The lawsuit, which was filed Oct. 12 in California federal district court by three current distributors and one former distributor, names 15 defendants and 100 unknown defendants that plaintiffs allege are responsible for the injuries and harm they incurred. Named defendants include Kim Hui, who held the second-highest distributor rank in Jeunesse as a Presidential Diamond director, and her company US Global System (USGS), as well as four Diamond directors in Hui’s downline, May Chang, Yvonne Yen, Samson Li and Lisa Wang.
The lawsuit says Jeunesse Global makes tons of money in Hong Kong and China by exploiting Chinese American distributors, and the company’s “… conduct violates foreign laws and constitutes money laundering and tax evasion.” Truth in Advertising reports:
The complaint most likely implicates violations of foreign law because in 2005, the Chinese government enacted a law called Regulation of Direct Sales and Regulation on Prohibition of Chuanxiao (Chuanxiao roughly translates to MLM). According to this regulation, direct sales are permitted in mainland China but MLMs are not. The suit seeks to hold defendants liable for fraudulent business practices, false advertising, and violations of the Federal Racketeer Influenced and Corrupt Organization Act (RICO) and the Foreign Corrupt Practices Act, among other things.
This lawsuit was the latest in a series of class action lawsuits filed against Jeunesse recently. A July 2016 suit alleged that the company is pyramid scheme and there are secret compensation packages. A December 2016 lawsuit alleged that the company is a pyramid scheme and preys on Chinese American Immigrants.Continue reading
When someone introduces you to multi-level marketing (MLM), they are likely talking to you about the sales aspect of the company. They are talking about the fabulous product (maybe even about how it “sells itself”) and they are probably downplaying the recruiting aspect (since so many people hate the recruiting concept).
MLMs like to call themselves “direct sales,” another attempt to focus on the selling of the product, even though the companies live and die by recruiting. The product or service being sold is simply the bait to get someone in. It is used as the “cover” for the scam, as a product or service is necessary to combat claims of being a pyramid scheme.
The truth is that people involved in MLM do little actual retailing of products or services to third-party customers (non-members of the scheme). The vast majority of the purchases of products and services are made by the members of the MLMs themselves, either to stock inventory (which they will probably never be able to sell) or for personal consumption.
That’s not retailing. That’s making purchases within the scheme. The members of the mutli-level marketing company likely wouldn’t buy those products or services if they weren’t in the scheme. They’re making purchases for a variety of reasons: to move to the next level, to “qualify” for a commission check, etc.
Back in May, a class action lawsuit was filed against multi-level marketing company WorldVentures. This is the travel MLM that encourages distributors to share photos of themselves holding signs saying “You Should Be Here.” It is marketed as a direct sales travel club, yet the “start a business” part of their website doesn’t even mention what you will be selling or doing. The World Ventures compensation plan mentions making money from selling products and from recruiting others, yet the entire document speaks only to the money that is made from enrolling new distributors (called enrolling new product customers). Making money from selling something seems to be wholly disregarded.
MarketAmerica is a multi-level marketing company that has a number or product lines including Isotonix supplements, Motives cosmetics, and others. It also uses what it calls a “product brokerage concept,” which is essentially a massive affiliate program which pays a small amount of cash back to the the distributor when purchases are made at certain retailers while on the shop.com website. (This sounds just like Shop to Earn, a defunct MLM that screamed pyramid scheme.)
Per the lawsuit, Market America requires a start-up fee of $399 and an ongoing monthly fee of $129. Distributors must also spend $100 to $300 per month on shop.com to continue to qualify as an enrollee, and other fees are incurred to attend training and events.Continue reading
Almost everyone loses money in MLM. Which means almost no one makes money in MLM. This is a universal truth. More than 99% of distributors will lose money, and this is GUARANTEED by how these schemes are set-up. No matter how hard you work or how well you follow the guidelines, you still have almost no chance of success.
In the past couple of weeks, multi-level marketing company LuLaRoe (the seller of weirdly patterned leggings) has been hit with two class action lawsuits and a whole bunch of negative publicity. The first LuLaRoe class action lawsuit was filed on October 13 in federal court in California, and the lead plaintiffs are Stella Lemberg, Jeni Laurence, Amandra Bluder, and Carissa Stuckart. The complaint has all kinds of words I like: scheme, bait, lure, and cheating.
The focus of this lawsuit is a promise LuLaRoe made in April 2017. The company said that consultants (who spend upwards of $5,000 to sign up and purchase an initial inventory package) could cancel their agreements and receive a 100% refund of the wholesale value of the inventory they purchased with no exceptions or conditions. Distributors would also get free shipping for the inventory they returned. The policy had no expiration date, but the lawsuit alleges that on September 13, 2017 the company changed the policy to offer a 90% refund (at most) with lots of conditions and exceptions, and no free shipping.Continue reading
The truth is that MLM is not a “business opportunity.” Almost everyone who participates is guaranteed to lose money. You can follow all the instructions, talk to everyone you know, invest money in the scam, and you will still lose money. Why? Because MLM is nothing but a pyramid scheme in which all the people at the bottom of the pyramid will lose money.
This video was published in 2016, but the information is still very relevant. It features victims of the Herbalife “business opportunity.” They put lots of money, time, and effort into their “businesses” and ended up losers.
Robert FitzPatrick, president of Pyramid Scheme Alert has written a new book about multi-level marketing and how the FTC allows these pyramid schemes to exist. In PONZINOMICS, the FTC’s Protection of Multi-Level Marketing, he discusses the political interests involved in MLM and the lack of action by FTC officials.
What is “Ponzinomics”? FitzPatrick uses the term to describe the scourge of multi-level marketing, which is nothing more than a pyramid scheme, but has been presented as a viable business opportunity. The government in the United States has gone so far as to protect these criminal enterprises which prey on millions of people each year, using cult-like tactics in furtherance of their pyramid schemes.
The book talks about the lure of the (false) income opportunity and the use of testimonials and the flaunting of wealth to draw people in. FitzPatrick also discusses the tactics used to draw in new victims, as well as “blaming the victims” when the venture inevitably fails.
One of the common statements made by people in favor of multi-level marketing is that it is just like corporate America. We call MLM a pyramid scheme, and corporate America is a pyramid too! That’s simply not true.
While the SHAPE of the hierarchy of people looks like a pyramid in MLM and in corporate Amercia (one person at the head of the company, a few below, managing several below them, and so on)… that is where the similarities end.Continue reading
Defenders of multi-level marketing (MLM) will tell you that some companies “do it” right, while some companies “do it” wrong. One such example is John Hempton, a clown who thinks that Herbalife is the greatest thing since sliced bread. He says the following in an article about Nu-Skin:
Disclosure: I am predisposed to believe that multi-level-marketing schemes like Avon, Herbalife or Nu Skin are likely to be good cash generative businesses. I have done much looking at Herbalife and got very long. I do not think a negative interpretation of Herbalife is sustainable. Herbalife’s business is legal, sustainable and will generate vastly more cash in five years. Nu Skin does not lend itself to such definitive opinions. History is littered with MLMs that no longer exist – and a few like Avon, Nu Skin, Herbalife, Amway and Mary Kay which have lasted decades.
The fact that a multi-level marketing company like Mary Kay Cosmetics has been around for more than 50 years does not define whether it is a fraud or scam. Remember Enron (in business more than 15 years prior to the fraud being discovered) and Bernie Madoff (whose investment firm was in business for more than 40 years before his Ponzi scheme was revealed)? Length of time in operation has nothing to do with whether something is a scam or a fraud. Being traded on the New York Stock Exchange is not an indicator of legitimacy either.Continue reading