WASHINGTON, Sept 17 (Reuters) – Multilevel marketing company Amway Corp. and two of its affiliates will pay the U.S. Federal Trade Commission and Washington state $225 million to resolve allegations it recruited new members by deceptive claims about how much money they could make, the agency said on Thursday.
Amway and affiliates World Wide Group LLC and Leadership Team Development Inc told potential recruits that they could make $40,000 or more, according to the FTC. But most of those who joined the two affiliates after 2020 ended up spending more money on training and Amway products than they made, after they were encouraged to buy products that they did not want in order to earn compensation from Amway, the FTC said.
The $225 million will largely go to repay Amway members affected by the conduct, the FTC said. Amway also agreed to change its practices to disincentivize members seeking to earn money not by actually selling Amway products, but by buying products themselves and recruiting others to do so.
Amway did not immediately respond to a request for comment.
The FTC said the settlement is the largest in an FTC action against a multilevel marketing company.
(Reporting by Jody Godoy, Daphne Psaledakis, Ismail Shakil; Editing by Doina Chiacu and Aurora Ellis)
