Amway sales group facing Government closure call

Times Online, UK/November 24, 2007

The British subsidiary of the world’s biggest direct-selling group may be closed by the Government as a result of an investigation into its business practices, The Times has learnt.

Amway, which has 12,000 agents in Britain and worldwide sales of $6.4 billion (£3.1 billion), will face a High Court petition on Monday to wind up its activities. The group, which arrived in Britain in 1973, has been accused of being more interested in selling motivational books, tapes and seminars to its sales staff than pushing its merchandise.

The petition, brought on behalf of John Hutton, the Secretary of State for Business, Enterprise and Regulatory Reform, seeks to close the company in the "public interest". Mr Hutton’s department said that a review of Amway’s activities had been carried out by the Companies Investigation Branch.

Although the company has sales of only £12.5 million in Britain, the legal action could seriously damage its reputation. Amway has a sales network of three million people that spans more than 80 countries.

Amway said that it had responded to the investigation by imposing a three-month moratorium on recruitment of distributors in the UK and a ban on the sale of tapes and literature not produced by the company.

Last month more than 4,000 of its sales staff attended a conference in Birmingham, where Mark Beiderwieden, managing director of Amway Europe, said: "We will invest what it takes to remain in this market and build it to its fullest potential."

A spokesman for Amway (UK) said yesterday that the company was facing action on three grounds but denied that they included laws banning pyramid selling.

The Government has claimed that the sales people were persuaded to join Amway on the basis that it provides "easy money" or requires "minimal effort". It also alleged that the business’s primary aim was to recruit staff rather than sell products.

In a memo to its salesforce this month, Steve Van Andel, Amway’s chairman and Doug DeVos, its president, said the company had worked "tirelessly" to address the Government’s concerns.

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