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Atkinson V. Lularoe
Case 5:17-cv-02287 Document 2 Filed 11/14/17 Page 1 of 28 Page ID #:2 1 Alexander M. Schack, Esq., (SBN 99126) Natasha N. Serino, Esq., (SBN 284711) 2 LAW OFFICES OF ALEXANDER M. SCHACK 3 16870 West Bernardo Drive, Suite 400 San Diego, California 92127 4 Telephone: (858) 485-6535 5 Facsimile: (858) 485-0608 [email protected] 6 [email protected] 7 Attorneys for Plaintiffs Melissa Atkinson, et al. 8 9 IN THE UNITED STATES DISTRICT COURT 10 FOR THE CENTRAL DISTRICT OF CALIFORNIA 11 ) Case No.: 12 MELISSA ATKINSON, an individual, for ) herself and all others similarly situated, ) CLASS ACTION COMPLAINT 13 ) Plaintiffs, ) 14 ) JURY TRIAL DEMANDED vs. ) 15 ) ) 16 LLR, INC., a Wyoming Corporation; ) LULAROE, LLC d/b/a LULAROE; a ) 17 California limited liability corporation; and ) Does 1 through 100, inclusive, ) 18 ) ) 19 Defendant(s). 20 21 Plaintiff Melissa Atkinson (“Plaintiff”), individually and on behalf of all others 22 23 similarly situated (the “Class”), by and through her attorneys, files this Class Action 24 Complaint against LLR, Inc., LuLaRoe, LLC, and DOES 1 through 100 (collectively 25 “Defendants”). 26 27 28 - 1 - CLASS ACTION COMPLAINT Case 5:17-cv-02287 Document 2 Filed 11/14/17 Page 2 of 28 Page ID #:3 1 INTRODUCTION 2 3 1. This is an action on behalf of Plaintiff Melissa Atkinson (hereinafter 4 “Plaintiff, for herself and all those similarly situated, to recover damages caused by 5 Defendant’s operation of a fraudulent pyramid scheme and endless chain scheme. As 6 alleged herein, the scheme is fraudulent because it requires the payment by participants of money to Defendants LuLaRoe, LLC and LLR, Inc. -
92926 Vieve Designs 92919 Scentsy 92921 Monika's Little Bookshelf
92926 Vieve Designs 92919 Scentsy 92921 Monika's Little Bookshelf 92922 The Traveling Vineyard 92927 Books by L.com 92923 Plexus Worldwide Independent Ambassador 92924 LulaRoe Amanda 92925 Rodan & Fields 92773 Swann Cleaning Services 92774 Swann Cleaning Services 92931 Sweet Southern Treats 92928 Scentsy 92929 DoTerra 92930 Ehrichs Essential Oils 92932 Hanna's Creations 92754 Scentsy 92933 Herbalife 92934 Hoa Mi Craft 92935 Pho 101 92936 Scentsy with Shari 92938 Kayla Boots Dog Care 92941 Rodan & Fields 92937 Coin Art 92940 Honey Do Bakery 92939 Jen's Cookie Corner 92942 Rock Painting 92943 LulaRoe Rosalie 92944 Jewelry in Candles Jen 92945 LulaRoe Amelia 92946 The Mad Potter 92766 Ready. Set. Tan. 92719 Sara's Balloon Arrangement 92947 Vinyl & Etching Creations 92948 Nycole's Couponterage 92949 Paradise Dreams 92958 First Command 92954 Nico & Stitch 92950 LuLaRoe 92951 Patriotic Online Market Place (POMP USA) 92952 Bob Smith's K9 Association 92953 Pamered Chef 92955 Capturing Sunday Photography 92956 Cheapest Phot Scan 92957 My Precious Baby Boutique 92959 Paper Pride Cre8tions 92960 Close to My Heart 92961 LuLaRoe 92962 Thirty-One Gifts 92963 Rodan & Fields 92964 Bonnie Blair 92965 Scentsy 92966 Origami Owl 92968 Phuong Nails 92967 WineShop at Home 92863 DoTerra 92969 Rodan & Fields 92869 Creative Threads 92878 3 of a Kind Lads 92971 Barnes Custom Crafts 92972 76 Boutique 92973 Pumpkin Patch Productions 92974 The Longaberger 92975 The Major Group 92976 Norwex 92978 LuLaRoe 92979 Stella & Dot 92970 Parachute and Paintbrushes 92977 Talent -
Active Companies 2-1-2021
ACTIVE COMPANIES 108 TAP HOUSE & BURGER BAR 1600 TONGASS AVE HOLDING LLC 1601 TONGASS LLC 1768 RENTAL 1926 CUB COURT 215 MAIN STREET ASSOCIATES LLC 2275 RENTAL 28 CREEK STREET LLC 3 GS MARINE FABRICATION 3 RAVEN'S RENTAL 3137 RENTALS 3244 FIRST RENTAL 3295 TONGASS AVE, KETCHIKAN, LLC 362 D1 LOOP ROAD RENTALS 4205 CAMBRIA LLC 4206 CAMBRIA DR W LLC 472 N YORKTOWN RENTAL 49ER BAR & LIQUOR STORE 49TH STATE SECURITY SERVICES 50 FS LLC 517 ANDERSON 5213 SHORELINE DRIVE 525 FRONT STREET 55 N COFFEE 5TH DAY TAXIDERMY 623 GRANT ST LLC 81 PHILLIPS LANE 814/816 WARREN 86 ELECTRIC LLC 8X8 INC 907 CLEAN 907 MOBILE MECHANICS 910/912 PARK AVE 963 FOREST PARK DRIVE A & S ENTERPRISES A A B BOOM TRUCK COMPANY A LITTLE TASTE OF TEXAS LLC A P & T WIRELESS INC A TO Z BATTERY DOCTORS A TO Z RENTALS A&K ENTERPRISE LLC A.J.'S GOURMET BURGERS AAA FENCE INC AAA MOVING & STORAGE INC AAA SPORTFISHING COMPANY AB CONSTRUCTION LLC ABM INDUSTRY GROUPS LLC ACCEL FIRE SYSTEMS INC ACCENTUATE THE POSITIVE ACCUVEIN INC ACE RENTAL ACH CONSULTING LLC ACORN STAIRLIFTS INC ACS INTERNET LLC ACS LONG DISTANCE LLC ACTION ADVENTURE CHARTERS ACUITY SPECIALTY PRODUCTS INC ADP LLC ADT LLC ADVANCED COMMUNICATIONS INC AERO SERVICES C/O ATLANTIC AVIATION AIKIDO KEIKO DOJO AIM BOOKKEEPING SERVICES AIMEE SHULL PHOTOGRAPHY AIR MARINE CO INC AIRPORT LOUNGE & SNACK BAR LLC AISHA FINE JEWELRY AJK VISTA DRIVE AK WELDING AND REPAIRS LLC ALASCOM ALASKA ACOUSTICAL ALASKA AFFORDABLE ADVENTURES ALASKA AIRLINES INC ALASKA AMPHIBIOUS TOURS LLC ALASKA BEACH CABINS ALASKA BUSINESS PARTNERS ALASKA CANOE EXPERIENCE LLC ALASKA CATAMARAN LLC ALASKA CATCH THE ALASKA CLEARING INC ALASKA COACH TOURS ALASKA COASTAL RETREAT ALASKA COMMERCIAL DIVERS INC ALASKA CREPE CO ALASKA CRUISES INC ALASKA DIESEL POWER INC ALASKA DISCOUNT TOURS ALASKA EAGLE ARTS ALASKA ESCROW & TITLE INS. -
Businesses As of 7/31/17 DBA Name Address
All Businesses as of 7/31/17 DBA Name Address Line 1 Line 2 City State Zip Code A LAKE COMPANY 2300 LAKE AVE PUEBLO CO 81004 "A FRESH START" HOME REPAIR AND REMODELING 3205 GEM DR PUEBLO CO 81005 #1 A LIFESAFER OF COLORADO, LLC 810 S PORTLAND AVE PUEBLO CO 81001 0.1 AFFORDABLE HAULING & MOVING 1723 E 1ST STREET PUEBLO CO 81001 0.5 HAULING 9 FLINTLOCK CT PUEBLO CO 81008 1 SHAMROCK'S FINEST LANDSCAPES 1830 JERRY MURPHY RD PUEBLO CO 81001 1 STORY LLC 16359 260TH ST GRUNDY CENTER IA 50638 1-800 CONTACTS INC 261 W DATA DRIVE DRAPER UT 84020-2135 101 PARK AVENUE PARTNERS, INC 277 PARK AVENUE FLOOR 16 NEW YORK NY 10172 107 S GRAND LLC 107 S GRAND STUDIO 1 PUEBLO CO 81003 13TH STREET BARBER SHOP 1205 N ELIZABETH PUEBLO CO 81003 1A SMART START INC 4850 PLAZA DR IRVING TX 75063 1ST RATE SERVICE PLUMBING 225 S SIESTA DR PUEBLO WEST CO 81007 2017 CHILE AND FRIJOLE FESTIVAL 1 CITY HALL PLACE PUEBLO CO 81003 21ST CENTURY BUILDERS 2401 W 11TH ST PUEBLO CO 81003 3-D AUTO DETAIL & TINT SHOP 1910 E 4TH ST BLDG C PUEBLO CO 81001 303 TECHNOLOGIES, INC 7955 E ARAPAHOE CR #2525 CENTENNIAL CO 80112 360 RAIL SERVICES LLC 385 INVERNESS PKWY ENGLEWOOD CO 80112 360i CERTIFIED HOME INSPECTIONS 3418 LUCIA COURT PUEBLO CO 81005 3D SYSTEMS INC 333 THREE D SYSTEMS CIRCLE ROCKHILL SC 29730 3D'S CIGARS 307 S UNION AVE PUEBLO CO 81003 3FORM, LLC 2300 S 2300 W SALT LAKE CITY UT 84119 3M COMPANY 3M CENTER ST PAUL MN 55144 3SI SECURITY SYSTEMS INC 486 THOMAS JONES WAY STE 290 EXTON PA 19341 4 RIVERS EQUIPMENT HOLDINGS, LLC 685 E ENTERPRISE DR PUEBLO WEST CO 81007 4FRONT ENGINEERED -
Don't Get Caught in a Pyramid Scheme!
DON’T GET CAUGHT IN A PYRAMID SCHEME! Pyramid schemes are just one of the many ways scammers capitalize on human greed. These business-centered schemes have been around for years, but scammers are still growing rich off victims. Recently, the state of Washington sued LuLaRoe, a massive pyramid operation that had collected millions of dollars from small business owners who believed it to be a legitimate organization. Pyramid schemes are especially dangerous because they can be difficult to spot. They make every effort to appear legitimate, and are often confused with authentic multi-level marketing (MLM) companies. Let’s take a look at what constitutes a pyramid scheme and how to avoid falling into their trap. What is a Pyramid Scheme? A pyramid scheme is a system in which participating members earn money by recruiting an ever-expanding number of “investors.” The initial promoters of the business stand on top of the pyramid. They will recruit additional investors, who will each also recruit even more investors. At each level, the number of investors multiplies. Investors earn a profit for each new recruit, and pass on some of the profit to their recruiters. The further up on a pyramid an investor is, the more money they will earn. Sometimes, pyramid schemes involve the sale of a product, but that is usually just an attempt to appear authentic. The product will typically be faulty, and will obviously not be the focus of the business. The main object of all pyramid schemes is to recruit new investors in a never-ending quest for expansion. -
Business Name D/B/A Name #1A LIFESAFER of COLORADO LLC
Business Name D/B/A Name #1A LIFESAFER OF COLORADO LLC 101 PARK AVENUE PARTNERS INC 1-800 CONTACTS INC 3 DAY BLINDS LLC 303 FURNITURE INC 303 TACTICAL LLC 303 TACTICAL 360 RAIL SERVICES LLC 3BB INC GREAT CLIPS 3D AUTOGLASS 3D STAINLESS LLC 3FORM LLC 3R Technology Solutions Inc 3SI SECURITY SYSTEMS INC 3T CULINARY INC THREE TOMATOES CATERING 4 FRONT ENGINEERED SOL INC 4283929 DELAWARE LLC ROCKY MTN PET CREMATION SERVICES 48FORTY SOLUTIONS LLC PALLET COMPANIES LLC 4imprint, Inc. 4LIFE RESEARCH CSA LLC 4LIFE RESEARCH USA LLC 50 IN 52 JOURNEY INC THE JOURNEY INSTITUTE 5071 INC 50-80 MASSAGE 5280 Contract Flooring 5280 HEATING COOLING & REFRIGERATION 5280 MAINTENANCE INC 5280 Stone Company, LLC 5280 Stone Company, LLC 5280 Telecom, LLC 5280 TOWING LLC 52Eighty Customs 5850 EAST 58TH AVENUE LLC 5850 EAST 58TH AVENUE LLC 6 ITALIAN WOLF SECURITY LLC 6171 LLC THE HIDEAWAY TAVERN 7-ELEVEN INC 7-ELEVEN STORE #38170 7-ELEVEN INC 7-ELEVEN STORE 37570 7-ELEVEN INC / JC INC 35828A 7-ELEVEN STORE 35828A 7-ELEVEN INC 23829 7-ELEVEN STORE 23829 7-ELEVEN INC 23829B 7-ELEVEN STORE 23829B 7-ELEVEN INC 34087 7-ELEVEN STORE 34087 7-ELEVEN INC 35828 7-ELEVEN STORE 35828 7-ELEVEN INC 35864 7-ELEVEN STORE 35864 7-ELEVEN INC 36013 7-ELEVEN STORE 36013 7-ELEVEN INC 36013 7-ELEVEN STORE 36013 7-ELEVEN INC 36464 7-ELEVEN STORE 36464 7-ELEVEN INC 36775 7-ELEVEN STORE 36775 7-ELEVEN INC 37291 7-ELEVEN STORE 37291 7-ELEVEN STORE 34087A 7-ELEVEN INC / S&As STORE INC 34087A 7-ELEVEN STORE 36013A EMHT INC & 7-ELEVEN INC 800-FLOWERS INC 8X8 INC A & A QUALITY APPLIANCE A & B Engineering Services LLC A CUSTOM COACH A CUT ABOVE LANDSCAPE LLC A GOOD LIL TRANNY SHOP LLC A GOOD SHOP INC A HOLE IN THE WALL CONSTRUCTIO AHW CONSTRUCTION A MAN WITH A VAN INC A SIMPLEE GORGEOUS BOUTIQUE A TO Z RENTAL CENTER, INC. -
Best Face Forward Masks
Business Name Business Combined Address Business Classification Code Description Business Type BEST FACE FORWARD MASKS, LLC 10313 HITE CIR GENERAL LICENSE ELK GROVE, CA 95757 "ALWAYS THE BEST" HANDYMAN SERVICE 10252 SHOECH WAY GENERAL LICENSE ELK GROVE, CA 95757 . DAPPONAIR 6425 LAGUNA MIRAGE LN HOME BASED BUSINESS INTERNET SALES ELK GROVE, CA 95758 . REALIZEYOU 9686 MIZZENMAST CT GENERAL LICENSE Retail ELK GROVE, CA 95758 @ EASE COMMERCIAL CLEANING SERVICES 9017 WARMSPRINGS ST GENERAL LICENSE ELK GROVE, CA 95758 @YOUR REQUEST 5050 LAGUNA GENERAL LICENSE #112-463 95758, CA 96758 1 LOVE DOG RESCUE 9255 SURVEY RD 14 GENERAL LICENSE ELK GROVE, CA 95624 1 TO 1 REALTY 9571 S COAST LN GENERAL LICENSE REAL ESTATE SERVICES ELK GROVE, CA 95758 106 AUTO SALES 6716 ROMANZO WAY HOME BASED BUSINESS Retail ELK GROVE, CA 95758 110 TOWING 8575 ELK GROVE FLORIN RD GENERAL LICENSE APT 236 ELK GROVE, CA 95624 112887 9821 BURROWING OWL WAY GENERAL LICENSE ELK GROVE, CA 95757 1320 PERFORMANCE 10461 GRANTLINE RD STE GENERAL LICENSE 150 ELK GROVE, CA 95758 1320 PERFORMANCE 9143 UNION PARK WAY GENERAL LICENSE AUTO PARTS ELK GROVE, CA 95624 1-ADAM-12 2505 DINWIDDIE WAY HOME BASED BUSINESS ELK GROVE, CA 95758 1ST CHOICE PIZZA & CURRY 9308 ELK GROVE BLVD 100 HOME BASED BUSINESS FOOD SERVICE ELK GROVE, CA 95624 1st Choice Pizzas 9308 ELK GROVE BLVD 100 GENERAL LICENSE ELK GROVE, CA 95624 1-STOP COMMUNICATIONS LLC 4801 LAGUNA BLVD SUITE GENERAL LICENSE Retail 104 ELK GROVE, CA 95758 2 HOT HAIR SPOT 8617 SCARLET SAGE WAY GENERAL LICENSE ELK GROVE, CA 95624 24 HOUR FITNESS #808 PO BOX 2409 GENERAL LICENSE CARLSBAD, CA 92018 24/7 RESCUE 9498 BERKLEY GLEN WAY GENERAL LICENSE AUTO SERVICE ELK GROVE, CA 95624 2JAZY4U 9448 TROLIO WAY HOME BASED BUSINESS Retail ELK GROVE, CA 95624 2MOMS N PARTY KITS 3209 BABSON DR HOME BASED BUSINESS RENTALS ELK GROVE, CA 95758 2ND CHANCE SHUTTLES 241 LANFRANCO CIR GENERAL LICENSE TRANSPORTATION SACRAMENTO, CA 95834 3 POINT REAL ESTATE & CONSTRUCTION, INC. -
5M1b Ltr to FTC Re MLM Income and Health Claims FINAL
June 30, 2021 VIA EMAIL Samuel Levine Acting Director, Bureau of Consumer Protection Federal Trade Commission 600 Pennsylvania Ave. N.W. Washington, D.C. 20580 [email protected] Dear Mr. Levine: For far too long multilevel marketing (MLM) companies have used deceptive marketing to promote the business opportunity and sell their wares.1 In fact, the problem is so longstanding and pervasive that the MLM industry’s self-regulatory body, the Direct Selling Self-Regulatory Council (DSSRC), stated just last month that: Though the industry has made significant strides to curtail the dissemination of unsupported claims regarding income potential …, there is still a great deal of work ahead of us to assure that the product and earnings claims communicated to consumers and potential salesforce members are truthful and accurate.2 Moreover, industry trade group, the Direct Selling Association (DSA), published an article in its January 2021 journal that stated, “[d]irect sellers will never be able to wholly prevent distributors from making improper claims.”3 Such pessimism is cause for concern as improper health and income claims not only deceive consumers but also lead to social, emotional, and physical harms, and financial hardship.4 Given this backdrop, TINA.org urges the Commission to implement a penalty offense program targeting the direct selling industry and its market-wide practice of utilizing deceptive earnings representations and false health claims.5 For more than 40 years, the FTC has consistently pursued individual MLM companies making -
Active Companies
ACTIVE COMPANIES 101 PARK AVENUE PARTNERS INC 1601 TONGASS LLC 3 GS MARINE FABRICATION 3 RAVEN'S RENTAL 3137 RENTALS 3244 FIRST RENTAL 3295 TONGASS AVE, KETCHIKAN, LLC 350 LAYNE 362 D1 LOOP ROAD RENTALS 4205 CAMBRIA LLC 4206 CAMBRIA DR W LLC 49ER BAR & LIQUOR STORE 50 FS LLC 5213 SHORELINE DRIVE 623 GRANT ST LLC 81 PHILLIPS LANE 814/816 WARREN 907 CLEAN 910/912 PARK AVE 963 FOREST PARK DRIVE A & S ENTERPRISES A A B BOOM TRUCK COMPANY A M HOME STORE A P & T WIRELESS INC A TO Z PREMIER AUTO AND BATTERY SERVICE AAA FENCE INC AAA MOVING & STORAGE INC AAA SPORTFISHING COMPANY AB CONSTRUCTION LLC ABM ONSITE SERVICES - WEST INC ACCENTUATE THE POSITIVE ACE RENTAL ACH CONSULTING LLC ACN COMMUNICATION SERVICES ACS INTERNET LLC ACS LONG DISTANCE LLC ACTION ADVENTURE CHARTERS ACUITY SPECIALTY PRODUCTS INC ADAMS MARINE SERVICES ADP LLC ADT LLC ADVAITA YOGA CENTER ADVANCED COMMUNICATIONS INC ADVENTURE KARTS, LLC ADVOCARE INTERNATIONAL, LP AERO SERVICES C/O ATLANTIC AVIATION AFFORDABLE CONSTRUCTION AIMEE SHULL PHOTOGRAPHY AIR MARINE CO INC AIRLINE APARTMENTS, LLC AIRPORT LOUNGE & SNACK BAR LLC AJK VISTA DRIVE AK WELDING AND REPAIRS LLC ALASCOM ALASKA ACOUSTICAL ALASKA AIRLINES INC ALASKA AMPHIBIOUS TOURS LLC ALASKA APPRAISAL ASSOCIATES INC ALASKA BARGAIN CENTER ALASKA BEACH CABINS ALASKA BORN AND RAISED SEAFOODS ALASKA BUSINESS PARTNERS ALASKA CARIBBEAN DEVELOPMENT LLC ALASKA CATAMARAN LLC ALASKA CATCH THE ALASKA CLEARING INC ALASKA COACH TOURS ALASKA COASTAL RETREAT ALASKA COMMERCIAL DIVERS INC ALASKA COMMUNITY PARTNERS LLC ALASKA CRUISES INC ALASKA DIESEL POWER INC ALASKA DISCOUNT TOURS ALASKA DREAMS ALASKA DUTY FREE INC ALASKA EAGLE ARTS ALASKA ESCROW & TITLE INS. -
City of Wasilla Business License Listing As Of: Mar 1, 2018
City of Wasilla Business License Listing as of: Mar 1, 2018 Business License Business Name Long Owner or Contact Mailing Address City State Zip Line of Line or Type of Business Control Number Business Number Code 6921 14354 (A S S) ALASKA SEPTIC GUY MCWHORTER 340 BOLTIN ST ANCHORAGE AK 99504 56 ADMIN SUPPORT / SPECIALIST UNIT A WASTE MGMT / REMEDIATION 5282 11123 #1 A LIFESAFER OF ALASKA - ATTN SALES TAX DEPT 4290 GLENDALE CINCINNATI OH 45242 81 SERVICES / REPAIR / WASILLA MILFORD RD MAINTENANCE / GROUPS 4028 8434 A & A COMMERCIAL STEVEN APLING & 2600 E BROADVIEW WASILLA AK 99654 53 REAL ESTATE / RENTAL / DONNA ABER AVE EQUIPMENT LEASING 5858 14357 A & E AUTOMOTIVE JOHN ESADA 645 G STREET STE ANCHORAGE AK 99501 81 SERVICES / REPAIR / 100-699 MAINTENANCE / GROUPS 4783 10015 A ALASKA MONUMENT STEVEN A TWIFORD PO BOX 794 PALMER AK 99645 31 MANUFACTURING / PROCESSING / MILLING 6939 14392 A BLACK SHEEP SHOP ALBERTA & BRIAN 617 S KNIK-GOOSE WASILLA AK 99654 42 RETAIL / WHOLESALE PORTERFIELD BAY RD STE J TRADE / VENDING TRADE 5023 10622 A CAB 2 LLC ROGER ERDMANN PO BOX 874690 WASILLA AK 99687 48 TAXI/TOWING/ TRANSPORTATION/ WAREHOUSING 4943 10455 A FULL MOON SEPTIC DANIEL & ANGELA PO BOX 298252 WASILLA AK 99629 56 ADMIN SUPPORT / CHAMP WASTE MGMT / REMEDIATION 7118 14759 A HOME WITH HEART SARAH SUMMERS 5728 D VOSLER JBER AK 99506 42 RETAIL / WHOLESALE AVE TRADE / VENDING TRADE 7277 15082 A PERFECT FIT AK MELISSA DOBBS PO BOX 879455 WASILLA AK 99687 62 HEALTH CARE / SOCIAL ASST / CHILD CARE 5258 11075 A TO Z REALTY A TO Z HOLDINGS LLC 124 W. -
The Behavioral Economics of Multilevel Marketing Heidi Liu
Hastings Business Law Journal Volume 14 | Number 1 Article 3 Winter 2018 The Behavioral Economics of Multilevel Marketing Heidi Liu Follow this and additional works at: https://repository.uchastings.edu/ hastings_business_law_journal Part of the Business Organizations Law Commons Recommended Citation Heidi Liu, The Behavioral Economics of Multilevel Marketing, 14 Hastings Bus. L.J. 109 (2018). Available at: https://repository.uchastings.edu/hastings_business_law_journal/vol14/iss1/3 This Article is brought to you for free and open access by the Law Journals at UC Hastings Scholarship Repository. It has been accepted for inclusion in Hastings Business Law Journal by an authorized editor of UC Hastings Scholarship Repository. For more information, please contact [email protected]. 3_LIU_FINAL.DOCX (DO NOT DELETE) 4/26/2018 12:16 PM The Behavioral Economics of Multilevel Marketing Heidi Liu* Abstract Multilevel marketing companies (MLMs) — sales organizations that compensate independent consultants based on the sales and recruitment of other consultants — form a significant part of the American economy. Yet, MLMs provide little information to regulators and potential participants regarding potentially material information. Although MLMs are often compared to pyramid schemes, consultants argue that participation in a MLM allows them to make money outside of the traditional full-time labor force. This paper examines the law, economics, and psychology of MLMs, suggesting that MLMs may draw on prospective consultants’ cognitive biases in persuading consultants to join and continue a MLM. Consultants may be led to focus on unlikely benefits and to conform to notions of success that seem consistent with the “American dream” — even to their financial loss. * Ph.D. -
Multilevel-Marketing Companies Like Lularoe Are Forcing People Into Debt and Psychological Crisis
Multilevel-marketing companies like LuLaRoe are forcing people into debt and psychological crisis 8/6/17 Quartz Alden Wicker © Provided by Quartz Instagram Photo “I was urged to stop paying my bills to invest in more inventory. I was urged to get rid of television. I was urged to pawn my vehicle. I just had to get on anxiety meds over all of it because I’ve started having panic attacks.” In June 2016, Sophie (name changed) quit her job in the suburbs of Fort Worth, Texas, to sell for LuLaRoe, a rapidly growing clothing company that offers self-employment opportunities to American women in the form of hawking hyper-hued apparel. LuLaRoe’s consultants told her—and tens of thousands of other mostly rural and suburban women over the past five years—that she could provide for her family, join a sisterhood of supportive women, and find meaning in her life again through the conduit of colorful, stretchy fashion—all for a reasonable upfront investment of around $5,000. As economic opportunity has become more concentrated in urban areas in the U S , rural communities have fallen behind. Residents of towns like Casper (Wyoming), Spring Creek (Nevada), and DeRidder (Louisiana) all missed out on economic recovery following the 2007 global financial crisis. Bootstrapping, hard-working families in these regions are urgently searching for a way to regain their economic liberty, along with their dignity. Fed the fantasy of achieving the all-elusive American dream, many of them are being wooed by multilevel- marketing companies. Known as MLMs (or “direct-sales”), the current US administration is stocked with their cheerleaders: Betsy DeVos, the secretary of education, is married to a co-founder of Amway; Ben Carson is a spokesperson for a vitamin MLM called Mannatech; and president Donald Trump used to have an MLM, Trump Network, and was a spokesperson for another .