Amway, affiliates face $225 million payout over alleged deceptive business practices

Key Points:

• Amway and two affiliates, World Wide Group and Leadership Team Development, face a $225 million federal and state settlement over allegations of misleading recruits about earnings, pressuring product purchases, and encouraging false sales reports, marking the largest FTC settlement with a multilevel marketing company.
• The FTC complaint states that recruits were falsely told they could earn over $40,000 annually or replace full-time income, but most spent more on products and training than they earned, with a median 2023 bonus of only $139 before expenses.
• Regulators allege that the affiliates pressured distributors to buy set amounts of products monthly, rewarded recruiting over actual sales to customers, and encouraged false reporting of customer sales, with over 75% of products sold purchased by distributors themselves.
• Under the settlement, Amway must pay $154.7 million, World Wide Group $39.8 million, and Leadership Team Development $26.5 million, with nearly all funds going to compensate distributors who lost money; the agreement also mandates significant changes to Amway's sales tracking, distributor crediting, and recruitment practices.
• The order includes requirements for verified customer sales accounting for at least 70% of monthly volume, prohibits misleading earnings claims, mandates distributor training before recruiting, and imposes a 10-year independent audit and compliance period.