THE WHAT? Amway and two affiliates have agreed to a US$225 million settlement with the US Federal Trade Commission to resolve allegations concerning earnings claims made to independent distributors and the reporting of product sales.
THE DETAILS The FTC alleged that Amway, World Wide Group and Leadership Team Development misled prospective Independent Business Owners (IBOs) about potential earnings, including claims that participants could earn more than US$40,000 annually or replace their full-time income. The agency also alleged that many participants joining after 2020 spent more on Amway products and training than they received from the company. Nearly all of the proposed US$225 million settlement is expected to be distributed to affected participants. The agreement also requires changes to Amway’s business practices, including requiring IBOs to sell at least 70 percent of products purchased from Amway each month to other customers. Amway disputes the FTC’s characterisation of its business and its assertion that the company’s sales data was inaccurate.
THE WHY? The settlement introduces significant operational and compliance changes to Amway’s direct-selling model in the US, particularly around earnings representations, distributor inventory and verification of retail sales.
Source: Michigan Public
