FTC Takes Historic Action Against Multilevel Marketing Operator Amway for Unfair and Deceptive Business Practices

Amway Corp., one of the largest multilevel marketing companies in the U.S., and two of its affiliates—World Wide Group, L.L.C. (WWG) and Leadership Team Development Inc. (LTD)—will pay $225 million to resolve allegations from the Federal Trade Commission and the state of Washington that the companies use unfair and deceptive tactics to recruit members to its direct selling and multilevel marketing opportunity. 

The monetary relief to be paid by Amway and its affiliates under the proposed order marks the largest monetary recovery obtained in an FTC action against a multilevel marketing company, nearly all of which will be used as redress to consumers harmed by Amway and its affiliates’ allegedly deceptive tactics.

Amway offers a moneymaking opportunity that it claims gives individuals, referred to as Independent Business Owners (IBOs), the chance to own and operate their own business selling a variety of consumer products, ranging from nutritional supplements to energy drinks to health and beauty products. In their complaint, the FTC and Washington allege that Amway and two of its affiliates, WWG and LTD, use a variety of deceptive and unfair tactics, including misrepresentations about likely earnings, to incentivize and pressure IBOs to buy Amway products they don’t want and that end up being difficult to sell. 

The complaint also alleges that Amway and its affiliates deceptively instruct IBOs to falsely report selling products that they, in fact, did not sell, to create the appearance that the Amway opportunity revolves around selling products rather than attempting to recruit new IBOs to purchase Amway products.