Personal product giant Amway, which is headquartered near Grand Rapids, and two of its affiliates have entered into a settlement agreement with the Federal Trade Commission to resolve claims they deceived workers and instructed workers to report inflated product sales numbers.
The FTC said nearly all of the $225 million of the proposed settlement would go to people whom Amway and its affiliates allegedly misled about how much they could make buying and reselling Amway's soap and other products.
In its complaint, the FTC said workers, whom Amway refers to as "Independent Business Owners," or IBOs, were falsely told they could expect to earn substantial income, exceeding $40,000 a year, or enough income to replace their full time job and retire early, when most who joined after 2020 spent more money on Amway products and training than they received from Amway.
"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," said Christopher Mufarrige, director of the FTC's Bureau of Consumer Protection.
The lawsuit also named World Wide Group and Leadership Team Development, Amway's affiliates.
In addition to the monetary fines, the settlement agreement requires Amway and affiliates to change some business practices, including requiring IBOs to sell to others at least 70% of the products they purchase from Amway each month.
In a statement, Amway said it disagrees with the FTC's characterization of its business and rejects the agency's assertion that its sales data is inaccurate. "This settlement, like all settlements, required compromise. Resolution positions us to move forward and focus our energy where it belongs: on our customers, IBOs and employees."
