Guest post by Pyramid Scheme Alert
In a letter to a Director of Pyramid Scheme Alert, the chief of police in one of India’s largest states, Andhra Pradesh, wrote that a criminal case has been booked by the government’s Criminal Investigation Division against Amway India for promoting a “Money Circulation Scheme” in the disguise of Direct Selling. He stated, “Now the case has been charge sheeted and it is proved that Amway is nothing but Money Circulation Scheme. Andhra Pradesh Government now has issued a G.O. against Amway under sections 8 of the Prize Chits & Money Circulation Schemes (Banning) Act, 1978.”
India’s “Prize Chits & Money Circulation Schemes” law is equivalent to anti-pyramid scheme or anti “endless chain” statutes of many US states. At the federal level, such scams are covered in America under Section 5 of the FTC Act outlawing “unfair and deceptive trade practices.”
The criminal charge against Amway has been reported in the Indian news media, but not in America. One online news account reported, “the state government banned the controversial multi-level marketing company Amway India Enterprises from publishing any material and advertisements violating the Prize Chits and Money Circulation Schemes (Banning) Act.
“The crime investigation department booked cases against Amway alleging it is just a money circulation scheme. The home department has asked Amway not to publicize their schemes in violation with the Act.”
The report noted that Indian authorities also brought criminal charges against another MLM, GoldQuest, which has operated in many other countries. Famous film personalities in India are said to be involved with GoldQuest, according to the reports, and police booked “cases against some senior health department officials and prominent doctors” who were promoting the MLM scam.
The report stated that the “managing director of GoldQuest, Ms Pushpam Appala Naidu, who was remanded to the judicial custody two months ago is currently in Chennai prison.”
The police action against Amway follows a police raid on nine Amway offices in 2006. Amway India, in turn, had appealed to Andhra Pradesh High Court challenging the police raids and sought suspension of the probe into its business model. But the high court dismissed its petition on July 7, 2007, saying that the company’s scheme was merely to enroll members for earning quick money.
For a full and graphic picture of how Amway operates in India – especially if you live in India – read WITH SOAP IN THEIR HANDS & HOPE IN THEIR HEARTS by Ramjee Chandran from The Bangalore Monthly Magazine in July, 1998. Chandran characterizes Amway as a cause of “economic evil” and describes the pitiful scene of uninformed and low income Indians investing their life savings in the “non-retailing” sales scheme in which 99% are doomed to lose.
In 2005, PSA’s President spoke at a seminar in Sri Lanka of Central Bankers from five South Asian countries, including India. The representatives from India reported many complaints against Amway but also said various states differed in regulation and that, despite complaints and largescale losses among consumers, the courts had been allowing Amway to operate.