Welcoming the Enforcement Directorate's (ED) action against Amway India, the Swadeshi Jagran Manch (SJM) on Saturday called upon the central investigation agencies to launch a probe against all such companies which have been "looting" innocent people by luring them into earning "handsome incomes".
The RSS affiliate also stressed the need to formulate a regulatory framework to "firmly" stop the "fraudulent practices" of such multi-level marketing (MLM) business models.
Recently, the ED attached assets worth over Rs 757 crore of Amway India, one of the most popular MLM and direct-selling companies in the country, as part of a money-laundering investigation.
The federal agency issued a statement last Monday alleging that the company was perpetrating a "scam" by running a pyramid "fraud" in the guise of a direct-selling MLM network.
It claimed that while the entire focus of the company was about propagating how people can become rich by becoming its members, there was no focus on the products.
"Products are used to masquerade this MLM pyramid fraud as a direct-selling company," the ED alleged.
After the ED action, an Amway spokesperson said the company is cooperating with the authorities "towards a fair, legal and logical conclusion of the outstanding issues".
"Swadeshi Jagran Manch welcomes the action taken by Enforcement Directorate against the Amway India company, which ran the pyramid fraud under the guise of a direct selling multi-level marketing network," SJM co-convener Ashwani Mahajan said in a statement on Saturday.
The SJM claimed that there are many more MLM companies which have been selling their products at exorbitant prices by "looting innocent citizens" and by "luring them to earn handsome incomes" in India.
"When those in the net of these companies start luring their friends and acquaintances, the chain starts," it said.
The ED has "rightly" pointed out that the firm’s focus was on signing people up for the "get-rich schemes", and not selling products, it added.
Mahajan said a report published by the Federal Trade Commission, which studied the business model of 350 MLM companies, noted that 99 per cent of the people who take part in this business model lose their money.
"It may be a brilliant business model for the top of the pyramid salespeople but for the gullible public, it's a definite loss rather than an income opportunity," he said.
It's time to formulate a regulatory framework for the multi-level marketing companies to "firmly stop their fraudulent practices" in India, Mahajan added.
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