In a money-laundering investigation, the Enforcement Directorate attached assets worth 757.77 crores belonging to FMCG Amway India on Monday. The company is accused of executing a multi-level marketing scam, according to the investigation agency. According to the ED statement, the attached properties include Amway’s land and manufacturing building in Tamil Nadu’s Dindigul district, as well as plant and machinery, vehicles, bank accounts, and fixed deposits.
Previously, the government inquiry agency had provisionally attached immovable and movable items worth 411.83 crores, as well as bank balances of 345.94 crores, from 36 different Amway accounts.
The ED said in its investigation that Amway was operating a pyramid scheme under the cover of a direct selling multi-level marketing network. Most of the company’s products are found to be exorbitantly priced when compared to similar popular products from reputable manufacturers accessible on the open market.
The probe statement read, “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. Reality is that the commissions received by the upline members contribute enormously in hike of prices of the products.”
The company’s main concentration is on spreading the word about how members can become wealthy by becoming members. The emphasis is not on the products. According to ED, products are utilized to disguise this MLM Pyramid scheme as a direct selling organization.
A pyramid scheme is a risky and unsustainable business strategy in which a small number of top-level members attract newer members. Those who enrolled them pay up front expenses to those who enrolled them. A percentage of the subsequent fees received by newer members is also kicked up the chain as they recruit their own underlings. These operations, known as “pyramid scams,” are banned in several nations.
Those brave enough to take the pyramid plunge, according to the hard-sell presentations made at recruitment events, will theoretically gain big income from the recruits below them. In practice, though, the pool of potential members tends to dry up with time. When a pyramid scheme goes bust, the top operatives walk away with a lot of money, while the majority of the lower-level members walk away empty-handed.
