Amway India Chairman, 2 Directors Arrested

by louabbott on May 28, 2013

Amway IndiaNegative news is always bad for the company that is the subject of the news.  It is also bad for the reputation of the industry as a whole. The question is, how bad.  That depends on what actually took place. Were the arrests caused by activities unique to one particular company?  Or were they an attack on the model in general.

This first quote is bare-bones so you can’t tell much. Courtesy of NDTV.com:

Kalpetta, Kerala: Network marketing firm Amway’s India Chairman and CEO William S Pinckney and two company directors have been remanded to 14 days judicial custody by a local court here.

Pinckney and directors Sanjay Malhotra and Anshu Budhraja were arrested by the Wayanad Crime Branch (Economic Offences) wing from Kozhikode yesterday in connection with three fraud cases registered in Wayanad district.

Kalpetta Judicial First Class Magistrate N Ravishankar last night remanded them for 14 days.

They were booked under the Prize Chits and Money Circulation Schemes (Banning) Act based on complaints filed by two persons in 2011.

Last year the Crime Branch (Economic Offences wing) had conducted searches at the Amway offices at Thrissur, Kozhikode and Kannur districts as part of its crackdown on money chain activities.

The company’s godowns in these centres were also closed and goods seized.

It appears that the activities alleged were not typical of those practiced by MLM companies. International Business Times added these details [emphasis mine]:

The arrests were made on a warrant issued in three different cases registered by Wayanad district crime branch in 2011 on charges of violation of the Price Chits and Money Circulation Schemes (Banning) Act, Press Trust of India, or PTI, reported, citing police sources.

The arrests were made based on the complaint of a woman who claimed she had incurred losses, due to the company’s fraudulent practices. Four cases have been registered in two districts — three in Wayanad and one in Kozhikode — against Pinckney, a U.S. national.

Amway India Enterprises has been accused of selling low-priced products at inflated rates in the state. Last November, police raided Amway warehouses in various districts of the state and seized products worth 24 million rupees (about $450,000), following complaints that the firm was taking huge sums in advance from customers and representatives. The company’s Kerala state manager Rajkumar was arrested and warehouses were sealed.

Investigators found that the company had forced distributors to buy products at higher prices in violation of the guidelines and the police were working on leads that millions of rupees collected fraudulently from dealers were invested in the insurance business, according to some media reports.

This report from DNAIndia.com is more typical [again, emphasis mine]:

 A top official of Economic Affairs Wing (EOW), Kerala, who was part of the operation that led to the arrests, said: “With the call of easy money, they have been luring people to invest. The new members in turn had to get more people and this was leading to illegal money circulation. We had received several complaints against the company.”

There was another case filed by an ex-Amway distributor in 2012, charging the company with cheating. The company officials had received bail in that case. While probing the 2012 case, the police found that goods were being sold at overpriced rates. A product worth Rs37 was being sold to consumers at Rs395.

The EOW had also conducted raids at Amway’s godown in Kozhikode, Thrissur and Kannur and seized goods worth Rs2.14 crore last year.

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{ 6 comments… read them below or add one }

pelangsing herbal March 22, 2016 at 4:49 am Thumb up 0 Thumb down 0

I’m nonetheless regretting my mistake.

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http://photopeach.com/ September 24, 2014 at 11:33 am Thumb up 0 Thumb down 0

In fact, you are best placed to really turn those reasons for failure into motivators for
profit. 3) you must believe in yourself (I have faith that if
I continue to work hard, learn more, improve myself and my skills, and
treat others with respect, that I will build one of the best teams this company has ever seen).
We all share the responsibility in the rise and
fall of our home based businesses.

Reply

Fred May 28, 2013 at 10:46 pm Thumb up 0 Thumb down 0

I was an Amway distributor in the 90’s and should have stuck with it..When it came to pricing and dealing fair Amway went above and beyond and were always more than fair in dealing with mistakes if any and or pricing..it takes hard work to make your dream come true and make money and thats why most people don’t make it because they quit like yours truly or never give it their honest effort and think they will get rich quick. Amway had and still has great products. Rich and Jay were way ahead of times when they brought this opportunity to all.

Reply

jerry October 22, 2014 at 1:33 am Thumb up 0 Thumb down 0

Fred,
I was in Amway in the 90’s also, though my 20’s. I left around 2000 or so, but chose to take the positive aspects out of it. I felt it was my choice, nobody ever guaranteed me success and I truly did learn a lot. I did make some income along the way as well. I ‘wrote-off’ direct sales until 2012 when I came back to the industry after achieving success in the corporate world. Funny how life brings you back to your passions. Much different now with the help of social media. I hope you think about getting ‘back in the game’, it’s never too late! JT

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Dale Gerke May 28, 2013 at 6:52 pm Thumb up 0 Thumb down 0

The Amway case in India will have many twists. I have launched a new MLM company in India and I can assure you there will be many issues to consider.

The state in question has an obvious dislike for MLM and is trying to outlaw the industry. That state recently chased Mono Vie distributors also. The obvious message is to stay away for the Kochi region. Unfortunately that does not solve the problem of allowing legal and proper MLM companies to operate.

The full facts of the matter need to be properly investigated and tried in a court of law.

I suspect Amway would not be doing anything illegal. You will note that the allegations are reasonably vague. This may well be a case of a disgruntled distributor trying to cause trouble. However you never know and certainly in India you can always expect the unexpected. And distributors can always “do their own thing” from time to time. So due process needs to take place and the full facts explored.
In the meantime, anyone wanting to have the opportunity to change their life financially should consider MLM. However proper due diligence should be carried out and the main four points to consider should be properly researched. Always review: the company and owners, the products, the marketing plan and the marketing and training support.

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Gilbert Nichols May 28, 2013 at 12:57 pm Thumb up 0 Thumb down 0

Amway has always exhibited a higher standard than most countries are accustomed with many MLM companies. This news has only one side of the story and no one should be able to make a proper judgment until all the facts are on the table. When people who get into an MLM thinking they are going to get rich quick or let the products sell themselves, they are setting themselves up for disappointment. MLM’s take work, understandably so, and people think they are working enough already. What they miss out on is that their 9-5 job is for their career; the work afterward and on weekends is for their future.

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