I’ve written previously about Fortune Hi Tech Marketing (FHTM), a multi-level marketing company that is all about recruiting more people into your pyramid, rather than actually selling products.
Fortune Hi-Tech Marketing has previously been the target of legal action by the Attorney General of North Dakota, and has been a target of the North Carolina Attorney General, cracking down on “business opportunities”:
- Fortune Hi Tech Marketing claims that people who buy into its business earn thousands of dollars a year. Based on consumer complaints, Cooper’s office launched an investigation into FHTM in mid 2010. Consumers say they paid money to the company but were only able to make money by recruiting others into the scheme, not by selling any actual goods or services. A total of 25 consumers have now complained about FHTM, and Cooper’s office is investigating the company. Although this case is currently under investigation, it’s important for consumers to know that a pyramid scheme is a violation of the law and is defined as any plan in which a participant pays money for the chance to receive money upon the introduction of new participants into the program.
“We’re looking closely at business opportunities that seem to offer false hopes, and also reaching out to educate consumers on how to recognize and avoid fraud,” Cooper said.
The Attorney General of Texas went after Fortune HiTech Marketing for its abusive practices, and recently there was a settlement. The settlement includes Fortune Hi-Tech Marketing, Inc., FHT Marketing Inc., and FHTM Foundation Inc., Paul C. Orberson, Jeffery M. Orberson, Thomas A. Mills, and David S. Mills.
Of course, those involved parties “vehemently deny” all the allegations, but are settling anyway.
FHTM will pay up to $1.3 million to claimants, and must also pay $200,000 to the Attorney General for attorneys’ fees, expenses, and investigative costs.
The settlement allows victims in Texas to “… receive settlement damages or other relief, including, but not limited to, actual damages, the restoratin of money or property, real or personal, which have been allegedly acquired by meanjs of any unlawful act or practice by FHTM and/or the Individuals.” Claimants are essentially going to get their $299 sign-up fee refunded, less anything the company previously paid them in commissions or other compensation.
The settlement agreement between FHTM and the Texas Attorney General essentially forbids the company from violating Texas’s Deceptive Trade Practices – Consumer Protection Act (DTPA). Fortune Hi Tech Marketing has been accused in the past (repeatedly) of misrepresenting its affiliations with certain companies, as well as overstating the earning potential of the opportunity. This agreement forbids that, stating in part:
It is recognized that FHTMI has had significant improvements in its business practices over the past years. Without admission as to whether FHTMI has ever engaged in any of the following practices, and to ensure the continuation of these business practices, for a period of three (3) years from the Effective Date of this Agreement, FHTMI shall NOT, in Texas:
4.2 Adopt deceptive trade practices concerning the profitability of joining FHTMI;
4.3 Adopt deceptive trade practices concerning representations about the affiliation of FHTMI with the companies who supply FHTMI’s products or services;
4.4 Adopt deceptive trade practices concerning the likelihood that FHTMI Independent Representatives will be able to form a productive and profitable “downline” sales organization;
4.5 Make oral representations that contradict terms or language contained in FHTMI’s written contracts with Texas FHTMI Independent Representatives;
4.6 Adopt deceptive trade practices concerning representations as to the source, sponsorship, approval, or certification of products or services sold through FHTMI;
4.7 Adopt deceptive trade practices concerning representations as to the affiliation, connection, or association with, or certification by another of products or services sold through FHTMI;
This is a small step for consumer protection, but one which I hope may be replicated for other multi-level marketing companies. They are all abusive, and they all follow the same script… promising “unlimited earnings” with products or services that are easy to sell. After they recruit you, they spend their time getting you to recruit more people, knowing that this activity is the only one which will sustain the pyramid. But because of the nature of the “opportunity” being sold (failure by design), almost no one will turn a profit.
Multi-level marketing companies are legalized scams that are taking billions of dollars out of the pockets of consumers each year. When are consumers going to demand that the government crack down on these legalized pyramid schemes?