Amway has entered into a settlement with the Federal Trade Commission (FTC) and Washington state regulators to resolve allegations involving the company and two training providers, World Wide Group, LLC (WWG) and Leadership Team Development Inc. (LTD). Under the agreement, Amway will preserve the core elements of its business model while implementing measures addressing issues raised by regulators.
The settlement includes $225 million in monetary relief, almost all of which will go to consumers. The agreement also enhances requirements related to product resale, customer verification, field training and earnings claims.
Amway disputes the agencies’ characterization of its business and has not admitted wrongdoing. The company said resolving the matter through a settlement allows it to move forward while preserving the fundamental structure of its business.
“We completely disagree with how the Commission has characterized our business, but resolving this through a settlement allows us to move forward,” Andrew Schmidt, Amway’s Regional President, West Markets, told Direct Selling News. “We have affirmed and preserved the business model through this settlement.”
Schmidt emphasized that Amway’’’s line of sponsorship, independent contractor status and multilevel compensation structure remain unchanged. He also said many of the practices required under the agreement are already in place at Amway, while others represent modest enhancements to existing policies and procedures.
“What we’ve agreed to, per the terms of the order, is a collection of things that we either already do or things that are relatively modest enhancements to existing policies or existing processes,” Schmidt explained. “There are not massive changes embedded in the order for our operations.”
Committed to the Business Model
Schmidt said Amway views consumer protection as an existing priority rather than a new direction resulting from the settlement.
“We believe our consumer protection commitments and policies are best in class, both for our business opportunity participants and the customers of our products,” Schmidt said. “We stand behind the quality of our products and the experience anyone has with our products, and we stand behind the legitimacy and the integrity of our business opportunity.”
Schmidt also emphasized that the settlement does not change the company’s long-term commitment to its IBOs, the North American market or the direct selling model.
“We are totally committed to the industry, to the business model, to the channel. We’ve been doing this for 67 years, and we have intentions to do it for decades and generations to come.”
The settlement leaves the fundamental Amway business structure intact while formalizing additional requirements around product resale, customer verification, earnings claims, training and oversight. For the broader channel, those requirements provide a timely framework for reviewing whether product demand, compensation practices and field behavior are aligned—and whether companies have the systems in place to demonstrate that alignment.
Dave Grimaldi, CEO, Direct Selling Association stated, “Yesterday’s FTC announcement reflects a settlement between Amway and government regulators. Amway fundamentally disagrees with the FTC’s characterization of its business and has not admitted wrongdoing. The settlement includes measures addressing the issues raised. DSA’s Code of Ethics continues to set clear standards for member companies and their independent salesforces. We remain committed to upholding and enforcing those standards.”
