VC Sajjanar, Deputy Inspector General of Police, who has been waging a war against the illegal money circulation schemes for nearly a decade, asserted that Amway has been doing illegal business in the name of selling products.
In an exclusive interview with Corporate Frauds Watch, the DIG said that it has been proved beyond reasonable doubt that Amway’s direct selling was hoax. “There are several lakhs of people who lost their precious earnings by way of purchasing products in the hope of becoming rich,” he pointed out.
The senior IPS officer says that no fool would buy a Glister tooth paste for Rs. 200 unless he is induced that he is going to become rich soon.
Referring to the recent criminal cases filed against Amway India Enterprises in Kerala, the DIG recalled that Amway India, instead of approaching the judiciary for redressal of its grievance if its business is genuine and legal, has chosen to maintain stony silence and its withdrawal symptoms were visible.
On the business model which Amway India claims that it has been a proven good business opportunity worldwide, Sajjanar said that Andhra Pradesh High Court had thoroughly dissected its business model to prove that it attracted the provisions of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 (PCMC Act) in its judgment in 2007.
The issues pointed out in the judgment included the easy and quick money being made by Amway India and its IBOs and how it attracted the provisions of the PCMC Act, he averred.
The Amway India in its writ petition claimed that it has four lakh IBOs in the country. The Amway is collecting Rs. 4,500 for becoming the IBO out of which Rs. 1800 goes to the company as registration fee. So the Amway India has made about Rs. 80 crore through registration fee without providing any service or product to the consumers. “It is nothing but easy and quick money,” the DIG said.
Likewise, the Amway is also collecting Rs. 990 every year by way of renewing the registration. In effect, the Amway is coolly pocketing Rs 40 crore every year by way of renewal again without extending any service or product to the IBOs. The DIG said that these two observations by the High Court are enough to prove that the business model of Amway is illegal.
In the case of IBOs also, the High Court stated that by way of enrolling downline members, the IBOs are making money by the turnover achieved by the downline members which is nothing but easy and quick money for the IBOs.
The senior IPS officer avers when it was clearly proved in the judgment that its business model was illegal, how could the Amway India claim its business is direct selling.
Referring to the innocent-looking statement by the CMD of Amway India, Mr William Pinckney who stated with a straight face that Amway India has been an FMCG company not a chit fund company, the DIG has taken strong exception to the duplicitous remarks.
He said that it is high time the corporate veil of these fraudulent companies was removed and the real intention of the easy and quick money-making scheme was exposed. “There is hardly any direct selling of the products in the business scheme of these direct selling companies,” he added.