Police book case against Amway

Andhra Pradesh police today conducted a massive search and seizure operations at the offices of 'Amway India Enterprises' located in several towns and cities, including Hyderabad, based on a complaint of harassment by Amway members.

The police registered cases against the company and half-a-dozen persons involved in its operations under various sections of IPC, including Section 420, and the Prize Chits and Money Circulation Scheme (prevention) Act of 1978.

It is for the first time in the state and elsewhere that Amway, which runs direct marketing operations by offering incentive to members on enrollment of new members, has run into trouble with the law enforcement agency. The police seized a number of documents and articles from the Amway facilities.

While explaining the reasons for their search operations, T Krishna Raju, additional director general of police of CID wing, said the chain distribution schemes adopted by Amway and other such direct selling companies were resulting in financial benefit for a few who had joined at the beginning of the scheme and financial loss to a very large number of contributors who had joined the scheme at a later stage.

Meanwhile Amway India in a press statement questioned the manner in which the enquiry was being conducted. "Amway is yet to be informed of the reasons for this enquiry and it will adopt all measures including legal recourse to resolve the issue," the press release stated.

According to the police, a complainant alleged that he was trapped by Amway members and induced into becoming its member. After taking the membership, he was asked to enroll further members to get more commission. Later on he was even subjected to mental harassment.

Amway, however, refuted the contention of the police, saying that the direct selling model was approved by the Centre and the Foreign Investment Promotion Board and the authorities had to differentiate between fly-by night operators and firms like Amway and Indian Direct Selling Association (IDSA).

Amway currently markets over 75 products in four categories and has 74 offices and 55 warehouses across the country besides having a manufacturing unit in Hyderabad. It clocked a turnover of Rs 705 crore last year.

In the last financial year, Amway paid over Rs 9.57 crore in sales tax to the Andhra Pradesh government , according to the company press release.

The police said that the case details would be conveyed to drug control authorities, income tax department and sales tax department for the alleged violation of various laws by Amway.