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Business News/ Companies / News/  Amway CEO, two Indian executives get bail in Kerala
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Amway CEO, two Indian executives get bail in Kerala

Direct seller says routine consumer redressal issue has been misinterpreted and booked under money circulation Act

Amway India managing director and chief executive William Scott Pinckney. Photo: Hindustan Times (Hindustan Times)Premium
Amway India managing director and chief executive William Scott Pinckney. Photo: Hindustan Times
(Hindustan Times)

New Delhi: Amway India managing director and chief executive William Scott Pinckney and two senior officials of the direct selling consumer products firm were granted bail by the Wayanad district court in Kerala on Tuesday.

Pinckney, chief financial officer Anshu Budhraja and vice-president Sanjay Malhotra were arrested on Monday for allegedly cheating members of the direct sales network. They were booked under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, which monitors fraudulent practices by multi-level marketing companies.

Mint reported on Monday that the probe against Amway India and its officials began in November, following a complaint by a woman dealer in Kozhikode. She accused Amway of not returning money she had invested in the company’s products as she had failed to sell these through the multi-level marketing structure. The case was transferred to the crime branch while the Wayanad police also registered three similar cases.

The company said on Tuesday that the complaints had been misinterpreted. “What can best be described as a routine consumer redressal issue or complaint has been misinterpreted and booked under the Prize Chits and Money Circulation Schemes (Banning) Act 1978 (PCMCS)," Amway said in a release. “This has repeatedly been a challenge not only in Kerala but elsewhere across India, for the direct selling industry."

In India, direct selling comes under the purview of the law if the business encourages or is purported to promote money circulation or pyramid selling.

The Indian Direct Selling Association (IDSA) said the law shouldn’t apply to its members. “Prize Chits and Money Circulation (PCMC) Act is inapplicable to the industry as the Act is outdated and industry pledges to stand together against it," IDSA said in a note. “In spite of the large number of regulations, the direct selling sector in India does not have clear policy framework."

“IDSA demands a clear policy framework... This should also have a clear definition of pyramid scheme, with a clear distinction between fraudulent financial pyramid schemes and direct selling business model," Chavi Hemanth, IDSA secretary general, was cited as saying in the release.

The Federation of Indian Chambers of Commerce an industry lobby said the arrests were unwarranted since there was no criminality involved.

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ABOUT THE AUTHOR
Suneera Tandon
Suneera Tandon is a New Delhi based reporter covering consumer goods for Mint. Suneera reports on fast moving consumer goods makers, retailers as well as other consumer-facing businesses such as restaurants and malls. She is deeply interested in what consumers across urban and rural India buy, wear and eat. Suneera holds a masters degree in English Literature from the University of Delhi.
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Published: 28 May 2013, 09:02 PM IST
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