Amway's launch into the Indian market several years ago has had some struggles, and this week those struggles took a turn for the worse, with raids on Amway India Offices by Crime Investigation Department (CID) police in the Indian state of Andhra Pradesh.

 

The CID apparently claims that the Amway multi-level marketing/direct selling scheme is in violation of The Prize, Chits and Money Circulation Schemes [Banning Act] 1978. Which is a little like deja vu all over again! Confusion reigned back on December 2 22 when the Reserve Bank of India claimed Amway and Network Marketing broke this law and on the very same day, the India government minister responsible for Consumer Affairs said the Supreme Court had cleared Network Marketing. In February the minister again stated that the Supreme Court had already said Network Marketing was not covered by this act. In 23 this was confirmed yet again in a case in Chandigarh. More below the fold ….

UPDATE: Court grants injunction against CID in favour of Amway. Amway back to business in state

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To confuse the issue further the Drugs Control Administration (DCA) jumped in to the fray. The DCA in Kerela has been after Amway for some time regarding the Nutrilite product range, with various claims that they are not properly licenced to market these products. The Supreme Court of Kerala allowed Amway to keep marketing the products while the issue is resolved. It would appear now the DCA in Andra Pradesh is supporting their western brethren.

Interestingly, in one article on this weeks raids we have some quotes from the police on the reasons for the raids –

Andhra Pradesh police today conducted a massive search and seizure operations at the offices of ‘Amway India Enterprises’ located in several towns and cities, including Hyderabad, based on a complaint of harassment by Amway members.

… 

While explaining the reasons for their search operations, T Krishna Raju, additional director general of police of CID wing, said the chain distribution schemes adopted by Amway and other such direct selling companies were resulting in financial benefit for a few who had joined at the beginning of the scheme and financial loss to a very large number of contributors who had joined the scheme at a later stage.

With all due respect, Sir, what you are describing is an illegal pyramid scheme. Amway does not operate in that manner and never has. You yourself could join tomorrow and make more money than any who joined "at the beginning of the scheme". Someone has decidely lead you astray here! The article continues –

According to the police, a complainant alleged that he was trapped by Amway members and induced into becoming its member. After taking the membership, he was asked to enroll further members to get more commission. Later on he was even subjected to mental harassment.

  Trapped and induced into joining, subjected to mental harrassment! Oh good grief. Even if this is true, why would they raid Amway Corporation and not the relevant "Amway members"? Obviously because of a fundamental misunderstanding of how the business model works. Amway "members" do not work for Amway, they do not take orders from Amway, they own their own independent businesses. If they are indeed "mentally harrassing" someone or "trapping" them etc, then they should feel the full force of the law – but they are not working for Amway.

Please, read The Prize, Chits and Money Circulation Schemes [Banning Act] 1978 yourself. I'm no lawyer, let alone an Indian lawyer, but I can find no connection at all to the way Amway operates and the act. Can you?

Frankly, this smacks of influence by existing businesses or organisations in India that may feel threatened by Amway, and in particular Nutrilite. Nutrilite is the #1 nutritional brand in the world, and it is obvious that some factions within India do not want it being marketed there. Are they behind the police harassment as well?

Whether there is any substance to these kind of raids or not, they do make the news, and this adversely affects business. Look at the Amway India sales –

FY 25 Rs 633 Crore

FY 24 Rs 636 Crore

FY 23 Rs 579 Crore

FY 22 Rs 626 Crore

FY 21 Rs 553 Crore

FY 2 Rs 25 Crore

FY 1999 Rs 9 Crore

As you can see, sales took a 7.5% drop after the RBI controversy of 22, and while they have recovered, they have been flat the past two years. It's a fair guess that 27 sales will be affected again.

The good news out of this? If competitors are using their influence to try and discredit you, then it means they are worried about you! IBOs of Amway India – step up the fight, you're doing well!

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