Legal Issues; Amway under scrutiny for violating MLM Laws

Legal problem with Jay Van Andel and Rich DeVos who coined Amway seems to be violating Laws

Amway is a well-recognized and one of the top MLM companies that have gathered popularity among individuals of all age group around the globe.

Amway founded in 1959 has proved to many that a lot can be achieved through Multi-Level Marketing.

The company sells health, beauty and home care products and uses MLM to grow its business and reach among its customers.

However, with such a big name, expectations are also huge. And Amway being irresponsible, violated law and rules that all MLM companies should abide to. Amway Vietnam failed to inform some provincial Departments of Industry and Trade for the 3rd, 4th, 5th, 6th and 7th after it changed its certificate of registration of MLM activities.

The Ministry of Industry and Trade carried out the investigation to dig deeper into the case and found out the ways Amway has buzzed off its responsibilities and the results were shown on January 12, 2017.

Amway has been active in many countries and being a multinational company, it needs to stick with the laws of every country which has allowed it to put its feet in. Failure to inform the authorities clearly indicates its easy-going attitude that is the start of the downfall for any business.

According to the state management of MLM, Amway has violated Clause 17 of Decree 42/2014/ND-CP and is answerable to the management.

This clause lucidly restricts every MLM company to only carry out the company’s activities after receiving approval from the local Department of Industry and Trade which Amway ignored and it has put Amway among the list of those companies which are under trial. How could it miss the most vital part of running a business?

Like many other MLM companies, Amway also trains its distributors through online portal but does not have the ways to track if the distributors are actually learning from their program which puts the company out of sync.

Customers have access to the distributors and it is important for the distributors to be informed about all the updates of the company for better consulting and product choice suggestion.

As per the current update on the investigation, Amway has asked for the permission from the Vietnam E-commerce and Information Technology Agency under MoIT.

Amway is not the only company which went through the investigation in Vietnam. There were many MLM companies that were investigated by MoIT in 2016 because of the increase in scams related to these companies.

Resulting to which many companies were banned from operating in Vietnam and many voluntarily left the country. This step proved to be successful in clearing the companies that were violating the country’s law. However, Amway is trying to sort out all the discrepancies happened and is ready to take responsibilities for the same.

The current scenario suggests that the company will do everything in its hand to mend whatever went wrong. The Direct Selling News 2016 Global 100 ranked Amway as the top company in direct selling business in the world and I wish it continues to be there the following years as well.

that’s being said now Amway may suffer from a legal issues , in paste, The case was filed in California in 2007 by former distributors for Quixtar, the name multilevel marketing giant Amway used for its U.S.-based operation at the time. 

Amway agrees to pay $56 million, settle case alleging it operates a ‘pyramid scheme’


A letter from Amway President Doug DeVos and Chairman Steve Van Andel to Amway employees:

To The Amway Community,

Today we are announcing settlement terms in a class action lawsuit filed several years ago by three former Quixtar independent business owners (IBOs).

The suit focused on allegations that in past years, our North American business did not always train and support IBOs well enough, and as a result, best business practices were not always followed when promoting the business.

The suit contains strong and disagreeable allegations and language that we categorically reject. They are sensationalist claims that remain unproven and that we expect will be dismissed by the court.

Nevertheless, the company and its IBO leaders take responsibility for all past issues, and we take responsibility for fixing them. We regret that the experiences of some IBOs fell short of the high standards that have allowed us to help many people, from all walks of life, start successful businesses for more than 50 years.

We have not only addressed the issues raised in this case, we have also gone further than settlements and safeguards. In the past few years, we have invested more than $300 million in additional business initiatives to help our IBOs succeed – including many investments that began before this case was filed. We have fundamentally transformed our North American business to offer our IBOs the best possible opportunity to succeed. Some of these efforts include:

• Tripling our company’s investment in IBO education programs;

• Expanding our 100% money-back guarantee to include all products and training materials purchased by IBOs in their first 90 days;

• More than doubling the number of professional trainers we employ to teach best business practices across the country;

• Consumer advertising, improved websites and other efforts to support our business opportunity, enhance IBO success rates and protect consumers from misrepresentation; and

• Revised pricing strategies to enhance our competitive position.

This means that IBOs can launch their businesses with minimal, refundable start-up costs, receive excellent business and sales training, and be safeguarded by a robust satisfaction guarantee and return policy.

Still, we agreed to settle and to compensate the claimants in both money and equivalent product value, as we are confident that we have taken the necessary steps to address these past issues. We want to focus on helping IBOs build healthy businesses for the future, not a long court fight over allegations from the past.

Our founders had a simple philosophy: we start every day determined to make the business better than it was the day before. And in keeping that promise, we can confidently and proudly focus all our attention on offering an excellent business opportunity that is open to all.

Steve Van Andel Chairman
Doug DeVos President

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