ED charge sheet against Amway India identifies proceeds of crime worth ₹4K Cr

Amway India pretty much started the multi-level marketing (MLM) craze in India by enrolling lakhs of people as its members by offering them lucrative commissions on exorbitantly priced products as long as they kept adding members below them.

The Enforcement Directorate (ED) has filed a charge sheet against Amway India, a popular direct marketing company that pretty much started the multi-level marketing (MLM) craze in India by enrolling lakhs of people as its members by offering them lucrative commissions on exorbitantly priced products as long as they kept adding members below them, the agency said on Monday.

The agency claimed it has identified proceeds of crime worth ₹4,050 crore generated by Amway by cheating a large number of subscribers.

A money laundering probe against Amway India Enterprise Pvt Ltd, which has 5.5 lakh direct sellers across the country, was started in 2011 based on various first information reports (FIR) filed by the Telangana police.

It was alleged that Amway was promoting an illegal ‘money circulation scheme’ under the guise of sale of goods and has been cheating the general public by promising them very high commissions/incentives through simple enrolment of new members and by claiming that these commissions/incentives would continue in perpetuity.

ED’s probe revealed that Amway has been promoting a Pyramid scheme in the guise of direct selling. “Instead of selling goods directly to the end consumer, Amway has floated a multi-level marketing scheme of members and has introduced many intermediaries in the name of distributors. The scheme does not focus on the sale of products but survives primarily on the enrolment of members. Once a newcomer is convinced to pay money through someone who has referred him to the company, he/she becomes a representative and to earn commission, he/she has to enroll new members and as the number of persons increases down the line, the ones on top get more commission and more incentives like luxurious tours,” the agency said in a statement on Monday.

It further said that “Amway has been operating a multi-level marketing scheme and money circulation scheme and has collected huge amounts from the subscribers”.

By commission of the scheduled offence of cheating, Amway has generated proceeds of crime totaling ₹4,050.21 crore, ED added.

Referring to the diversion of money by Amway, ED said “ ₹2,859 crore of money collected from the members has been siphoned off and parked in the bank accounts of overseas investors in the name of dividend, royalty and payments for other expenses”.

Amway said it was committed to legal and regulatory compliance. “The prosecution complaint (charge sheet) currently filed by the Enforcement Directorate pertains 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 from time-to-time. Since Amway began its operations in India 25 years ago, it has been committed to legal and regulatory compliance, and has diligently maintained a culture of compliance and integrity to the present day,” an Amway spokesperson said in a statement.

“We want to reiterate our continued confidence in the Indian legal and judicial system following the due process of law as we pursue our legal rights,” the spokesperson said.

The financial crimes probe agency had attached Amway’s movable and immovable properties worth ₹757.77 crore in April. At that time, ED had stated that Amway collected ₹27,562 crore from its business operations from 2002-03 to 2021-22. Of this amount, the company paid commission worth ₹7,588 crore to its distributors and members in India and in the United States between 2002-03 and 2020-21.

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