Category Archives: Amway Asia

Amway India now free to join

I reported a couple of weeks ago about Amway India’s legal challenges, with two states (Andhra Pradesh and Kerala)  and an Indian federal body, “The Enforcement Directorate” investigating them. As I noted I thought the claims against Amway were frankly bizarre, but nevertheless Amway can’t afford to do anything but take such cases seriously. Well, now they’ve made a move that they hope will put a stop to the investigations – they’ve removed all registration fees, it’s now free to join with Amway in India. A similar move was made in the United Kingdom during the BERR vs Amway UK case.

The allegations against Amway in India revolved around a law called The Prize Chits & Money Circulation Schemes Banning Act (1978). Like many laws the text is unfortunately almost indecipherable, even for experts, but the claims against Amway revolve around allegations it is a “Money Circulation Scheme”, which is defined in the act in this way –

(c) “money circulation scheme” means any scheme, by whatever name called, for the making of quick or easy money, or for the receipt of any money or valuable thing as the consideration for a promise to pay money, on any event or contingency relative or applicable to the enrolment of members into the scheme, whether or not such money or thing is derived from the entrance money of the members of such scheme or periodical subscriptions;

The act then goes on to ban such schemes –

3. Banning of prize chit and money circulation schemes or enrolment as members or participation therein.

No person shall promote or conduct any prize chit or money circulation scheme, or enrol as a member to any such chit or scheme, or participate in it otherwise, or receive or remit any money in pursuance of such chit or scheme.

Breaking down the definition, a money circulation scheme is thus either of the following –

  1. a scheme “for the making of quick or easy money”
  2. receiving money or something of value for promising to pay money for enrolling people in to a scheme (whether from entry fees or subscriptions)
These are both clearly very broad definitions. For example, if I say to you “I’ll give you 50 rupee if you pop down the corner and post this letter for me“. Quick and easy money! Is it a “scheme” though? What about if I add “and do this every time I have a letter to send” – that’s a “systematic plan of action”, a scheme, and under this law is a “money circulation scheme” and, if you consider it “quick and easy”, it’s illegal! Absolutely ridiculous. What’s even more ridiculous is that “quick and easy” is entirely subjective, nowhere defined in the act. In an early case, brought by Amway against the State of Andhra Pradesh a few years ago, the court was of the opinion that money a Diamond earned after many many years of effort building a business asset was “quick and easy money”.

By this definition virtually any income in India that is not straight trading of “rupees for hours” is illegal. Income from a business, Bollywood royalties, share market dividends, heck even inheritance! All illegal “money circulation schemes”! Ridiculous, I’m sure you’d agree. Do people actually bother to read these laws they write before they enact them? Sometimes I think it’s all just a plot … or should I say scheme … by lawyers to ensure they have a lot of profitable work! Hopefully not quickly or easily.

It’s possible that somewhere along the line there is some case law that has been created by Indian courts that refine this ridiculous “definition”. If there is, let me know!

The second part of the definition, as I’ve interpreted it above, is a bit more akin to normal illegal pyramid scheme definitions around the world. It’s illegal to receive money (or something of value) for promising to pay people for enrolling them in a “scheme” where you (and they) will earn money by enrolling others. A classic pyramid scam in other words.

But wait …. in India it’s not that simple. That’s not all the definition says. It says it’s illegal to collect money for promising to pay money not only for enrolling others, but also “on any event or contingency relative or applicable to the enrolment of members into the scheme”. What exactly does that mean? Well, “contingency” can be interpreted as any related future event, or it can be a future event dependent on the current event. Think about standard multi-level marketing – using the first defintion, a downline purchasing products might be considered a “contingency relative or applicable to the enrolment”, and (assuming you qualify) you might get paid for it. That could therefore be illegal. In the same Andhra Pradesh case I mentioned earlier, the Supreme Court suggested this may be their view. I’d argue that the second definition of “contingency” is what is meant, that an event dependent on enrolling is what is necessary to satisfy the definition. You don’t need to enroll anyone to earn money selling Amway products, and you don’t need to enroll to buy Amway products, so earning an income from sales of products is not contingent on enrolling people. It can happen with or without it.

Still, it’s pretty much at the whim of whatever judge(s) you may have, so it’s prudent of Amway to completely clear this second definition of “money circulation scheme” off the table. With the removal of registration fees, no money (or item of value) is received for promising to pay people for enrolling others  – or anything related. That issue is now gone.

I can’t imagine that anyone (apart from the diehard anti-Amway zealots) would pursue the ridiculously broad “quick and easy money” definition, so Amway India should now be free to continue with, as the US State Department recently described it

“building up the business acumen and human capital of independent distributors; fostering entrepreneurship; recruiting locally, investing in building its workforce abilities, promoting its management staff from within; and fostering an environment of volunteerism.”

The bizarre world of Amway in India

For some years now I’ve been trying to write a post about the trials and tribulations of Amway India, and I never quite manage to get one done. It’s a struggle  just to sort through the bizarre allegations, unreadable and confusing legalize, and the truly bizarre misinformation of Amway’s critics.

Anyway, I’m trying again. As many readers might know, back in 2006 police in the Indian state of Andhra Pradesh raided and closed several Amway offices citing the “The Prize Chits & Money Circulation Schemes” law. Amway appealed to the courts, successfully, to remain open but their attempt to get the courts to once and for all declare the Amway business model legal and tell the police to stop harassing them failed. The court refused, instead stating that if the police allegations were correct, then the law would apply, so they ordered the police to complete their investigations within six months so their original allegations could be heard. Five years later that still hasn’t happened, and Amway critics in the country have spent the intervening time claiming the courts decision means Amway is illegal in India and lobbying for action. Of course, they conveniently ignore the part about the allegations needing to be correct! Unfortunately, similar events, and allegations, have now been made in the state of Kerala, and today it’s been reported that “The Enforcement Directorate” is investigating money laundering charges against Amway.

So what exactly are these allegations? It’s frankly a nightmare trying to sort through all the very oddly worded legal documents, but as best I can find from the original court hearing, here are some of them –

  • Amway’s membership fees are “quick and easy money” and no services are provided to distributors in return.
    Apparently the products and literature that come with the kit, the website, telephone support staff, dozens of  product centers throughout India, Media advertising, 14,000 support stuff throughout the world etc, etc etc don’t exist)
  • prescription of minimum level of 50 PV to qualify for getting commission is sufficient inducement for the members to relentlessly strive for maintaining the PV level at or above the said minimum levels.
    This requirement, which much of the world (including the FTC) cites as a reason that Amway is not a pyramid scheme, is to the Andhra Pradesh police a reason why it’s illegal! Having retail customer volume provides evidence that an MLM company has real products with real world demand. In the bizarro world Amway India lives in, it “forces” distributors to buy Amway products, giving Amway “automatic” income. The fact the vast majority of Amway distributors don’t actually do this thing it’s claimed they’re “forced” to “relentlessly strive for” is apparently irrelevant. Continue reading The bizarre world of Amway in India

Amway ranked one of China’s top consumer brands

Amway has been listed as one of China’s top consumer brands in the inaugural CLSA China Brands index. Of all brands, Amway was ranked 72nd, outranking companies such as Nestle (75), Apple (77), Panasonic (83), Toshiba (84), and Whirlpool (96).

Amway was listed within the skincare category, where it ranked 3rd after mass market brands OLay and L’Oreal.

This recognition follows only a short time after Amway was ranked one of Korea’s favourite foreign companies.

Amway – one of Korea’s favourite foreign companies

Amway_KoreaAccording to a survey by the Korean Foreign Company Association (KOFA), Amway was the third favourite foreign company in Korea, beaten only by McDonalds and Carrefour and outranking companies like Citibank, IBM, Renault, and Sony.

That’s a challenge for Amway business owners in the rest of the world! You’ve got much the same products and much the same business plan as Amway Koreacan you help make Amway one of the public’s favourite companies in your country?

Think it might be tough going? Continue reading Amway – one of Korea’s favourite foreign companies

Amway to open in Sri Lanka, Nepal, Bangladesh and Pakistan

Following last week’s news reports that Amway Vietnam is scheduled to open in 2008, a report in Indian news media quotes Amway India Managing Director William S Pinckney as saying –

“the company will start exporting to Sri Lanka, Nepal, Bangladesh and Pakistan from India within the next couple of years.”

Given the current political turmoil in Pakistan, and to a lesser extent Nepal and Sri Lanka, this is somewhat surprising news. IBOs should note that market openings have often slid years passed their originally planned dates – so don’t start booking any tickets just yet! Still, it might make for smart business to start talking to ex-pats from those countries sooner rather than later. In the past it has often been folk who have learned to properly build the business in their adopted countries who then return to their home countries and build the most successful Amway businesses there.

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