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Amway will pay $225 million, the largest amount the FTC has ever recovered from a multilevel marketing company. The complaint's key number is smaller: in 2023 the median Amway distributor's bonus was $139 before expenses.

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The Federal Trade Commission and the State of Washington filed a complaint and a stipulated order against Amway and two of its largest training organisations, World Wide Group and Leadership Team Development, on September 17. The $225 million settlement is, in the FTC's words, the largest monetary recovery it has obtained against a multilevel marketing company. The complaint says recruits were told they could earn $40,000 a year and were pushed to buy products they were unlikely to resell. Figures in the complaint show that about 1 percent of more than 241,000 distributors made $40,000 or more in bonuses in 2023 and that the median bonus was $139. The order is not yet final: a federal judge in Seattle must sign it. The defendants neither admit nor deny the allegations. Redress details have not been announced, and no one needs to file anything yet.

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Two numbers sit in the same paragraph of the complaint the FTC and Washington State filed against Amway on September 17.

The first is what recruits were told they could earn: $40,000 a year or more, enough to replace a job or retire early.

The second is what happened. The complaint puts it this way: "In 2023, for instance, median total bonuses (before expenses) for IBOs were only $139". IBO means independent business owner, Amway's term for a distributor. It continues: "only about 1 percent—fewer than 1,600 IBOs out of more than 241,000 IBOs— received $40,000 or more in bonuses from Amway in 2023."

The settlement

Amway, World Wide Group and Leadership Team Development, two of the largest organisations that recruit and train Amway distributors, "will pay $225 million to resolve allegations from the Federal Trade Commission and the state of Washington," according to the FTC. The agency calls it the "largest monetary recovery obtained in an FTC action against a multilevel marketing company".

The stipulated order divides it:

Payer Amount
Amway $154.7 million
World Wide Group (Amway jointly liable) $39.78 million
Leadership Team Development (Amway jointly liable) $26.52 million
State of Washington, for costs and enforcement $4 million

The FTC portion is already held in escrow and is due within seven days of the order being entered.

What the complaint alleges

  • Recruits were pressed to buy a set amount of product each month, whether or not anyone wanted to buy it from them. "In recent years in the U.S., Amway has sold more than three-quarters of its products to its own IBOs."
  • The training organisations' own model of a successful distributor drew 96 percent of its revenue from recruits rather than customers.
  • New distributors paid for training that cost more than they earned. Among those who joined the two organisations from 2020 to 2023, average and median bonuses were below what they spent on training. Training in the second year and after cost roughly $1,600 to $3,600 a year.
  • From 2021, leaders told members to report retail sales to customers that had not happened.
  • Young adults were the main targets, "and many of them have incomes below $50,000 a year."

Christopher Mufarrige, director of the FTC's Bureau of Consumer Protection: "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".

What changes, if the judge signs

  • Selling, not stockpiling. A distributor who resells less than 70 percent of what they buy in a month gets proportionally less bonus credit. Recruiters earn much less when their recruits buy but do not resell.
  • Sales must be real. Every customer sale is reported and the customer gets a receipt. Faking one means at least a month's suspension the first time and termination the second.
  • Refunds on stock. Distributors can return unsold or unopened product bought in the previous 12 months, with Amway paying return shipping.
  • Oversight. An independent auditor within 120 days, training before anyone may recruit, no charges to new members other than product for their first 12 months, and a permanent ban on misrepresenting earnings.

Most of the business-practice rules take effect nine months after the order is entered and run for ten years.

What is not settled yet

  • The order is not final. It was filed as a stipulation, which means the parties agreed to it, and it becomes binding when a judge of the Western District of Washington enters it. The Commission voted 2-0 to file.
  • No admission. "Defendants neither admit nor deny any of the allegations in the Complaint, except as specifically stated in this Order."
  • Who gets paid, and how much. The FTC says nearly all the money is meant for distributors recruited by the two organisations who lost money. The order itself says only that it "may be" used for consumer relief. There is no count of eligible people, no amount per person and no date.

If you were an Amway distributor

There is nothing to file. The FTC says details of the redress program "will be provided at a later date." Any message asking you to pay to claim a share, or to hand over account details to get one, is not from the FTC.

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