BUSINESS
ED's investigation revealed that Amway is running a pyramid fraud in the guise of direct selling multi-level marketing (MLM) network.
The Enforcement Directorate (ED) on Monday said it has attached assets worth Rs 757.77 crore belonging to Amway India Enterprises Private Limited, a company accused of running a multi-level marketing (MLM) scam, in connection with a money laundering case.
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. Attaching a property means it cannot be transferred, converted or moved.
The ED had recently attached immovable and movable properties worth Rs 411.83 crore and bank balances of Rs 345.94 crore from 36 different accounts belonging to Amway.
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What is pyramid fraud?
Pyramid schemes or frauds are so named because they resemble a pyramid structure, starting with a single point on top, that becomes progressively wider toward the bottom.
Such a scheme funnels earnings from those on lower levels (in pyramid on top) of an organization to the top.
A money-laundering investigation by the ED revealed that Amway is running a pyramid fraud in the guise of direct selling multi-level marketing (MLM) network.
Multi-level marketing (MLM)
Businesses that involve selling products to family and friends and recruiting other people to do the same are called multi-level marketing (MLM) or direct marketing businesses. Some MLMs are illegal pyramid schemes.
In the pyramid fraud by Amway, the entire focus of the company is about propagating how members can become rich by becoming members. Products are used to masquerade this MLM Pyramid fraud as a direct selling company.
It was 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.
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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 in hike of prices of the products.
It was observed that the company has collected an amount of Rs 27,562 crore from its business operations from 2002-03 to 2021-22 and out of the above, the company has paid a commission of Rs 7,588 crore to its distributors and members in India and in the US during FY 2002-03 to 2020-21.
(With IANS inputs)
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