Amway is an American multilevel marketing company founded in the year 1959 by Jay Van Andel and Richard DeVos. It sells multiple kinds of products, including dietary supplements, personal care products, cookware, cosmetic and beverages, through a direct selling model involving a network of independent distributors, referred to as independent business owners. The distributors earn money by directly selling Amway products to the customers and recruiting others to join the network as distributors.
Amway is the largest multilevel marketing company in the world by revenue. It reported a global revenue of $1.8 billion in the year 2023. The company is currently operating in more than 100 countries worldwide. Amway’s business model is facing global scrutiny because its direct selling model resembles a pyramid scheme in which earnings depend more upon recruitments than product sales.
Legal Status in India
Amway is not banned in India and continues to function as a legal entity in the country. However, the company faces intense legal heat in India over accusations of operating pyramid schemes, money laundering and illegal business practices.
In the year 2007, Amway was found of guilty of illegal business practices by the Indian authorities. The government ruled that Amway’s multilevel marketing model violated laws against money circulation schemes. Amway challenged this ruling in the Supreme Court of India but the court upheld the government ruling.
In the year 2013, the then CEO of Amway, William Scott Pinckney, was arrested by the Kerala police on charges of fraud and illegal money circulation. He was arrested again in Andhra Pradesh on similar charges. Later, he was freed on bail.
Enforcement Action
In April 2022, Enforcement Directorate, the premier investigative agency in India for financial crimes, attached Amway India’s assets worth Rs. 757.77 crore under the relevant provisions of the Prevention of Money Laundering Act or PMLA. The agency accused Amway India of perpetrating a pyramid fraud in the guise of direct-selling multilevel level marketing. Pyramid fraud was defined as a system in which recruitment of new members generated revenues, with product sales acting as a masquerade.
In November 2023, ED filed a prosecution compliant against Amway India in a Hyderabad court. In the prosecution complaint, the agency alleged that Amway generated Rs. 4050 crore in proceeds of crime through its MLM scheme.
Current Status
Amway is currently functioning in India through its 550,000 active distributors, 140 offices and 55 warehouses across the country. However, cases against it under PMLA are active in the courts. The company’s pyramid schemes are prohibited in the country.
