Amway FTC 1986 Violation

FOR IMMEDIATE RELEASE:  May 19, 1986
 AMWAY CORP. TO PAY $100,000 CIVIL PENALTY, SETTLING FTC CHARGES
 IT FAILED TO MAKE REQUIRED EARNINGS DISCLOSURES IN NEWSPAPER AD
     Amway Corp. will pay a $100,000 civil penalty to settle Fed
eral Trade Commission charges it violated a 1979 Commission order
by making earnings claims for its distributors without disclosing
actual average gross income figures, under a proposed consent
decree filed in federal court today.
     The consent decree and a complaint were filed at the request
of the FTC by the Department of Justice.  The consent decree is
subject to court approval.
     Amway is a manufacturer and marketer of household and
consumer products, which are sold door-to-door, including home
and personal-care products, vitamins and food supplements.  Under
its Amway Sales and Marketing Plan, the Michigan-based company
sells its products to distributors, who in turn resell to other
distributors or directly to consumers.
     A 1979 Commission decision resolved FTC charges that Amway's
claims about the amount of money distributors are likely to earn
had the capacity to deceive potential distributors.  The order
accompanying that decision prohibits Amway from misrepresenting
the amount of profit, earnings or sales its distributors are
likely to achieve.  The order also requires that whenever Amway
makes above-average earnings or sales claims, it must also dis
close clearly and conspicuously either the average earnings of
all distributors or the percent of distributors who actually earn
the amount claimed.
     According to a complaint filed with the proposed consent
decree, Amway violated the 1979 order by placing an advertisement
in newspapers across the country that represented the earnings of
distributors without the required disclosures.  The complaint
charged that the 1983 ad, which offered Amway distributorships,
contained earnings and sales claims that were higher than the
average income actually earned in any recent year.
     In addition, the complaint charged, Amway violated the 1979
order by failing to include in its ad clear and conspicuous dis
closures of the average earnings or sales of all distributors in
any recent year or the percent of distributors who actually
achieved the results claimed.
     Under the consent decree, Amway is prohibited from making
claims about above-average distributor earnings or sales unless
it makes the required disclosures about actual earnings or sales.
     This consent decree is for settlement purposes only and does
not constitute an admission by the company that it violated the
law.
     The proposed consent decree was filed in the U.S. District
Court for the District of Columbia.
     FTC Chairman Daniel Oliver and Commissioner Andrew J.
Strenio Jr. did not participate in the vote.
                             (More)
     Copies of the proposed consent decree, a stipulation by the
FTC and Amway agreeing to the consent and the complaint are
available from the FTC's Public Reference Branch, Room 130, 6th
St. and Pennsylvania Ave. N.W., Washington, D.C. 20580; 202-523-
3598; TTY 202-523-3638.
                              # # #
MEDIA CONTACT:  Dee Ellison, Office of Public Affairs, 202-523-
                1891
STAFF CONTACT:  Elliot Feinberg, Bureau of Competition, 202-634-
                4604
FTC File No. D. 9023
Civil Action No. 86-1360
[amway]