Over the past few years, multi-level marketing companies, or MLMs, have been facing a number of lawsuits. Why? Because they are illegal pyramid schemes and not only do the majority of people who join these companies end up losing money, many of them are also selling products that claim to do things (help you lose weight, cure illnesses, etc) and they very much do not. Here are some of the top MLM companies that are facing lawsuits
If you’ve been paying attention to social media at all lately, you’ve heard of the Amazon documentary LuLaRich which focuses on the LuLaRoe empire and its downfall. LuLaRoe has been faced with a number of lawsuits, some of which I’ve written about before. Not only was there a class action lawsuit in the state of Washington, they were also sued by one of their vendors for not paying their bills. Earlier this year, a group of women in California filed a class action lawsuit against LuLaRoe similar to the one in Washington.
Thousands of women lost thousands of dollars through LuLaRoe, as they were required to buy more and more clothes to stay in the business and the quality of the clothing kept decreasing. Many of them were left with inventory they couldn’t sell and credit card bills they couldn’t pay, so I wouldn’t be surprised to see more lawsuits popping up.
Young Living is another MLM company facing lawsuits. Young Living members sell overpriced essential oils, and worse, they claim that these essential oils can cure illnesses. As with all MLMs, the majority of Young Living members have lost money through the venture. There is currently a class action lawsuit pending in California claiming that Young Living is an illegal pyramid scheme and thousands of people have lost money. Another similar lawsuit was filed in Texas but was moved to the court in Utah.
Young Living is also facing a class action lawsuit in Minnesota for their false claims that the essential oils are “therapeutic” and have health benefits. A similar case is pending in New York.
Monat sells hair care products. You may have heard of them because a number of people had serious allergic reactions to the products and ended up with significant hair loss. (Though this technically could happen with any hair product, it’s unlikely with traditional hair products sold in stores, and more importantly, those companies would never tell you that this is a normal reaction. Monat sellers encouraged people to keep using the products, promising them they would see improvements.)
There were a number of class action lawsuits filed against Monat that have been combined into a single large suit in Florida, alleging that Monat knowingly sells a product that causes harm and falsely advertises that it is safe and FDA approved.
In addition to the MLM companies that are facing lawsuits, earlier this year, the FTC put all MLM companies on notice that they cannot continue to use deceptive income claims when recruiting for their companies. They have been put on notice that there may be civil penalties if they continue to violate these restrictions.
- Essential Oil MLMs – Why they’re even more dangerous
- Another MLM Gone: AdvoCare Changes Business Model
- MLM Scams During COVID-19 Pandemic
Megan is a 40-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.