New Delhi (Agency): The Directorate of Enforcement (ED) has taken significant legal action against M/s Amway India Enterprise Pvt. Ltd. (Amway), filing a prosecution complaint under the Prevention of Money Laundering Act (PMLA), 2002. The Hon’ble Metropolitan Sessions Judge cum Special Court (PMLA) Hyderabad has taken cognizance of the complaint on November 20, 2023.
This development follows ED’s investigation based on multiple FIRs registered by the Telangana Police against Amway and its directors. The FIRs accused Amway of operating an illegal ‘Money Circulation Scheme’ disguised as a goods sale business, deceiving the public with promises of high commissions and perpetual incentives through the enrollment of new members.
The ED’s investigation uncovered that Amway was running a pyramid scheme under the pretext of direct selling. Instead of focusing on product sales to end consumers, the company primarily relied on enrolling members through a multi-level marketing strategy. This scheme depended on new members paying money, who would then have to recruit further members to earn commissions, creating a chain where those at the top benefited disproportionately.
Amway’s operations, as per the ED, have resulted in the accumulation of proceeds of crime amounting to Rs. 4050.21 crore. It was also found that over Rs. 2859 crore collected from members was siphoned off to overseas investors’ bank accounts under various pretexts such as dividends, royalties, and other expenses.
In the course of the investigation, the ED has attached movable and immovable properties worth Rs. 757.77 crore. The probe into Amway’s activities and financial transactions is ongoing, indicating the seriousness of the allegations and the potential financial implications.
This case highlights the ED’s efforts in cracking down on fraudulent financial schemes and protecting consumers from deceptive business practices. The outcome of this legal action could have far-reaching implications for direct selling and multi-level marketing businesses in India.