FTC orders Amway to pay $225 million for deceptive MLM practices
The Federal Trade Commission and the state of Washington announced that Amway and two of its affiliates will pay $225 million to settle allegations that they used unfair and deceptive tactics to recruit members into their multilevel marketing opportunity. The payment represents the largest monetary recovery ever obtained in an FTC action against a multilevel marketing company. The complaint alleges that Amway misled prospective business owners with promises of earnings exceeding $40,000 a year and then pressured them to buy products they could not resell.
The order requires Amway, World Wide Group, and Leadership Team Development to provide redress to consumers harmed by the alleged deceptive practices, with nearly all of the $225 million going to affected individuals. The FTC and Washington state said the companies falsely told independent business owners they could earn substantial income, replace a full-time job, or retire early, while most participants who joined after 2020 spent more on products and training than they received. Additionally, the agencies alleged that Amway and its affiliates misrepresented the likelihood of recruiting multiple new members and the exclusivity of mentorship from top leaders, when in fact most recruits did not bring in others and the mentors were not highly successful. The affiliates’ training programs reportedly instructed owners to purchase a set volume of products each month regardless of resale potential and to focus efforts on recruiting others to duplicate that behavior.
“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,” Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection said.
Amway describes itself as one of the largest multilevel marketing companies in the United States. World Wide Group and Leadership Team Development are two of its biggest approved provider groups, selling training
What we know
$225 million payment
largest monetary recovery in an FTC action against a multilevel marketing company
false earnings claims exceeding $40,000 a year
most consumers who joined Amway and WWG or LTD did not recruit multiple participants
mentors described as highly successful leaders are typically not highly successful