Amway agrees to settle suit

Published Aug. 17, 1996|Updated Sept. 16, 2005

Amway Corp. and two of its top distributors agreed to give its members coupons for discounts on company products as part of a settlement of a class-action lawsuit.

The lawsuit, which made racketeering and antitrust claims, was filed two years ago in Philadelphia by five former sellers of Amway products. The vendors claimed the company and two regional distributors exaggerated the profitability of selling Amway products and forced them to buy motivational materials.

Under the settlement, Amway will mail coupons to lower-level distributors good for a 35 percent discount on more than 20 Amway products such as shampoo, floor cleaner and insect repellent.

The coupons can be used to buy as many as 10 products, although no more than three of any one kind, according to court records.

The coupons are good for 180 days from the time they're mailed.

The regional distributors also agreed to label all motivational materials sold to lower-level vendors as optional. They also agreed to notify buyers of a refund policy on the materials, the court records show.

Amway, one of the world's largest multilevel marketing companies, also agreed to publish in its internal magazine a notice reminding distributors of their rights.

The lawsuit claimed that the regional distributors, William Britt of Carson City, Nev., and Dexter Yager of Charlotte, N.C., built an extensive Amway network by deceiving lower-level distributors.

The plaintiffs claim Britt and Yager never told them Amway distributors make an average of $65 a month or discussed the costs of building a distributorship. They also claimed Amway knew Britt and Yager lied to other distributors and did nothing to stop them.