MONAT Is Like A Pyramid Scheme Lawsuit Claims

There has been a recent rash of lawsuits against MONAT. More than 500 complaints have been filed with the BBB and their BBB page is currently down for an update. In a recent class action lawsuit, MONAT has been compared to a pyramid scheme.

MONAT is a MLM company selling naturally based age-prevention products. They opened their doors in 2014.

MONAT starts with changing your hair and eventually changes your life. We offer a generous compensation plan, an exceptionally nurturing support system, and caring, committed leaders who treat you like family. – Source monatglobal.com

Here are the highlights from this class action lawsuit:

This class action is brought to remedy violations of applicable law in connection with the sale of hair care products designed, manufactured, marketed, and sold by MONAT  Global Corp. (“MONAT” or “Defendant”). Plaintiffs seek damages and equitable remedies for themselves and the Class (defined in ¶ 63, below), which includes consumers who have purchased MONAT Hair Care Products (“MONAT Hair Care Products”).

MONAT Hair Care Products are promoted as “naturally-based” and “safe.” These and other claims made by MONAT are patently false. Indeed, MONAT claims without caveat that MONAT Hair Care Products are “suitable for all skin and hair types.” See https://monatglobal.com/the-science-of-monat/ (last checked February 15, 2018). And not only does MONAT claim that their products are safe for everyone, but that MONAT Haircare Products will have substantial health benefits, including the cessation of hair loss and hair regrowth. Beneficial health and efficacy claims regarding the MONAT products are ubiquitous on MONAT’s website and in MONAT’s marketing materials. For example, MONAT’s claims about Capixyl, a central ingredient to many, if not all of its products, “clinical results prove significant decrease in hair loss effect and increase in hair regrowth.” Id. MONAT goes on to claim “higher proven results than the other leading hair rejuvenation brands.” Id. Relying on the foregoing statements in Defendant’s so-called “The Science of MONAT” section, which shows a scientist in a lab coat with rubber gloves and a microscope, reasonable consumers reach the logical conclusion that MONAT Haircare Products are safe for everyone and will re-grow hair for those losing it.

Far from the panacea that MONAT Haircare Products claim to be, in reality MONAT has caused scalp irritation and hair loss for many consumers. And when consumers complain about hair loss or scalp irritation MONAT dutifully erases all such comments. Shamefully, hair loss claims are met with unsubstantiated claims of a “detox” period that will cause increased hair loss before the purported benefits of MONAT Haircare Products accrue or worse yet, suggestions to spend more money on still more expensive MONAT Haircare Products. To be sure, MONAT has systematically denied legitimate claims of hair loss and methodically sued individuals with the courage to stand up and tell the truth about the harm caused by the product. For example, Vickie Harrington, a woman who started a Facebook page dedicated to victims of MONAT was sued by MONAT on January 26, 2018 for “in excess of $225,000.” See MONAT Global Corp. v. Harrington, USDC EDNC Eastern Division Case No. 4:18-CV-8 at Docket No. 1, ¶78(g).

Unlike many beauty products sold through big box stores and salons, MONAT is sold through a multi-level marketing scheme in which the company actively recruits purchasers to become “Market Partners.” Market Partners are utilized to market and sell MONAT Haircare Products through social media and other marketing channels to consumers. MONAT provides a sales platform for its Market Partner agents and micro-websites hosted on the MONAT website where customers can place orders for MONAT Haircare Products and credit the Market Partner. If these Market Partners recruit additional Market Partners they share in the “down-line” profits generated by their recruits. In this way, MONAT functions in a manner many would think of as a pyramid scheme.

At the top of the pyramid is the Urdaneta family. According to the MONAT website, MONAT is led by chairman and founder Luis Urdaneta, and his son Rayner acts as CEO. See https://monatglobal.com/meet-the-team/ (last checked February 15, 2018). A video on the MONAT website touting MONAT Haircare Products and promoting the money that Market Partners can make features Messrs. Urdaneta frolicking in a mansion that they arrive at via an orange Ferrari. See https://monatglobal.com/history/ (last checked February 15, 2018). The ostentatious display of wealth comes along with a gratuitous garage shot featuring a Bentley and a Range Rover. The video does not mention the sharp business tactics employed by the
family or the damage their products have caused.

As described below, an inherent design and/or manufacturing defect in Defendant’s MONAT Hair Care Products causes significant hair loss and scalp irritation to many consumers—the aforementioned Facebook page started by Ms. Harrington had more than 8,000 members. Defendant provides no warning about this consequence and, in fact, makes numerous assertions about the safe nature of the products. These statements and others, which related uniformly to all the MONAT Hair Care Products, were and are false and have harmed Plaintiffs and the Class. In fact, MONAT Hair Care Products use numerous harsh chemicals and known human allergens. As a result of the defective nature of the MONAT Hair Care Products, they
were and are unfit for their intended use and purpose.

During the Class Period, Defendant also represented that MONAT Hair Care Products are sulfate-free. However, MONAT Hair Care Products actually do contain sulfates, such as Sodium C14-16 Olefin Sulfonate, rendering these statements demonstrably false.

Similarly, during the Class Period, Defendant represented in no uncertain terms that MONAT Haircare Products do not contain petrochemicals. To the contrary, among other petrochemicals, MONAT Haircare Products contain Butylene Glycol—a known petrochecmical— rendering these statements demonstrably false.

Once the hair loss caused by MONAT Hair Care Products begins, it can often continue for weeks or months before abating, even if the consumer immediately discontinues use of the product. The hair loss is not de minimus—consumers who suffer hair loss often lose significant amounts of hair. Plaintiffs have suffered injury in fact and loss of money or property as the result of their use of MONAT Hair Care Products.

This action further arises from Defendant’ failure, despite their longstanding knowledge of a material design defect, to disclose and/or warn Plaintiff and other consumers that MONAT Hair Care Products can and do cause substantial hair loss and/or scalp irritation. Indeed, not only did Defendant fail to warn consumers, they actively concealed customers’ comments concerning hair loss, by blocking and/or erasing such comments from the Internet, filing lawsuits and issuing cease and desist letters to individuals who made public statements concerning damage caused by the products.

Further, based on inherent defects in the formula and/or manufacture of the MONAT Hair Care Products, Defendant knew or should have known that its warranties were being breached by the hair loss and scalp damage caused by MONAT Haircare Products. Defendant knew or should have known that Plaintiff and Class members would suffer damages as the result of the hair loss caused by MONAT Hair Care Products. Defendant concealed these facts from Class members, including Plaintiff. Defendant’s failure to disclose this defect about which they knew or should have known constitutes both an actionable misrepresentation or omission, and an unfair, unlawful, fraudulent, and deceptive business practice.

– Source Whitmire et al v. Monat Global Corp.