The average Australian, knows 'Amway' is a scam and a cult

 

Readers of Corporate Frauds Watch (particularly, Indian law enforcement agents and prosecutors in Kerala) might be interested to take a look at the following frightening description of 'Amway' from an Australian who signed him/herself 'Mo.'

 

 

'Well your blog has really been the eye opener.

 

For 6 months our family was hounded by my cousin's ex-partner. He is 37 - that's if he is still alive. Although he is a big strait bloke who has worked some pretty rough jobs, he was groomed like a little choir boy by a creepy older man from his past who rang him with the "business deal of the century." He was taken out on his first Amway date in a new 4X4 to a swanky restaurant then seduced by all the bright lights and rock music at the late night razzle dazzle Amway masses. He became sure he was going to become a big millionaire leader with his own big car in a couple of years. He shaved off his beard dug out a suit gave up drinking and stacked his garage with the Amway rubbish. He spoke like a tape recorder. He told us that the Amway business is not a scam because it has been running since the 1950s with government backing. He also told us that you don't need to sell anything. You can buy hundreds of dollars of Amway products every month and recruit 6 people to copy all the buying and recruiting. When no one fell for the scam he was giving his Amway rubbish away by the box load. I suppose he thought having to use it every day would get us hooked. Eventually no one would speak to him and my cousin and their kids were taking a lot of flak. She is now diagnosed with depression. Her ex has run up 40 000 dollars on their credit cards and done a runner. She thinks he's topped himself. The average Australian knows Amway is a scam and a cult, but I never really got how it all worked until I read your explanations. "Wampum's" about right. The rubbish products are a smoke screen to steal your money in a pyramid scam and pretend your in a legal selling business. '

 

 

Corporate Frauds Watch

Amway area manager in Kerala in judicial custody

Action against multi-level marketing firms

Area manager of Amway in the State P.M. Rajkumar, 29, who was arrested following searches at the offices and godowns of Amway in Thrissur, Kozhikode, and Kannur, was produced before the Judicial First Class Magistrate, Thamarassery, on Saturday and remanded in judicial custody for 14 days.

The Crime Branch (Economic Offences), Kozhikode, team, which is spearheading the drive against multi-level marketing companies in the State, had arrested Rajkumar on Friday night.

The investigating team led by P.A. Valsan, Superintendent of Police, Crime Branch (EO), Kozhikode, decided to arraign the Delhi-based couple Sharadul Suresh Shroff and Pallavi Suresh Shroff, both directors of Amway, as accused in the case.

The drive was triggered by a complaint filed by Vishalakshi, a tailor in Kozhikode. It is expected that more complaints would be registered, leading to more arrests.

It is learnt that Rajkumar maintained the company’s official line that it was doing legal business within the guidelines approved by the State government in 2011 for direct selling companies. However, the investigating team is charging that the company making it mandatory for its distributors to purchase products to get returns out of investment amounted to violation of the guidelines.

ALGA ROYAL LIFE MARKETING:

Also, the Crime Branch team is finalising the procedures to issue lookout notices on eight directors of Alga Royal Life Marketing Company, which was closed down for violation of Prize Chits and Money Circulation Scheme (Banning) Act.

All the directors of the company went into hiding after the case. One of the senior officials in the team said that even though the company offered products against investments made during initial stages, towards the later period it was directly canvassing investment after promising double the returns. The company used to distribute products marketed by Maharishi Herbals.

The business model outlined in the website of the company offers five streams of income for those joining as distributors, which keeps multiplying depending on the number of new distributors brought into the network by them.

Getting at least one of the directors in custody was essential to gauge the exact spread of the network, as it could only by cracked through the transactions made online. Without interrogating any of the directors, the administrative rights to go into the records online could not be secured. The investigating team has decided to wait for it rather than seeking help of the Cyber Cell to crack the website.

Kerala police raid Amway outlets again

Kerala police on Friday (9-11-2012) raided the Amway outlets, warehouses all over the State and closed down the outlets.
This is the second time in a year Kerala police conducted raids on Amway stating that it is running illegal money circulation scheme in the name of selling products.
Recently, the Kerala Government filed an affidavit in the Kerala High Court stating that the guidelines the government issued sometime back related to direct selling companies but not to the multilevel marketing companies like Amway and others.
Basing on the affidavit, the Kerala police raided the Amway outlets and seized the warehouses.
Details are awaited.

On August 7, 2011, the Kerala police conducted raids on the nine premises of Amway India in Kerala following criminal cases against the multilevel marketing company filed by several persons at three places - Kannur, Wynad and Thrissur.

Police conducted raids on the premises of Amway India at Thirvunanthapuram, Kollam, Kottaaym, Kochi, Kozhicode, Thrissur, Palakkad, Wynad and Kannur in the Indian southern State of Kerala.

There have been several complaints against this fraudulent company of indulging in money circulation scheme in the name of selling products. This fraudulent company has been offering a 'good business opportunity' to become rich in 3-5 years.

The website of Amway India offers its members a monthly of Rs. 62,500 if they succeed in enrolling 102 members downline of each member with the business model of 6-4-3. That means every member has to enroll six members and in turn these six members has to enroll four members each and these four members has to enroll three members each to complete one cycle. If the cycle is completed the first member would earn every month Rs. 62,500 without any personal effort.

In effect, the business of Amway India has been completely shut down for the time being in this Arabian coastal cash-rich State of India.

It may be recalled that Andhra Pradesh High Court has already held that the business model of Amway India is illegal and police have powers to stop such business. And when the Amway  India preferred a special leve petition in the Supreme Court of India, the Apex Court upheld the judgement of Andhra Pradesh High Court. Still, the fraudulent  company is still practising the same business model for quite sometime on the pretext that there were no complaints.

The Madras High Court in the Apple FMCG case held that for the simple reason that there were no complaints the business model would not become legal. A crime is a crime whether there were complaints or not.

Renowned gold merchants cheating people with illegal schemes

Big Corporate Houses like Tanishq, Kirtilal, Mahaveer Jewelers, Mohammad Khan & Co Kalyan Jewelers and a score of others which are into sale of gold ornaments, diamonds and other products have been cheating millions all over the country in the name of various schemes.

But there is one similarity in all these schemes. All these schemes violate Prize Chits & Money Circulation Schemes (Banning) Act, 1978. Though they have been cheating millions in the name of schemes, in spite of the complaints by Corporate Frauds Watch, police are not taking action against these companies on the pretext that there are no victims to lodge a complaint against them.

The Madras High Court in Apple FMCG Marketing vs. Union of India in 2005 stated that the mere fact that no complaints were received does not make an act legal, if it be otherwise illegal.

Section 2 (e) of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 defines what is Prize Chit. It clarifies that the conventional chit fund won't fall under this enactment. 

A close look at their schemes reveals how they are cheating the gullible with the promise of benefit to the customers. In fact, they are only making easy and quick money.

Section 2(e) “prize chit” includes any transaction or arrangement by whatever name called under which a person collects whether as a promoter, foreman, agent or in any other capacity, monies in one lump sum or in installments by way of contributions or subscriptions or by sale of units, certificates or other instruments or in any other manner or as membership fees or admission fees or service or service charges to or in respect of any savings, mutual benefit, thrift, or any other scheme or arrangement by whatever or the income accruing from investment or other use of such monies for all or any of the following purposes, namely:-

(i) giving or awarding periodically or otherwise to a specified number of subscribers as determined by lot, draw or in any other manner, prizes or gifts in cash or in kind, whether or not the recipient of the prize or gift is under a liability to make any further payment in respect of such scheme or arrangement ;

(ii) refunding to the subscribers or such of them as have not won any prize or gift, the whole part of the subscriptions, contributions or other monies collected, with or without any bonus, premium interest or other advantage by whatever name called, on the termination of the scheme or arrangement, or on or after the expiry of the period stipulated therein, but does not include a conventional chit. 

As per the schemes, the members have to pay money in installments for a certain period and by the end of the period, the member would be repaid in kind but not in cash. Anyway, the enactment prohibits in repayment of cash too.

For instance, if a member pays Rs. 1000 per month the company would receive Rs. 12,000 in a year. If they collect the subscriptions from 1000 members, the company would be collecting every month Rs. 10 lakh and in a year and the amount would be a staggering Rs. 1.2 crore.

The company repays only in kind i.e., gold ornaments or other products. In effect, there would be an assured business of Rs. 1.20 crore to the company with profits. Moreover, the money would be with the company through out the scheme period fetching interest on the deposit which is also another profit to the company. This is nothing but easy and quick money. 

And the most dangerous part, there is no guarantee for the deposits if the company vanishes with the deposits.

The companies may claim that their companies have long-standing record of repayment perfectly to the customers. But that does not make an illegal act, a legal one. It is illegal to collect deposits from the public without the permission of the Reserve Bank of India.

In June, 1974, the Reserve Bank of India had constituted a Study Group under the Chairmanship of James S. Raj, the then Chairman of Unit Trust of India for examining in depth the provisions of Chapter III-B of the Reserve Bank of India Act, 1934. In its report submitted to the Reserve Bank in July, 1975, the Group observed that the prize chit/benefit/ savings schemes benefit primarily the promoters and do not serve any social purpose, and that they are prejudicial to the public interest and affects the efficacy of the fiscal and monetary policies of the country.  The Study Group formulated the Prize Chits & Money Circulation Schemes (Banning) Act and it was enacted in 1978.

MLM has been described as the greatest of all scams

Dear Colleagues,

I have just posted a Blog, entitled "Have I Got a Deal for You: The Endless Chain Offer." The Blog references the excellent article recently published by Bruce Craig, former Asst. Attorney General of the state of Wisconsin.

Many of us have debated, studied and written about the fraudulent practice of selling products (services, dreams, investments, training, etc.) by using an endless chain income promise as the marketing lure. Rewards depend on an ever-increasing number of other investors or participants also joining the plan. The "endless chain" is basis for all pyramid schemes, ponzi schemes, economic bubbles and financial manias. Recent events show it to be the most dangerous of all threats to global economic stability. It can distort pricing, ruin asset values, wipe out jobs, and make people crazy. Yet, it is still a largely unstudied or misunderstood form of fraud.

In much of my own analysis of the endless chains in multi-level marketing (MLM) fraud -- following the mainstream Federal Trade Commission approach -- I have focused on levels of retailing by the MLM salespeople as a determinant of MLM legality. 

Yet, in recent months, mostly from conversations with Bruce Craig, and through my own defense in a defamation lawsuit brought against me by a multi-level marketing company,  I have come to see more clearly that an endless chain is an insidious fraud, regardless whether the "downline" has retail customers or not. It is true that perhaps the harm to the victims would be lessened if all the salespeople could recoup some or all of their investments from retail sales profits. But the reason for their initial investment would have been based on deception by the perpetrators. The promised income could not be gained. All their time, effort and other capital investments would be lost.  Also, many would not actually recoup their direct financial investments anyway since the "unlimited" recruitment rewards and the endless profusion of "salespeople" in all areas makes profitable retailing pointless and unproductive. 

Often the so-called threshold of retail sales is said to have been met (3 customers for each salesperson, with both buying the same amount and paying the same price, with salespeople classified as both customer and distributor), yet, virtually none of the so called "distributors" is profitable. They are still paying out more than they gain in retail profit. Gaining the few retail customers (usually friends or family or phantom customers paid for by the salespersons themselves) is merely an additional "consideration" paid to qualify for the illusory endless chain rewards. The scheme is profitable at the expense of thousands of unprofitable salespeople.

Meanwhile, the promised income, that is based on building a downline, is reserved for the top 1% of recruiters. That fact is mathematically pre-determined and immutable. Offering it to everyone as the lure to draw investments, purchases and fee payments or to induce retail sales is "unfair and deceptive", that is, a swindle. Some state laws, Wisconsin's and California's for example, among others, plainly prohibit endless chain income or discount schemes, and they do not include any provision for a threshold of retail sales. The endless chain is recognized as an "inherent" fraud.

Unfortunately, due to the Amway federal court decision of 1979, the PR and lobbying of MLM companies, and the laxness of the FTC,  "retail sales" has become the wedge that opened a chasm for endless chain promises to enter the marketplace, with multi-level marketing (MLM) as the standard bearer. The pyramid scheme was elevated to a "business model." And now, each year,  millions of people transfer their last remaining savings to the MLM promoters on the futile hopes and dreams of building a huge downline and making the "unlimited" income that is promised.  The endless chain income promise is the central and defining feature of MLM pay plans. Without its false but seductive lure, these schemes would collapse in weeks. 

And since retail levels are the held up as the key factor for claiming legality, the MLM industry has gone to great lengths to ensure that data on retailing cannot be documented. They claim not to know retail sales levels or any other facts about "end-users" or that the data is impossible to document. In fact, this is because, in most cases, the retail customers don't exist! So, a factor (retail sales levels), that it essentially irrelevant to legality, is held up as proof of legality, and then that factor is hidden from the public or regulators to document. The legal defense is both irrelevant and mythical. 

MLM has been described as the greatest of all American scams, but the legal defense of MLMs may be an even greater scam.

References:

False Profits Blog

Bruce Craig Article on MLM Legality

Sincerely,

Robert FitzPatrick, Pres.
PYRAMID SCHEME ALERT
Charlotte, NC
704-334-2047
rfitzpatrick@pyramidschemealert.org

Watch A great short film on the MLM which is killing relationships

A must watch short film in Tamil with subtitles. Thanks to Shanmuga for bringing it to my notice. 

Deluded Ambot or 'Amway' Ministry of Truth in thin disguise?

Shyam

 

The many free-thinking readers of this Blog should be amused to learn that, Corporate Frauds Watch has received another load of reality-inverting, scripted-bullshit from either a temporarily-deluded Ambot or from the 'Amway' Ministry of Truth in thin disguise.

 

Laughably, a classic piece of 'Amway' propaganda, signed 'gigirichard' (who claimsto be an 'Amway Distributor Building the Business in Singapore') instructs 'Amway'adherents not to read CFW, but (in almost the same breath) attempts to portray the authors of this Blog as time-wasting, closed-minded propagandists who cannot tolerate the free-opinions of others.

 

In the adult world of quantifiable reality, the position of CFW remains as follows:

 

The quantifiable evidence (in the form of an effectively-total lack of income-tax payments, over many decades, by a never-ending chain of tens of millions of temporarily-deluded persons imagining themselves to be 'Independent Amway Business Owners') proves beyond all reasonable doubt that the so-called 'Amway Income Opportunity' has been a pernicious, Utopian lie designed to steal its victims cash whilst loading them with guilt. 

 

So come on 'gigirichard', don't be shy, I'm giving you the perfect opportunity to prove to the many free-thinking readers of CFW that you are neither a temporarily-deluded Ambot nor the 'Amway' Ministry of Truth in thin disguise - please demonstrate that your critical and evaluative faculties are, indeed, fully-functioning(as you claim) simply by answering the following common-sense questions:

 

• Since the organization's instigation, exactly how many people around the world have signed-up with 'Amway' and exactly how many of these alleged 'Independent Business Owners' have got back more money than they paid in?

• What quantifiable evidence can you supply which would prove that the so-called 'Amway Income Opportunity' has had any significant and sustainable revenue other than that deriving from a never-ending chain of losing participants?

 

David Brear (copyright (2012)