<p class="wp-block-paragraph">The Federal Trade Commission (FTC) is seeking to compel multilevel marketing company Amway to pay $225 million to address allegations that it and two affiliated training groups employed deceptive tactics to recruit individuals and pressured them into purchasing products they struggled to sell.</p>
<p class="wp-block-paragraph">Amway presents itself as a business opportunity where individuals, referred to as independent business owners, can earn income by selling consumer products, including nutritional supplements, energy drinks, and health and beauty items.</p>
<p class="wp-block-paragraph">According to the FTC and Washington state, Amway and its affiliates, World Wide Group and Leadership Team Development, misrepresented potential earnings and encouraged recruits to buy Amway products even if they did not need them.</p>
<p class="wp-block-paragraph">The FTC alleges that Amway’s training groups prioritized product purchases over sales to external customers, pushing sellers to buy a specific number of products each month to accumulate points that could influence their bonuses.</p>
<p class="wp-block-paragraph">“Selling to customers is not rewarded, not taught by leaders and difficult,” stated one of Amway’s top executives in a 2019 presentation, according to court documents.</p>
<p class="wp-block-paragraph">Another Amway leader remarked during a 2023 training session that “we’re rich because we’ve always used our own products.”</p>
<p class="wp-block-paragraph">The FTC noted that over 75% of Amway’s products have been sold to its own independent business owners in recent years. Many Amway sellers reportedly discontinue their business pursuits after realizing that the costs associated with purchasing products and attending training exceed their bonuses, as claimed in the court filings.</p>
<p class="wp-block-paragraph">The FTC also indicated that recruiters have targeted young adults with promises of financial independence, early retirement, and the ability to leave traditional employment. Prospective recruits were sometimes misled about the nature of the Amway business opportunity, initially being presented with the chance to be mentored by a wealthy couple who allegedly retired in their 20s or 30s.</p>
<p class="wp-block-paragraph">The agency cited instances where recruiters informed potential independent business owners that they had “connected with a couple” who had left their jobs in their 20s and 30s and were willing to mentor them.</p>
<p class="wp-block-paragraph">The costs of participation can accumulate significantly. Membership fees, messaging services, and tickets to major World Wide Group events can exceed $2,100 annually, according to the FTC, with additional travel and other expenses potentially increasing the total.</p>
<p class="wp-block-paragraph">“Amway rejects the agencies’ assertion that the company’s sales data is not accurate,” stated an Amway spokesperson. “In fact, Amway and the FTC have agreed to rely on our sales data to continue tracking and substantiating IBO customer sales.”</p>
<p class="wp-block-paragraph">Under the proposed settlement, Amway and its affiliates would be required to modify how independent business owners are compensated and trained. Independent business owners would need to sell at least 70% of the products they purchase from Amway each month, while recruiters would receive reduced compensation when recruits buy products without reselling them.</p>
<p class="wp-block-paragraph">The FTC and Washington state filed the complaint and proposed settlement in federal court in Washington.</p>