A major multilevel marketing company and its affiliates have agreed to pay hundreds of millions of dollars to settle federal claims that they misled recruits about potential earnings and pressured them into purchasing products they were unlikely to sell.
According to the Federal Trade Commission (FTC) and the state of Washington, the proposed settlement requires Amway Corp., World Wide Group, and Leadership Team Development to pay $225 million, with nearly all of the funds designated for consumer redress.
The complaint alleges that the companies falsely promised incomes exceeding $40,000 per year or a viable path to replace a full-time job. In reality, the FTC stated that most independent business owners who joined the companies after 2020 spent more money on products and training than they actually earned.
Additionally, the complaint claims the firms instructed participants to falsify sales reports to conceal a business model that relied more heavily on recruitment than on actual product sales.
The proposed order introduces several new rules for the companies, which include:
- Requiring independent business owners to resell at least 70% of their monthly purchases
- Lowering pay for recruiters whose downline participants fail to move inventory
- Enforcing prompt sales reporting accompanied by customer receipts
- Mandating independent audits
- Banning first-year training fees from approved providers
Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection, commented on the action, stating, “Amway and its affiliates misled prospective workers with false earnings claims and then pressured them to buy Amway products they were unlikely to be able to sell. Today’s action makes clear that the FTC will not tolerate any company deceiving workers—whether through deceptive earnings claims or by promoting reports of false sales to make direct selling or multilevel marketing opportunities look appealing to consumers.”
