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Amway accused of Pyramid style marketing

Amway India Enterprises Pvt Ltd is facing heat from the nodal investigating agency, namely Enforcement Directorate (ED) for violation of government rules that pertain to companies both Indian and overseas that opt to use the direct selling route to end customers in the country.

As of now, ED has attached INR 757.77 crores worth property of Amway India and is in the process of conducting a detailed probe into the money-laundering route employed by the company under the guise of direct selling or Multi-level marketing.

It may be recalled that our Sprouts’ Special Investigation Team (SIT) had unearthed and carried a detailed report on the fraudulent methods adopted by Amway and other MLM companies to dupe the unsuspecting investors and lure them into parting with their hard-earned savings.

The problem with Amway’s marketing model is that it lures unsuspecting members to buy their products at unreasonably high prices and avail of a pyramid structure that involves recruiting more members in order to earn money.

In short, the members who get recruited are unable to sell the product and the only way for them to obtain funds is to recruit other gullible members thereby promoting a pyramid structure under the guise of direct selling or multi-level marketing.

Actually, it’s the pyramid structure that makes the pricing of the Amway products highly exorbitant or unreasonable. As this structure has to provide for the earnings of the members who are higher up in the pyramid, the costs keep escalating.

The land and factory structure belonging to Amway India in Tamil Nadu’s Dindigul district, besides its plant, machinery and bank deposits stand attached by the ED. The ED authorities summarized that they had attached both movable and immovable assets of Amway India.

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