The FTC and the state of Washington just announced the largest monetary recovery the agency has ever obtained from a multi-level marketing organization. Amway Corp. and two affiliated "approved provider" groups, World Wide Group and Leadership Team Development, will pay $225 million to settle allegations that they misled recruits, known as Independent Business Owners or IBOs, about likely earnings and pressured them into buying product they had no real opportunity to sell to consumers.
The complaint, filed contemporaneously with the stipulated order, alleges that IBOs were told to expect $40,000 or more a year, or income that would replace a full-time job, when most recent recruits spent more than they made. It also alleges inflated claims about recruiting success and access to mentoring from top performers.
The complaint's explanation for why those earnings never materialized is the more interesting allegation. It alleges Amway's products are priced at premium levels that make them genuinely hard to sell to non-IBOs, quoting an Amway executive's own 2019 presentation conceding that selling to customers is "not rewarded, not taught by leaders and difficult." Rather than address that issue, the complaint alleges WWG and LTD leaders instructed IBOs to buy a set volume of product every month to generate bonus-qualifying points and to recruit others to do the same, a practice the complaint says is known internally as "duplication." The result, per the complaint, is that Amway...
The FTC and the state of Washington just announced the largest monetary recovery the agency has ever obtained from a multi-level marketing organization. Amway Corp. and two affiliated "approved pro...