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Amway has seen a dip in new distributor sign-ups due to regulatory uncertainty over direct selling companies.
The company’s India CEO Bill Pinckney was arrested for alleged violations under the Prize Chits and Money Circulation Schemes (Banning) Act 1978. Pinckney was first arrested last year by Kerala Police and now is under the custody of the Andhra Pradesh police.
Speaking to Business Line , Samir Behl, Amway’s regional president, Europe, India and South Africa, said, “We are still signing up thousands of new distributors but there has been some dip. The uncertainty over regulation has impacted our business but we are regularly communicating with our distributors informing them of all facts.”
“The impact on our business is also putting in jeopardy the income of lakhs of distributors and their families. We are urging the Government to step in with clear amendments to the existing law that would bring clarity in the business environment,” he added.
Pinckney, head of the direct selling company faces charges under Section 420 of IPC (cheating) and violations under the Prize Chits and Money Circulation Schemes (Banning) Act 1978, according to Kurnool police.
But Amway says it is a direct selling company and any case filed is being misinterpreted and booked under the PCMCS, which is otherwise intended to regulate financial schemes.
“I plan to meet the Finance Minister and seek an amendment to the PCMCS Act clearly legitimising direct selling companies. We are also meeting the Chief Minister of Andhra Pradesh and other local authorities to expedite bail for Pinckney,” Behl said, adding that the actions against its India CEO was unreasonable and unnecessary.
Behl said that though the incidents have shaken up the confidence of international investors, Amway continues to believe in India’s market potential. “This will not have any impact on our plans and we are going full ahead with our business. Our investments in setting up a state of the art plant in Tamil Nadu are on track and we hope to make it operational by the end of the year,” Behl said.
‘Investors need security’He, however, added that the arrest of the India CEO has caused concerns among employees which could take the focus away. “This dents the image of the country. Investors need basic security and certainty. We are sure that the new Government will set this right,” Behl said.
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