Arbonne Sued For Being A Pyramid Scheme
Update: 3/20/2018 This lawsuit has now been settled.
In a lawsuit by Cynthia Dagnall and Michael Dagnall from Texas, Arbonne has been sued for being a pyramid scheme. There are some very powerful statements made in this lawsuit. Many of these companies make you use arbitration if you have a problem with them. Arbonne is no exception. This couple does not care.
Arbonne is an international multi-level marketing company that reportedly generated $541 million in net revenues in 2016. It also is a pyramid scheme masquerading as a direct seller of health and beauty products. Its many millions in revenues are primarily derived from bilking its hundreds of thousands of distributors.
Participants in the Arbonne scheme are its so-called independent consultants (the “Consultants”). Arbonne requires them to purchase start-up packages and pay annual dues, and the Arbonne system makes it a virtual necessity that the distributors purchase Arbonne products—lots of them. In return, the Consultants receive the right to receive compensation based in primary part on their recruitment of new Consultants (who pay fees, pay dues, and purchase product). Just like a classic pyramid scheme, the more new Consultants a Consultant brings into the Arbonne program (and the more payments those new Consultants make), the more money a Consultant can make.
Unlike participants in a classic pyramid scheme, the Arbonne Consultants receive health and beauty products, which the Consultants can theoretically sell. But that fact makes Arbonne no less a pyramid scheme. As a group, the Consultants may sell a limited amount of products at retail, but the bulk of the money paid to the Consultants comes from other Consultants. Just like a classic pyramid scheme, Consultants are feeding off the money paid by other Consultants.
The vast majority of Arbonne’s Consultants lose money. The only people who make money from the Arbonne pyramid scheme are the very few at the top of the pyramid. These few— including Defendants Donna Johnson, Cassandra House, Tarrah Brandsma, Iain Pritchard, and Deborah Carroll Neal (collectively, the “Individual Defendants”)—actively participate in the Arbonne pyramid scheme and profit from the payments to Arbonne made by the many thousands of other losing Consultants.
Arbonne’s Own Promotional Materials are Misleading
Arbonne’s own website boldly reinforces the message portrayed by the Individual Defendants—that anyone can get rich with Arbonne, just as the Individual Defendants have. Arbonne entices potential new Consultants with promises of the dream life:
Imagine the freedom to live the life of your dreams by starting your own successful business. That’s the beauty of our business model. So many of our Independent Consultants have done just that, and have transformed their careers, their lives … themselves. They have created a better work-life balance because they choose when to work and when to play. With the right leadership, tools and effort, you can too.
This message is obviously misleading, and Arbonne knows it. Arbonne’s own income statement shows that over 86% of Consultants lose money with the Arbonne business model. Certainly, a Consultant’s success or failure depends to some degree on “leadership, tools and effort,” but the clear implication from the message is that any person willing to put in effort to Arbonne will be financially successful. Unless 14% of Arbonne Consultants have the “right leadership, tools and effort,” the implication from Arbonne’s website is belied Arbonne’s own disclosures.
Background with Arbonne for Cynthia Dagnall and Michael Dagnall:
Between February 2014 and May 2016, Cynthia Dagnall spent approximately $2,500 in fees, product purchases, promotional materials and costs related to attending Arbonne’s annual convention in Las Vegas. Her last payment to Arbonne was May 31, 2016. Over the course of her association with Arbonne, Cynthia received approximately $30.00 in payments from Arbonne.
Michael Dagnall joined Arbonne a few weeks after his wife in February 2014. He never ended up making money on Arbonne’s business opportunity. Michael paid Arbonne $340.00 in fees and product purchases between February 2014 and May 2015. His last payment to Arbonne was May 2015. Over the course of his association with Arbonne, he received $0.00 in payments from Arbonne.
Arbonne Scam Conclusion
In my opinion, Arbonne is another recruiting scam. It is incredibly difficult to make any significant amount of money selling skincare products directly to your friends and family. They pay commissions to six levels deep in a distributors downline. Only 13% of all U.S. Arbonne Independent Consultants earned a monthly commission check. For the 13% that were considered active 90% averaged $3,391 per year or less. You can purchase Arbonne products easily for 20% below retail on Ebay and Bonanza. Recruiting others is where the real money is in this business opportunity. Why are you paying them to sell products for them? I would avoid the Arbonne business opportunity.