LifeVantage class-action filed, pyramid scheme & snake oil allegations
BehindMLM reviewed LifeVantage back in 2015.
Although retail was possible, we found LifeVantage’s overall business model was focused mostly on autoship affiliate recruitment.
This combination of token retail with affiliate recruitment is at the core of modern-day MLM pyramid schemes.
LifeVantage meanwhile have had three years to clean up their act.
If a lawsuit filed earlier this year is to be believed however, nothing much has changed.
In a January 24th filed complaint, Brian Smith identifies himself as a LifeVantage affiliate who paid over $1000 to sign up in 2016.
Smith runs Cancer Survivors Who Can Charities, Inc., a non-profit organization.
Smith alleges that he was
approached by a LifeVantage Distributor who suggested that LifeVantage products would be helpful to the members of his cancer organization.
Upon attending two LifeVantage meetings, he was only informed of LifeVantage’s more expensive Product Pack signup options.
Smith was told he had to sign up with a Product Pack and after choosing the most expensive $1200 pack, Theresa Cannavo, filled in his distributor application.
Eight months in Smith cancelled his autoship, having realized he’d joined
a pyramid scheme, designed to only make money for LifeVantage and a few top promotors at the expense of Plaintiff and people like him.
During his time as a Distributor, Smith learned that:
(1) he would have to recruit others to become LifeVantage Distributors in order to recoup the money he paid to become a Distributor;
(2) he was required to make monthly purchases of Protandim products to get any commissions and remain a Distributor;
(3) it was nearly impossible for him to break even based on retail product sales alone, and;
(4) he would have to pay additional costs to attend meetings to learn the “selling secrets” of the top-earning Distributors.
At the root of Smith’s pyramid claims are allegations of little to no retail sales taking place.
LifeVantage is nothing more than a pyramid scheme dressed up as a multi-level marketer (an “MLM”) of dietary supplements.
LifeVantage induces people to become Distributors with sales pitches promising wealth and business independence, and its marketing and compensation system encourages its Distributors to recruit others into the system with the same promises of wealth and business independence.
Distributors pay money to participate in the business opportunity, which funds LifeVantage’s payments and “bonuses” to other Distributors.
Despite LifeVantage’s claims of retail sales, little money comes in to the system from actual retail users of LifeVantage products disconnected from the business opportunity.
The majority of its retail sales are monthly sales to its Distributors purchasing product in order to participate in the compensation system and remain eligible to receive bonuses.
Distributors really can only make money by bringing in new Distributors – a classic pyramid scheme.
The recruitment chain described in Smith’s lawsuit is your basic affiliate autoship recruitment model, the same model we were wary of in our LifeVantage review.
New Distributors are told or strongly encouraged to agree to an automatic shipment program of $100 or more per month in
product, secured by their credit cards, and to pay for “training” and other accoutrements of being a Distributor.
Each new Distributor is placed in his or her recruiter’s “downline,” with a portion of their initial purchase being kicked “upline” to the recruiter and others up the chain.
LifeVantage’s MLM system further encourages Distributors to expend thousands of dollars in additional product purchases, event fees and expenses, and other miscellaneous fees.
LifeVantage’s products, which the lawsuit acknowledges failed in the retail market before the company went MLM,
are falsely advertised as remedies for various diseases—are snake oil and have no real medicinal or nutritional value.
Side-effects personally witnessed by Smith include negative vision loss.
(Smith) was contacted by a cancer patient in Colorado who claimed that Protandim negatively affected their vision.
He had given free bottles of Protandim to several people within
his cancer organization who could not afford LifeVantage’ s monthly rate, and was contacted by one of these persons who claimed to be experiencing the same negative vision effects.
Smith became uncomfortable and started questioning the product testing touted by LifeVantage because, among other reasons, the test results advertised to Smith and other Distributors were devoid of independent studies or testing.
In addition, he discovered that the ingredients in several LifeVantage products were mostly easily found herbs, such as turmeric, a well-known nfr2 activator.
LifeVantage claimed to provide its own special blend and charged upwards of $50 a month for the products, claiming it was the special blend that caused nrf2 to occur.
Despite cancelling his autoship order eight months into his distributorship beginning 2016, Smith
received and was charged by LifeVantage for several product shipments he did not order.
He struggled to return the unordered products and never received a full refund.
To stop the unauthorized shipments and charges, Smith was forced to cancel his credit card.
To this day, he still receives emails from LifeVantage about updating his credit card information and renewing his orders and distributorship.
LifeVantage also told Smith that if he did not purchase their products, his membership would be terminated.
In seeking damages against LifeVantage, Smith contends had he
been informed that the LifeVantage business opportunity was actually a pyramid scheme, he would not have purchased the Start Kit or Platinum Kit, or made any of the payments necessary to maintain his Distributor rights.
Not surprisingly, Smith lost money as a result of being a LifeVantage Distributor.
Smith is seeking class-action relief against LifeVantage across seven counts, including RICO violations.
The case has been playing out in court since it was filed back in January.
In April LifeVantage filed a motion requesting the case be moved to Utah, which was granted on July 24th.
The transfer to Utah went through on August 6th, where the case will now continue.
We’ve added Smith’s class-action to the list of lawsuits we’re tracking, so stay tuned for updates as we receive them.