FTC and Washington State Sue Amway; Proposed $225 Million Settlement Awaits Court Approval

A filing and a proposed deal on the same day

On 17 September 2026, the Federal Trade Commission (FTC) and the State of Washington filed a lawsuit against Amway, World Wide Group and Leadership Team Development. Simultaneously, the parties submitted a proposed settlement to the court providing for a total payment of $225 million together with extensive ongoing obligations.

The settlement does not take legal effect unless and until the court approves it; until then the matter carries "Pending" status. According to the FTC, the amount would represent the highest financial settlement ever reached in a proceeding brought against a network marketing company.

The $225 million is earmarked almost entirely for compensating IBOs who suffered losses.

What the regulators allege

The core of the complaint is that participants were presented with an overly positive picture of the business opportunity. The 83-page filing refers to representations involving annual figures of $40,000 or more, the prospect of replacing regular employment income, and the possibility of early retirement.

Citing Amway's own data, the FTC contends that only a small share of IBOs actually reached those bonus levels. The agency also criticises how the economics were presented, arguing that product purchases, training costs and other expenditures were not adequately taken into account. According to the FTC, many participants spent more on products and training than they received from Amway.

The regulators additionally examined the extent to which the business rests on genuine, external customer demand. The complaint states that in 2023 a large portion of US product sales went directly to IBOs rather than to outside customers, and that some customer sales were not reliably documented or were in part fictitious.

Amway's position

Amway firmly disputes the characterisation of its business model advanced by the FTC and the State of Washington. The company says its IBOs are already bound by clear standards of conduct and that they sell real products to real customers, adding that its own sales data will continue to form part of its monitoring systems.

The settlement involves no admission on Amway's part. The company describes the agreement as a compromise intended to bring the legal dispute to a close.

The obligations on the table — and the wider context

Under the proposed settlement, customer sales would have to be documented more precisely in future. For Business Volume to be credited in full, qualified customer sales would have to account for at least 70 percent of monthly product volume; where the share is lower, the creditable volume is reduced proportionately.

Requirements around recruiting and training would also be tightened, with mandatory compliance training for both new and existing IBOs. Certain benefits would be conditional on demonstrable customer sales, while fictitious or falsely reported customer sales would trigger graduated sanctions up to and including termination of the contract. In the first year, new IBOs would not have to pay certain training and service fees provided by Approved Providers.

Legally, the settlement applies only to the US parties involved and does not automatically create new rules for every network marketing company worldwide. It nonetheless recalls the well-known FTC–Amway proceeding of the 1970s, which shaped the legal assessment of network marketing in the United States for decades and centred on the question of when network marketing qualifies as a legitimate sales system and when it constitutes a pyramid scheme.