Explained: Pyramid Scam that Amway India is being probed for, Rs 757 crore assets attached
Among the various assets of Amway India Enterprises Pvt Ltd that has been attached by ED include movable as well as non-movable assets.
New Delhi: Amway India, a multi-level marketing firm, saw its assets worth Rs 757 crore attached by the Enforcement Directorate (ED) on Monday for alleged money laundering.
Amway India, in last many years, has become a household name with its wide range of consumer good products. The company was the scanner of investigative agencies for quite sometime. On Monday, the ED sleuths called the bluff of consumer goods company and attached its properties as part of crackdown on money launderers.
The firm came under the ED scanner for running a pyramid fraud and hoodwinking the customers in name of direct selling multi-level marketing networks.
What is Pyramid scam?
The consumer goods company came in the crosshairs of investigative agencies for running a Pyramid scam.
Pyramid scam is a fraudulent method of ‘duping’ investors by forming a long chain. Under this method, the promoters of the company are in an ever-increasing drive to add new investors. They recruit ‘primary’ investors, who in turn recruit more and then more. Reason why it is called Pyramid is because at every level, new investors are added, therefore forming a chain.
The business model boasts of numerous benefits for every shareholder but the concept itself remains sketch & untenable. Moreover, it is illegal in the country under the Consumer Protection Rules, 2021.
As per Consumer Protection Rules, 2021, the direct selling companies and sellers don’t have permission to run a pyramid scheme. Companies or sellers can not register any individual in the scheme or participate in such an arrangement, under the garb of direct selling business.
What properties are attached by ED?
Among the various assets of Amway India Enterprises Pvt Ltd that has been attached by ED include movable as well as non-movable assets. They include land and factory building at Dindigul district in Tamil Nadu, plant and machineries, vehicles, bank accounts and fixed deposits.
Once the property is attached by an agency, it cannot be transferred, converted or moved in name of anyone else.
What Amway said in response
In response to the ED action, the multi-national company said that it has been co-operating with the agencies since 2011 and will continue to do so.
““The action of the authorities is with regards to the investigation dating back to 2011 and since then we have been co-operating with the department and have shared all the information as sought for from time to time since 2011,”” Amway said in a statement.
“We will continue to cooperate with the relevant government authorities and the law officials towards a fair, legal, and logical conclusion of the outstanding issues,” it further added.