Premier Financial Alliance has reached a settlement in a pending class-action filed against it.

PFA class-action proceedings are the combination of two class-action lawsuits;

The first lawsuit filed in 2018 alleges PFA is a pyramid scheme.

The second lawsuit filed in 2019, alleges PFA is a pyramid scheme that specifically targeted Asian immigrants.

The two cases were consolidated in April 2020. Class certification was granted in November 2021.

As per a March 17th declaration filed by Class Counsel;

Class Counsel’s objective in negotiating the settlement was to reproduce, to the extent practicable, the rescissory relief that Class Counsel would pursue if the Class prevailed at trial.

To that end the agreed upon class covered by the settlement will include;

All Persons who:

(i) enrolled as PFA associates between January 1, 2014 and the Stipulation Date and

(ii) purchased one or more Living Life Policies within California between January 1, 2014 and the Stipulation Date of March 17, 2023.

On the exclusion list we have;

The following persons are excluded from the Class:

(a) all individuals who reached the level of Provisional Field Director, Qualified Field Director, Senior Field Director, Regional Field Director, Area Field Director, National Field Director, Executive Field Director, or Senior Executive Field Director at PFA;

(b) the judicial officers to whom this matter is assigned and their immediate family members and staff;

(c) Defendants, their parents, affiliates, subsidiaries, legal representatives, predecessors, successors, assigns, employees, and any entity in which one of these Defendants has a controlling interest or which has a controlling interest in one of these Defendants;

(d) Jack Wu, Aggie Wu, Rex Wu, Hermie Bacus, Bill Hong, Lan Zhang, and their legal representatives, successors, assigns, and immediate family members;

(e) any Person who previously released any Defendant pertaining to any Released Claim; and

(f) any Person who submits a valid request to be excluded from the Class in accordance with this Stipulation.

Prior to exclusions being sorted through, there are estimated to be about 22,000 class members.

All Class Members are eligible to make a claim, regardless of whether they are former or active policyholders.

Some Class Members with active policies have built up sufficient cash value so that it does not make financial sense for them to terminate their policy.

Partly for this reason, not all Class Members with an active policy will elect to terminate. Class Counsel took care to ensure that the Settlement preserves their right to keep their policy in force.

As to the settlement itself;

The Settlement provides cash payments that Class Counsel believe equate to the rescissory relief they would seek at trial. Both Class Members who are former insureds, and Class Members who elect to terminate their in-force Class Policy, are eligible to make a claim.

The Settlement obligates the Defendants to return a portion of the premiums paid by Class Member claimants, according to a formula that subtracts cost of insurance and similar policy charges from the total premiums paid, and then applies a one-third discount.

If all Class Members made a claim, the Settlement would pay out almost $50 million over and above cash surrender values.

Under the Settlement, the Defendants agree not to oppose an application by Class Counsel for attorneys’ fees not to exceed $6,000,000 and reimbursement of litigation expenses not to exceed $371,000.

Class Counsel believe(s) … that participation in the Settlement will be higher than for a comparable offer of rescission following a victory at trial.

Plaintiff Dalton Chen’s personal claim is cited as a “representative” example of what PFA class-members can expect;

As inactive policyholder, he will receive $2,370, equating to 67% of his total premiums paid after subtraction of policy charges and overhead, and 42% of his recovery under the damages model proposed.

Individual Plaintiffs who brought forward the class-action will receive an additional $10,000 each.

With respect to filing a claim, details will be provided to Living Life policyholders (past and present) via mail. A settlement website and toll-free number for assistance will also be established.

Class Members will have 90 days from Preliminary Approval to make a claim.

One particularly interesting part of the settlement is PFA agreeing to make changes to its business practices.

These include:

  • retention of approved marketing materials;
  • providing a publicly available annual “Associate Compensation Summary”;
  • ceasing use of earnings claims for marketing (including “images of vacation destinations”, private planes, luxury cars and homes);
  • ceasing use of checks and financial statements for marketing;
  • ceasing encouraging potential PFA recruits to “quit jobs or school, take out loans or incur debt”;
  • ceasing use of terms like “passive income”, “unlimited income potential”, get rich” and “get wealthy” to market PFA;
  • “eliminate the phrase ‘become a client’ and similar references from marketing”;
  • instructing upline Associates “that they are prohibited from advising or encouraging recruits or downline Associates to purchase a life insurance policy to increase credibility, to improve sales, or for any reason other than the desire of the potential policy owner to obtain a death benefit and other policy attributes”;
  • ceasing any representation that participation in PFA’s MLM opportunity is a “prerequisite to success”;
  • ceasing any representation that “purchase of an insurance policy is a precondition to or natural material element of the participant’s successful participation in the sales program”;
  • ceasing any representation that “the purchase of an insurance policy by the participant will count towards … sales targets”
  • making it clear on PFA’s website that “the nature of the business opportunity is selling insurance”
  • making it clear on PFA’s website that “a license to sell insurance is required before any commission or other compensation may be paid to an Associate
  • providing a copy of PFA’s compensation plan on its website

New PFA insurance policy holders will also be required to

sign a separate standalone disclosure and consent form certifying that

(a) the purchaser is not making the purchase at the request of an upline Associate to help meet the program’s sales goals; and

(b) he or she is proceeding with the purchase because of the desire to obtain the insurance product being purchased.

I’m getting a strong vibe that Premier Financial Alliance was a potential FTC slam-dunk that slipped through the cracks.

While technically nobody is admitting fault, a $50 million settlement ceiling and the very specific business practices changes above speak for themselves.

I can personally speak to the vagueness of PFA’s MLM opportunity as its initially presented to the public. This was one of my core observations in BehindMLM’s 2016 Premier Financial Alliance review.

Premier Financial Alliance is a pretty good example of how not to run an MLM company.

A target retail customer-base isn’t readily identifiable, based on a complete lack of product or service information presented on the PFA website.

The compensation plan is a bit of a mess, with percentages not really meaning anything until they are put into the context of products and/or services being paid for.

This would require costs of said products and/or services, which are again not disclosed.

In 2016 for an MLM company, this is not good enough.

Wasn’t good enough in 2016. Isn’t good enough today.

In my experience if PFA has built its MLM opportunity on deceptive marketing practices and pyramid recruitment, again as the changes to its business practices suggests it has, removing those practices and recruitment will gut the business.

This is a good thing for consumers. Not so much for company PFA’s owner David Carroll and top Associates.

Post-settlement we could be looking at lip-service with respect to PFA’s business practice changes, at which point it’d be great to see the FTC step in.

At time of publication, preliminary approval of the proposed PFA class-action settlement remains pending.


Update 26th July 2023 – Preliminary approval of the proposed class settlement was granted on July 21st.

A Fairness Hearing has been scheduled for January 16th, 2024.


Update 5th March 2024 – Following the scheduled Fairness Hearing, final approval of the proposed class action settlement was granted on February 5th, 2024.

This brings BehindMLM’s coverage of Dalton Chen’s PFA pyramid scheme class-action to a close.