August 30, 2011
http://www.mlive.com/business/west-michigan/index.ssf/2011/08/police_shut_down_amway_operati.html
ADA – Authorities in the Indian state of Kerala have shut down Amway's operations there amid allegations the company was operating as an illegal “money chain” and “cheating,” according to Indian media accounts.
Amway spokeswoman Andrea Clark confirmed the shutdown and said the company is working with authorities to resolve the issue.
“We're doing an ethical business,” Clark said. “We're trying to educate and inform them. That's often difficult where you have people who operate unethical businesses in the direct selling business.”
One of the world's largest direct selling companies, Amway has long faced regulatory scrutiny and has spent decades fighting charges that it operates an illegal pyramid scheme. In recent years it has spent millions of dollars to rebuild its image through advertising, high-profile endorsements and marketing of its Nutrilite supplements and Artistry cosmetics lines.
In 2010 the company settled a long-running suit in California that alleged it was a pyramid scheme by agreeing to pay $56 million without admitting guilt.
In 2008 a judge in the United Kingdom threw out a case against Amway in which the company had been charged with misrepresenting its business and putting the sales of training "tools" ahead of selling products. The dismissal of the case came only after the judge decided Amway had reformed its business practices in the country.
Amway distributors in Asia and most other markets are only supposed to make money when they sell Amway products, though they can receive additional bonuses when their sales groups meet certain product sales goals.
U.S. distributors are able to make money from sales by their “downline” distributors – typically those who they helped recruit into the business -- with minimal selling on their own.
Various press accounts said local police had been “harassing” Amway distributors into providing false or misleading information about the business.
Clark said the company's business model may not be for everyone, but the Amway offers all of its distributors a full money-back guarantee.
“You have to sell products to make money,” she said.
Clark said actions by authorities in Kerala do not affect operations in the rest of India, which has become one of Amway's top 10 markets in terms of sales. The company has said it is considering building a new factory in India to serve the local market.
The company set a goal of hitting the $500 million sales mark in the country in 2012, up from around $300 million in 2010.
During the raids a photographer for a local newspaper covering the raids was detained by Amway at one of the distribution centers and his equipment seized until photographers from other media organizations covering the raid protested, according to IBN Live, an Indian news website.
A complaint against the company has been filed by a press organization there, according to The Hindu Business Line.
E-mail Chris Knape: cknape@grpress.com and follow him on Twitter at twitter.com/Kcorner
http://www.mlive.com/business/west-michigan/index.ssf/2011/08/police_shut_down_amway_operati.html
ADA – Authorities in the Indian state of Kerala have shut down Amway's operations there amid allegations the company was operating as an illegal “money chain” and “cheating,” according to Indian media accounts.
Amway spokeswoman Andrea Clark confirmed the shutdown and said the company is working with authorities to resolve the issue.
“We're doing an ethical business,” Clark said. “We're trying to educate and inform them. That's often difficult where you have people who operate unethical businesses in the direct selling business.”
One of the world's largest direct selling companies, Amway has long faced regulatory scrutiny and has spent decades fighting charges that it operates an illegal pyramid scheme. In recent years it has spent millions of dollars to rebuild its image through advertising, high-profile endorsements and marketing of its Nutrilite supplements and Artistry cosmetics lines.
In 2010 the company settled a long-running suit in California that alleged it was a pyramid scheme by agreeing to pay $56 million without admitting guilt.
In 2008 a judge in the United Kingdom threw out a case against Amway in which the company had been charged with misrepresenting its business and putting the sales of training "tools" ahead of selling products. The dismissal of the case came only after the judge decided Amway had reformed its business practices in the country.
Amway distributors in Asia and most other markets are only supposed to make money when they sell Amway products, though they can receive additional bonuses when their sales groups meet certain product sales goals.
U.S. distributors are able to make money from sales by their “downline” distributors – typically those who they helped recruit into the business -- with minimal selling on their own.
Various press accounts said local police had been “harassing” Amway distributors into providing false or misleading information about the business.
Clark said the company's business model may not be for everyone, but the Amway offers all of its distributors a full money-back guarantee.
“You have to sell products to make money,” she said.
Clark said actions by authorities in Kerala do not affect operations in the rest of India, which has become one of Amway's top 10 markets in terms of sales. The company has said it is considering building a new factory in India to serve the local market.
The company set a goal of hitting the $500 million sales mark in the country in 2012, up from around $300 million in 2010.
During the raids a photographer for a local newspaper covering the raids was detained by Amway at one of the distribution centers and his equipment seized until photographers from other media organizations covering the raid protested, according to IBN Live, an Indian news website.
A complaint against the company has been filed by a press organization there, according to The Hindu Business Line.
E-mail Chris Knape: cknape@grpress.com and follow him on Twitter at twitter.com/Kcorner
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