FTC hits Amway with record $225 million settlement over deceptive earnings claims

• Amway and two major affiliated recruiting organizations have agreed to pay $225 million, the largest monetary recovery the FTC has ever obtained in a multilevel-marketing case.
• Regulators say prospective distributors were told they could earn $40,000 or more a year, even though most people recruited through the two organizations since 2020 spent more than they received.
• A proposed court order would sharply change how Amway operates, requiring distributors to resell at least 70% of the products they buy and barring first-year charges for training from approved providers.

The Federal Trade Commission and Washington state have taken what they describe as historic action against Amway, accusing the multilevel-marketing giant and two of its biggest recruiting organizations of using deceptive earnings claims and pressuring recruits to buy products they often could not sell.

Amway Corp., World Wide Group LLC and Leadership Team Development Inc. have agreed to a $225 million judgment, with nearly all of the money expected to go to Amway Independent Business Owners who lost money after being recruited through the two organizations. The settlement still requires approval by a federal judge.

It is the largest monetary recovery ever obtained by the agency in an action against a multilevel-marketing company, according to the Federal Trade Commission.

The case attacks one of the central selling points commonly used by MLM companies: the promise that ordinary people can build substantial incomes by selling products and recruiting others.

According to the complaint, recruits were told they could earn more than $40,000 a year, replace their regular jobs or retire early. Regulators say the actual experience was dramatically different.

Most people who joined Amway through World Wide Group or Leadership Team Development after 2020 spent more on Amway products and training than they received from Amway, according to the FTC and Washington state.

That allegation is especially striking when compared with Amway's own current income disclosure.

For 2025, Amway says the average annual earnings of U.S. Independent Business Owners at the Founders Platinum level and below were just $750 before expenses. Among those reporting any product sales, average earnings were $1,161 before expenses.

Amway also says 38% of U.S. distributors reported no product sales, sponsored no other distributor and received no payments from the company during 2025.

Regulators allege recruits were pushed to buy products

Amway calls its distributors Independent Business Owners, or IBOs, and says they can make money by selling products ranging from dietary supplements and energy drinks to beauty and household products.

But the FTC alleges that Amway and the two recruiting organizations created a system that pushed distributors to buy products regardless of whether they had customers who wanted them.

World Wide Group and Leadership Team Development are two of Amway's largest "approved provider" organizations. They recruit distributors and sell training programs and other services that the FTC says were presented as important to becoming successful.

According to the complaint, the groups instructed distributors to buy predetermined quantities of Amway merchandise every month and encouraged them to recruit others who would do the same.

The FTC alleges those purchases were often driven not by genuine consumer demand but by pressure to qualify for compensation within the Amway system.

Regulators also allege distributors were instructed to report sales that never actually occurred, making it appear that products were being sold to consumers rather than simply purchased by people inside the Amway network.

"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," Christopher Mufarrige, director of the FTC's Bureau of Consumer Protection, said in announcing the action.

Claims of exclusivity and successful mentors

The FTC also alleges recruits were told they were entering an exclusive business opportunity that would provide access to unusually successful mentors.

Regulators say neither claim accurately reflected reality.

The Amway opportunity was generally available to anyone who followed a recruiter's instructions, according to the complaint, and the supposed mentors frequently had not themselves achieved the level of financial success recruits were led to expect.

The FTC also says many recruits were told they would probably be able to recruit multiple other distributors who would help build their businesses when, in reality, most recruits did not successfully recruit several additional participants.

New rules would force sales to real customers

Perhaps the most important part of the settlement is not the $225 million payment but the extensive restrictions the companies would have to follow.

Under the proposed order:

• Distributors must resell at least 70% of the Amway products they buy each month.
• Recruiters' compensation will be substantially reduced when people they recruit buy products but fail to resell them.
• Distributors must promptly report customer sales and the actual selling price.
• Amway must send receipts directly to customers.
• Distributors who fabricate sales—or teach others to do so—must be terminated.
• Amway's sales records will be regularly reviewed by an independent auditor.
• Distributors must receive training on the new rules before they can recruit other distributors.
• Approved training providers such as World Wide Group and Leadership Team Development cannot charge new distributors for training or services during their first year.

Those requirements are intended to ensure that Amway's revenues depend on actual retail demand rather than purchases made primarily by recruits trying to qualify for bonuses.

A remarkable echo of Amway's 1979 FTC case

The 70% sales requirement has particular historical significance.

Nearly half a century ago, Amway faced another major FTC proceeding over whether its business structure amounted to an illegal pyramid scheme.

In a landmark 1979 decision, the FTC concluded that Amway's operation was not an illegal pyramid scheme in part because the company maintained safeguards designed to prevent distributors from accumulating unwanted inventory.

Among them was a rule requiring distributors to resell at least 70% of the merchandise they purchased each month before becoming eligible for certain bonuses. Amway also maintained a buyback policy and required qualifying distributors to document sales to at least 10 retail customers.

The Commission emphasized that those safeguards were meaningful because it found that Amway actually enforced them.

Later FTC guidance made clear that merely adopting similar rules does not automatically make an MLM lawful; what matters is whether genuine retail sales are actually taking place and whether the rules are enforced.

The new settlement therefore brings Amway remarkably close to its regulatory roots: once again, the government is insisting that compensation ultimately depend on products moving to real customers rather than circulating primarily among distributors.

The broader MLM problem

The Amway case comes amid renewed FTC scrutiny of earnings promises made by multilevel marketers.

In a 2024 review of income disclosures from 70 MLM companies, FTC staff found that many disclosures emphasized the earnings of a small number of successful participants while obscuring the far smaller amounts received by most recruits.

The agency said the vast majority of participants received $1,000 or less per year, and many received nothing at all. Expenses were also frequently omitted even though product purchases, travel, conferences, training and other costs can wipe out whatever revenue participants receive.

FTC guidance says MLM earnings claims should reflect what a typical participant can realistically expect after expenses, not what a handful of unusually successful distributors earn.

Testimonials showing expensive homes, luxury cars, vacations or people quitting their jobs can also be deceptive if those outcomes are not typical, the agency says.

The Commission has separately proposed an earnings-claims rule that would strengthen its ability to seek refunds and civil penalties when MLM companies make deceptive income representations.

What happens to the $225 million?

The FTC says nearly all of the settlement money will be distributed to Amway distributors recruited through World Wide Group and Leadership Team Development who lost money.

Exactly who qualifies—and how refunds will be distributed—has not yet been announced.

The FTC says details of the consumer-redress program will be released later.

Consumers who believe they may qualify should therefore be wary of anyone demanding an upfront payment to obtain a refund. Legitimate FTC refund programs do not require consumers to pay fees to recover their money.

The FTC and Washington filed the complaint and proposed settlement in the U.S. District Court for the Western District of Washington. The FTC voted 2-0 to authorize the action.

The agreement is a proposed settlement rather than a judicial finding that the allegations are true. Amway has disputed the government's allegations while agreeing to the settlement. Reuters reported that the company and its affiliates agreed to the $225 million resolution while disagreeing with the allegations.

What consumers should watch for

Anyone considering a multilevel-marketing opportunity should look past headline income claims and ask a few basic questions:

• What does the typical participant actually earn after expenses?
• How many participants lose money?
• Are purchases driven by genuine customer demand or by requirements imposed on distributors?
• Is expensive training really optional?
• Does compensation depend primarily on selling products to outside customers or recruiting new participants?
• Are spectacular income testimonials representative—or rare exceptions?

The Amway case suggests regulators are increasingly interested not simply in whether an MLM sells real products, but in who is actually buying them and why.