Synopsis: Under the attached assets, immovable and movable properties are worth Rs 411.83 Crores and it includes a bank balance of Rs 345.94 Crores from 36 different accounts that the company owns.
Assets worth Rs 757.77 crores that belonged to Amway India which is a direct-selling consumer goods company have been provisionally attached by Enforcement Directorate (ED). ED took the action under anti-money laundering law also accusing the company of being involved in Pyramid Fraud.
ED has released a statement mentioning that the attached assets of the company include land and factory building at Dindigul District, Tamil Nadu, Plant & Machineries, vehicles, bank accounts, and fixed deposits. Under the attached assets, immovable and movable properties are worth Rs 411.83 Crores and it includes a bank balance of Rs 345.94 Crore from 36 different accounts that the company owns.
Mentioning the action and accusations against the company ED said,
A money-laundering investigation by the ED 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.
In the statement, ED further added, “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. The reality is that the commissions received by the upline members contribute enormously to the hike in prices of the products.”
According to ED Amway India is entirely focusing on propagating on making members rich just by making them members. As per the statement of ED, the company is not focusing on products as well and it also said, “Products are used to masquerade this MLM (Multi-level Marketing) Pyramid fraud as a direct selling company.”
As per ED Amway has collected an amount of Rs. 27562 Crore from its business operations during 2002-03 to 2021-22 and out of above, while paying the commission of Rs. 7588 Crore to its distributors and members in India and in the US during FY 2002-03 to 2020-21.
Adding new names to the case, ED said,
M/s. Britt Worldwide India Private Limited and M/s. Network Twenty One Private Limited also played a major role in promoting pyramid scheme of Amway by conducting seminars for joining members under the guise of sale of goods by enrollment of members in chain system.
On the other hand, the company reportedly has reacted to the move of the probe agency with a statement saying that the company will continue to cooperate with ED. It said that the action of ED is with regards to the investigation dating back to 2011 and the company has been cooperating with the probe agency by sharing all the information ‘as sought for from time to time since 2011’.
The company further mentioned that it does not wish to comment further as the matter is sub judice with a request of following ‘caution’ it stated that any misleading impression about the business of the company will directly impact the livelihoods of over 5.5 lakh direct sellers in India.
What is Pyramid Scheme?
'Pyramid Scheme' is a business model that adds on to the channel of members who recruit other members luring them with profits such as payments or services for adding other members. In other words, new members in an organization are rewarded for adding every new member from their end.
This model of business is usually illegal. Especially Government of India barred direct-selling entities from promoting the 'Pyramid Scheme' in December 2021 with Consumer Protection (Direct Selling) Rules, 2021.