Multilevel Marketing vs. Pyramid Schemes
What’s the difference?
Multilevel Marketing
TINA.org has taken a multifaceted approach to rein in the plethora of deceptive health and income claims used by MLMs.
What You Need to Know
Seen or heard a deceptive ad? Report an Ad
Legal Actions
MLM Companies Income Claims
TINA.org found that 98% of MLM companies have used atypical income claims to market their business opportunities.
IYOVIA/IM Mastery Academy/iMarketsLive
TINA.org investigated International Markets Live and found that it uses unsubstantiated and exaggerated income claims to market its business opportunity.
DSA Companies Health Claims
TINA.org found that 97% of DSA-member companies selling supplements have used unsubstantiated disease-treatment claims.
FTC Business Opportunity Rule Comment
FTC Deceptive Earnings Claims Comment
In the Press
How the ‘Harvard of Trading’ Ruined Thousands of Young People’s Lives
Alice Kantor, Bloomberg
After LuLaRoe, do we need another ‘empowering’ leggings MLM? Savvi thinks so
Ali Montag, Fortune
“MLMs might not be able to get away with their shady promises much longer”
Emily Stewart, Vox
The Latest
The Struggle is (Not) Real
Rags-to-riches stories on repeat.
Forever Living Ditching MLM Model
Will the MLM Industry Fix Its Earnings Claims Problem?
James ‘Jay’ Noland’s Latest Ventures Raise Familiar Concerns
TINA.org Joins Consumer Advocates to Keep FTC Bipartisan
FTC Files for Injunction as IML Shuts Down
Class Actions
Information about relevant class actions filed around the country.
LifeVantage Pyramid Scheme Claims
Product/Service
LifeVantage business opportunity and products, including Protandim supplements
Allegations
Operating an illegal pyramid scheme that rewards recruiting consultants over retail sales
Making false and misleading income claims about distributors’ ability to earn substantial income and achieve financial freedom when the majority of distributors lose money
Making false and misleading claims about products, including that Protandim can treat or prevent diseases such as cancer and diabetes, and misrepresenting the scientific support and patents for Protandim
Status
Certain claims dismissed by court in 2019 and 2020; remaining claims voluntarily dismissed When a complaint is dismissed with prejudice, it cannot be refiled.
LifeVantage Pyramid Scheme Claims
Case Name (Date)
Smith et al. v. LifeVantage Corp. et al.
18-cv-621, D. Utah
(Jan. 2018)
Product/Service
LifeVantage business opportunity and products, including Protandim supplements
Allegations
Operating an illegal pyramid scheme that rewards recruiting consultants over retail sales
Making false and misleading income claims about distributors’ ability to earn substantial income and achieve financial freedom when the majority of distributors lose money
Making false and misleading claims about products, including that Protandim can treat or prevent diseases such as cancer and diabetes, and misrepresenting the scientific support and patents for Protandim
Status
Certain claims dismissed by court in 2019 and 2020; remaining claims voluntarily dismissed When a complaint is dismissed with prejudice, it cannot be refiled.
LuLaRoe’s Return Policies
Case Name (Date)
Patton et al. v. LuLaRoe, LLC et al.
17-v-2231, C.D. Cal.
(Nov. 2017)
Lemberg et al. v. LuLaRoe, LLC et al.
17-cv-2102, C.D. Cal.
(Oct. 2017)
Product/Service
LuLaRoe business opportunity and clothing
Allegations
Operating an illegal pyramid scheme that primarily rewards recruiting new participants
Making false and misleading income claims about consultants’ ability to earn substantial income and achieve financial freedom
Misrepresenting and failing to honor its return and refund policies
Status
Patton case: Dismissed; named plaintiff joined the Lemberg case
Lemberg case: Individual claims sent to arbitration; case voluntarily dismissed
LuLaRoe’s Return Policies
Case Name (Date)
Patton et al. v. LuLaRoe, LLC et al.
17-v-2231, C.D. Cal.
(Nov. 2017)
Lemberg et al. v. LuLaRoe, LLC et al.
17-cv-2102, C.D. Cal.
(Oct. 2017)
Product/Service
LuLaRoe business opportunity and clothing
Allegations
Operating an illegal pyramid scheme that primarily rewards recruiting new participants
Making false and misleading income claims about consultants’ ability to earn substantial income and achieve financial freedom
Misrepresenting and failing to honor its return and refund policies
Status
Patton case: Dismissed; named plaintiff joined the Lemberg case
Lemberg case: Individual claims sent to arbitration; case voluntarily dismissed
Premier Financial Alliance Pyramid Scheme Claims
Product/Service
MLM-based life insurance sales
Allegations
Operating an illegal pyramid scheme that rewards participants for recruiting others to join rather than for product sales
Falsely claiming that participation will lead to financial success and a luxurious lifestyle when a vast majority of participants lose money
Premier Financial Alliance Pyramid Scheme Claims
Case Name (Date)
In Re PFA Insurance Marketing Litigation
18-cv-3771, N.D. Cal.
(2018)
Product/Service
MLM-based life insurance sales
Allegations
Operating an illegal pyramid scheme that rewards participants for recruiting others to join rather than for product sales
Falsely claiming that participation will lead to financial success and a luxurious lifestyle when a vast majority of participants lose money
Status
Settled
(Final approval affirmed on appeal)
LuLaRoe Pyramid Scheme Allegations
Product/Service
LuLaRoe
Allegations
Operating an illegal pyramid scheme that rewards recruiting consultants over retail sales
Failing to honor its 100% return policy
Making misleading income statements to prospective and existing consultants
Status
Arbitration granted; voluntarily dismissed When a complaint is dismissed with prejudice, it cannot be refiled.; dismissal upheld on appeal
LuLaRoe Pyramid Scheme Allegations
Case Name (Date)
Sperring et al. v. LuLaRoe, LLC et al.
19-cv-433, C.D. Cal.
(March 2019)
Product/Service
LuLaRoe
Allegations
Operating an illegal pyramid scheme that rewards recruiting consultants over retail sales
Failing to honor its 100% return policy
Making misleading income statements to prospective and existing consultants
Status
Arbitration granted; voluntarily dismissed When a complaint is dismissed with prejudice, it cannot be refiled.; dismissal upheld on appeal
LuLaRoe Pyramid Scheme Claim
Product/Service
LuLaRoe
Allegations
Pyramid scheme allegations
LuLaRoe Pyramid Scheme Claim
Case Name (Date)
Ponkey et al v. LLR, Inc. et al
21-cv-518, C.D. Cal.
(March 2021)
Product/Service
LuLaRoe
Allegations
Pyramid scheme allegations
Status
Arbitration granted; Decision reversed on appeal