A Pyramid Scheme Fraud Of Which Amway Is Being...

DemystifiED: What Is A Pyramid Scheme Fraud Of Which Amway Is Being Accused Of?

The Enforcement Directorate (ED) of India has seized movable and immovable properties worth Rs. 411.83 crore and a bank balance of Rs. 345.94 crore from 36 different bank accounts belonging to the company named Amway. The attached properties include land and factory building of Amway at Dindigul District, Tamil Nadu, plant and machinery, vehicles, etc.

Amway India Enterprises Pvt Ltd. is a US-based company that deals with the direct selling of products related to nutrition, beauty, personal care, home care, etc. through direct sellers/retailers. It also offers business opportunities to the customers. 

The Alleged Fraud:

A money-laundering investigation by the ED has alleged that the company was perpetrating a scam by running a pyramid fraud. Pyramid frauds, as the name suggests, resemble a pyramid structure that starts from a single point on the top and becomes wider as we go down. The company at the top of the pyramid funnels earnings from those on the lower levels. 

It has been claimed that the company Amway was propagating how the members can become rich by just becoming members. The prices of the products of the company were very high as compared to the other alternative products available in the market. The new members were buying these products just to become rich as it was showcased by the company. 

On the company’s website, it can be seen that it rewards the members not only for selling its products to the customers but also for bringing in new members. These rewards are nothing but commissions that are given. ED has clearly stated that these commissions received by the upline members are contributing to the high prices of the company’s goods.   

After the investigation, ED has stated that the company has collected about Rs. 27,562 crores in the years 2002-03 to 2021-22 from its business operations. Out of this wholesome amount, Rs. 7,588 crores were paid as a commission to the members and distributors. 


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The federal agency has made this remark “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”.

Initially, this money-laundering probe against Amway was launched in 2011 based on a case that was filed in Hyderabad. It revealed that Amway is running a pyramid fraud in the name of a direct selling multi-level marketing network. 

Along with Amway, ED has accused two other companies, Britt Worldwide India Private Limited and Network TwentyOne Private Limited. These companies are said to be playing a major role in promoting Amway’s pyramid scheme through seminars where the members are asked to join. 

 What Does the Company Say About This?

Amway has issued a statement which said that “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”.

Previous Controversies- 

In 2013, the CEO and MD of the company, William Scott Pinckney was arrested by Kerala bb Police for alleged overpricing, duping members of their direct sales network, and fraud. Furthermore, in 2014, Pinckney was arrested by the Andhra Pradesh Police from the company’s Gurugram office and taken to Kurnool on fraud charges. 


Disclaimer: This article is fact-checked

Sources: The Print, The Times of India, The Indian Express, Outlook India

Image sources: Google Images

Feature Image designed by Saudamini Seth

Find The Blogger: @Manasvi94031684

This post is tagged under: Amway, Enforcement Directorate, fraud, scam, pyramid scheme fraud, land, factories, money laundering, bank balance, beauty, nutrition, health, home, members, business operations, commissions, upline members, Britt Worldwide India Private Limited, Network TwentyOne Private Limited

We do not hold any right/copyright over any of the images used. These have been taken from Google. In case of credits or removal, the owner may kindly mail us.


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