I am really glad to hear our from our friends. Sparring cannot be a single-sided one to make it livelier. My friend pointed out that there is nothing that nails Amway in the second letter. Anyway the Amway apologists all over India show the first letter to everyone but not the second letter. Why? The reason is the second letter nailed the Amway India Enterprises for its pyramid scheme which attracts the provisions of the Prize Chits & Money Circulation Schemes (Banning) Act, 1978. Nowhere in the world that type of wonderful legislation exists to punish the fraudulent companies like Amway and a plethora of other companies.
Now I would like to present the part of the judgement of Andhra Pradesh High Court that hit hard the Amway India in the gut. It is certain that it is going to hurt further Amway India in the forthcoming trial against it.
"... It is thus evident that the whole scheme is so ingeniously conceived that the inducement for aggressive enrollment of new members to earn more and more commission is inherent in the scheme. By holding out attractive commission on the business turned out by the downline members, the scheme provides for sufficient inducements for its members to chase for the new members in their hot pursuit to make quick/easy money. On the part of the Amway by pushing each member to achieve the minimum sales worth Rs. 2,000 per month, (this sale includes enrollment of new members) the Amway is assured of about Rs. 1,000 crore per annum. All this squarely satisfy the description of quick/easy money. In addition to this, it is an admitted fact that each person in order to continue to be distributor, shall pay renewal subscription fee of Rs. 995 per annum. In para-11(b) of the counter affidavit on the admitted number of distributors of 4,50,000 this amount is calculated at Rs. 45 crore per annum. These figures are not denied by the Amway India in its rejoinder. The plea of the Amway India that there is no compulsion that a member shall renew his distributorship looks to us specious. Once a person becomes a distributor in a scheme of this nature where the sops in the shape of commission are so luring, it would be very difficult for a member to withdraw from their membership to avoid payment of the annual renewal subscription fee.
From the whole analysis of the scheme and the way in which it is structured it is quite apparent that once a person gets into this scheme he will find it difficult to come out of the web and it becomes a vicious circle for him. In any event the Amway India has not specifically denied the turnover they are achieving and the income they are earning towards the initial enrollment of the disributors, the renewal subscription fee and the minimum sales being achieved by the distributors as alleged in the counter affidavit. By no means can it be said that the money which the Amway India is earning is not the quick/easy money. By promising payment of commission on the business turned out by the downline members sponsored either directly or indirectly by the upline members (which constitutes an event or contingency relative to enrollment of members), the Amway India is earning quick/easy money from its distributors, apart from ensuring its distributor earn quick/easy money. Thus the two ingredients are satisfied in the case of Amway too. We are, therefore, of the considered view that the scheme run by the Amway India squarely attracts the definition of 'Money Circulation Scheme' as provided in the Section 2 (c) of the Act. ''
This is how the Hon'ble Andhra Pradesh High Court described the fraud of the Amway India.
Now is it a toolscam or the scheming model of Amway India?
4 comments:
You have a valid point, yet minor, regarding the registration. The UK got rid of this. There is a valid reason for this minimal charge, as it costs money to support IBO's and paying a small fee every year clears out the "dead wood" (inactive IBO's). However, the UK recently got rid of the annual fee, and replaced it with a minimum purchase in order to get wholesale pricing, so they still make their money. I assume they drop the IBO after a period of time with no minimum purchases. Amway could get rid of both of these other charges, and simply build the costs into the product prices, but then it would be harder to get rid of the inactive IBO's.
A MUCH larger financial issue is the tool scam, run by the upline, as they make FAR more from each IBO in tool profit than Amway makes with the annual fee. You have uncovered a hang nail (minor issue), but you didn't notice the broken leg (major issue).
By the way, you don't have to start a brand new thread every time you respond, you can add a note to my note and make your blog much easier to follow.
It is not strictly accurate to say that Indian law is unique. In truth, technical legislation exists all over the world which has been designed to outlaw Ponzi (or money circulation) schemes. Unfortunately, most legislators have not thought deeply enough and they have fallen into the trap of drafting their laws using the inaccurate shielding-terminology of the criminals themselves. Thus, this type of legislation generally addresses counterfeit 'investment schemes', and counterfeit 'marketing schemes' have often escaped prosecution. Also, the 'MLM' racketeers have attempted to subvert the democratic process, via counterfeit 'Direct Selling Associations' and co-opted 'political/academic consultants' , all over the world. Amazingly, the de facto agents of racketeers have been allowed to take part in the debate concerning their pay-masters crimes and, thus, steer the law down a blind alley. 'Amway' has a 'Dept. of Government Affairs' for this very purpose.
Indian law is, however, unique in that (long before 'Amway' arrived) legislators thought much deeper, and they attempted to define the universal characteristics of all money circulation schemes, no matter how ingeniously they might be camouflaged. That said, this style of technical legislation (no matter how well conceived) is, in many respects, unecessary; for it is a universally accepted concept of criminal law that:
To lie to someone in order to get their money is fraud, which is a form of theft.
Counterfeit 'direct selling' companies, like 'Amway' , are manifestly fraudulent because they are based on one rather obvious lie.
In fraudulent money circulation schemes, the fundamental identifying characteristic is that they have no real external source of revenue. Therefore, it is a mathematical impossibility for the overwhelming majority of their participants to receive a profit. They've been peddled infinite shares in what can only be their own finite money. This is the obvious lie lurking behind 'Amway'. Since all 'MLM' companies offer products which are effectively unsaleable on the open market, they are 'premeditated closed-market swindles.'
Once legislators all over the world get together and finally grasp how the trick is pulled, only then will they will be able to draft effective laws using accurate deconstructed terms. Sadly, there doesn't seem to be any real political will to tackle this absurd, but nonetheless dangerous, problem; but then, apathy, is the major ally of all cults.
Kindest regards
David Brear
Where did I claim Indian law is unique? I WILL say Amway has told me some countries require retail sales, and others don't (I think one of them is Australia), and I don't know what the law in India says about this, do you?
Virtually every company has lobbyists who are paid to support their position. Nothing different with Amway in this regard.
What is the "theft" and "lie" you speak of? Specifically, not generalities.
I can tell you have been reading Brear/QIAC. Not smart.
Legislators can't get together in their own countries, how do you expect them to get together internationally?
I think a much better approach would be to use court cases in other countries, especially the UK, and determine how much the decisions can be applied in your own country. There is supposed to be a U.S. Burnlounge decision coming out soon that may help in this regard.
I would also use the word apathy, but also ignorance and bureaucracy, to describe the situation.
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