May 22, 2013 16:25

MLM Attorney Kevin Thompson Files Class Action Lawsuit Against eFusjon

Nov 24 2009 in eFusjon, Kevin Thompson by Troy Dooly

MLM attorney, Kevin Thompson filed a class action lawsuit against energy drink marketer eFusjon in in the SUPERIOR COURT OF THE STATE OF CALIFORNIA, COUNTY OF SAN DIEGO, NORTH COUNTY DIVISION. This may very well be a first in Network Marketing history.

Kevin is the one MLM attorney I send folks to who really need a helping hand. I’ve gotten to know Kevin personally, and believe he stands tall for our profession – period. He may be the only MLM attorney who specializes in the Profession, and not just the company side of things, or the distributor’s side.

Kevin Thompson

He is a former distributor himself, and fully understands the good, bad and ugly. If there is one perosn I would trust my MLM future to, it’s Kevin Thompson.

So, when I received the update on this Class Action lawsuit I just smiled. Over the last few months I had heard something was going to take place, but just waited until it went public. Although, none of us know where this legal issue will lead, I personally believe it shows that as a profession our members, at every level are willing to stand up for what is right!

Well, I tend to fall on the more conservative side of things myself, so I am glad to see this MLM legal action start.

Over the next few weeks we will dig deeper and look at what has happened and what might change in the future.

One very interesting situation we should bring up is the fact that Gerald P. Nehra and Richard W. Waak are the corporate MLM attorneys for eFusjon. Gerry is one of the most respect MLM attorneys and he has represented companies I have run in the past.

However, he was also representing Ad Surf Daily, when the Secret Service shut them down. It will be an interesting case.

You can read the whole story on Kevin’s blog, Next Generation Law.

Or you can bookmark ClassveFusjon.com

Kevin has also written a great synopsis on defining legitimate MLM from MLM pyramids which I suggest everyone read.

Through the Advocy Group, Kevin published this great reference on MLM Laws IN All 50 States.

Living An Epic Adventure,

Troy Dooly

Troy Dooly

Troy Dooly is recognized internationally as an influencer in the areas of personal branding, leadership development, marketing campaigns, organizational expansion, and corporate launch strategies. Dooly is a speaker, results coach, and radio host. He is a founding member, show host (Beachside CEO) and News Director of the Home Business Radio Network. He is a founding member, and currently serves on the Board of the Association of Network Marketing Professionals

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  • Pingback: CLASS v EFUSJON » Blog Archive » Kevin Thompson is the best MLM attorney

  • Chris W.

    Great info, Troy! This is really exciting. I was on the call a couple of weeks ago and heard you and Kevin talk. Great program! If what that lawsuit says is true, efusion is in some trouble.

  • Pingback: Efusjon’s Lawsuit- What Can We Learn From It? | Powerful Internet and Home Business Tips

  • http://www.lifeasitcouldbe.com/timn Tim N.

    This industry needs to have respectable legitimate companies that their roots are based in products or services that work and change lives and must have a FAIR comp plan. It is too bad that there are those that do not see it that way. I don't glory in that another company is gonna be shut down for bad practice because it is a mark on our industry. The naysayers then say "See thats all you guys are. Just a pyramid scheme" But I definately do agree that this action needs to be taken to get rid of the bad companies and hopefully there can be a standard set for other companies to have when they start. We are the ones that get hurt every time a bad company like that comes into this great industry.

  • Kent Froblom

    It's about time…All the hype and delays as he was signing new reps up. I want all my money back. And then to have the nerve to say that the Facebook launch was only a small part of the growth of this company. He was quoted as saying "we will change the mlm industry with our unique relationship with Facebook and with our beta testing we should have 10-12,000 new sign-ups every 3-4 days."
    Pleased to hear about the class action suit. He should return everyone's investment in that company.

  • http://www.financial-destination.com Sheryllyn McClintock

    Troy, a correction. Nehra wasn't representing Ad Surf Daily (ASD). He was hired as an expert witness for the case to review the comp plan and speak to its legality. That was all. Yes, he did find it to be a legal comp plan. That does not address if they were applying it or not. As it was written, it was legal.

    • http://intensedebate.com/people/troydooly troydooly

      Sheryllyn,

      The reality is Andy did hire Gerry to review their complete business model, when Andy left NME. Gerry went to ASD offices and to Andy's home and reviewed everything. In his opinion ASD was a legit business model.

      I respect Gerry and as I have mentioned in the past he has been corporate counsel for one of the companies I ran, and outside counsel for one I have equity in. However, in the case of ASD the business model was not legit. Nor is any pay to surf business with a compensation plan going to be seen as legit under current case law. There is no ads being sold to anyone outside the compensation plan. Now maybe Gerry told Andy to make some changes, and he did not, that I do not know.

      However, attorney's are not marketers by trade, and in most cases it is how the compensation plan is used, which cases a company to be legit or a pyramid. When a company promotes the "pay to play" aspect of their business over the movement of product or services to the end user, then they fall into the Pyramid side of things.

      Since the early turn of the century, every major "Pay to Surf" scheme has been shut down. Although there are still some smaller ones opporating, and a few offshore who are starting to bud here in the states, I have yet to review any which will be classified legit, which are promoting the massive amount of income to be made, by surfing other peoples ads.

      Maybe if the Feds keep shutting them down, someone will get it right. What makes the ASD case so important is the fact it was the Washington office of the Secret Service, which brought the original charges, and raided the ASD offices. There is still things which may not have come out in this case yet.

      Lately we have seen a new business model which seems to be working by AdZzoo and Local Ad Link (ZurVita) which are legit and may work. Both of these companies use a different compensation model and in the case of ZurVita it is just one of many income streams they offer to the consumers.

      Hope this clarifies my statement.

      Living An Epic Adventure,

      Troy

      • http://www.Financial-Destination.com Sheryllyn McClintock

        "when Andy left NME"

        Troy, what is NME?

        • http://intensedebate.com/people/troydooly troydooly

          Sheryllyn,

          I am sorry, I sometime get to writing and forget to spell the words. NME = New Millennial Entrepreneurs. Andy was one of the masterminds who helped the 21 year old founder launch this company out of Atlanta. The SEC came in and shut them down after they raked in close to $200 million dollars. The owner paid $100K in fines and was basically band from Auto Surfing. There are still several lawsuits still pending for some of the field reps.

          When Andy saw the writing on the wall, he took his top leaders and formed ASD. I supported the Auto Surf arena during its rise in popularity with managed computer security services, because so many of them were getting hacked. When they realized we had a compensation plan, the top leaders and owners of the companies joined my organization. Andy was one of the biggest.

          Great guy to be around, loved listening to his training. But like so many, he loves to ride a fine line. I brought up the fact back in the very beginning that pay-to-play auto surfing would not fly because it was built on a pyramid matrix. Each company thinks they have it figured out, and they get nailed.

          It works when there is no compensation or you use an affiliate pay model. When you add the hype and go past three levels, it will not fly. All of the money is from internal cunsumption, never from the outside. Or at least not at a percentage level which matters.

          Don't be a stranger,

          Living An Epic Adventure,

          Troy

          • http://www.financial-destination.com Sheryllyn McClintock

            "When they realized we had a compensation plan, the top leaders and owners of the companies joined my organization. "

            What organization is that, Troy?

  • http://intensedebate.com/people/artmeakin artmeakin

    Troy, as you know I've been around the MLM industry 40 years now. Started the series… The Shocking Truth About MLM Network Marketing in 1987. Over the years in my articles, lectures, etc., I've never outrightly mentioned a particular company but attempted to educate the pros and cons, do's and do not's, regarding comp plans and other various legal/regulatory aspects affecting MLM in general. Unfortunately… most people tend to learn through the "school-of-hard-knocks" rather than seeking out professional opinions or advice. And today it is easier than ever to seek out credible information (i.e. – Rod Cook, Troy Dooly, Len Clements, and others). Again… most people will not seek out this info. It usually takes a regulatory action to get people's attention.

    As to most new companies not making it… well it is shockingly true that only 0.6% of companies make it to their 10th year in business. Even when many new companies did everything correctly and right… they did not make it… for many reasons… the least of which was the compensation plan. Personally… I would go so far to say that many of the older companies (10 plus years or older) in business… if they started-up today with their current products, management, policies, procedures, and compensation plans… they would NOT make it… for various reasons. Furthermore… when many of the older companies started-up… they were not (at that time) legally or ethically compliant.

    I commend Kevin and others (in the class) for taking this self-regulatory action to help "clean-up" our industry. And I commend Troy for reporting it. I much prefer self-regulation to government regulation… although it really takes both.

    Art Meakin

  • Mark

    I am just now learning about the lawsuit, but I think the lawsuit is bogus, and based on misunderstanding. eFusjon is legitimate. There is no comparison between a "chain letter" pyramid scheme where people simply put money into the pyramid with the hopes of getting more money back. Here, you immediately get full value for the money you put in, in that you get a shipment of healthy, delicious energy drinks.

    • http://intensedebate.com/people/troydooly troydooly

      Mark,

      Thank you for stopping by, welcome to our community. I'm a firm believer in sharing both sides of an issue.

      I would like to ask a few questions.

      1. Why do you say there is no comparison to a pyramid scheme? By the way the use of "chain letter" is from the case law which crrated the illegal activity of pyramid schemes. Don't confuse its use in the complaint. You will see this term is often referrenced in class action lawsuits of this type. You can read the formalcomplaints of several Wall Street pyramids and ponzi's of late.

      2. Of all product sold, how much is sold to people who are not members of the compensation plan? In other words, product retailed or sold at a profit by distributors, not the company? Is it over 70% or even 50%?

      3. If all you do is buy product, and never sell to the end user at a retail level, then 100% of your income is generated through the matrix board. This is known as a classic MLM pyramid.

      4. Now I understand your point on "immediate value" However, personal value is different from "Fair Market Value." Based on the review of the complaint, watching several videos from officers of the company and doing the math. There is no market value. If you or any Efusgon distributor sell the product at the "suggested retail" then you will never reach a profit from selling product.

      This is a huge benchmark in determining legitimate MLM business models and MLM pyramids.

      This is not a lawsuit based on personal opinion, everyone loves the company they are marketing. It is about doing what is right to the average distributor.

      Again, thank you for coming by, I look forward to your answers.

      Living An Epic Adventure,

      Troy

      • http://www.renewyourbody.com Margaret

        Troy, referring to #2, are you saying that Life Force, Melaleuca plus about hundreds of other mlm companies are pyramid schemes? I didn't like Efusjon myself but… I think about 80% of the mlm companies are just recruiting new members nowadays.

        • http://intensedebate.com/people/troydooly troydooly

          Margaret,

          Thank you for stopping by and asking such a great question.

          So that everyone who is reading with fully understand your question, let's start with #2 of the complaint.

          "2. While pyramid schemes can take different forms, they are at core inherently illegal schemes by which their perpetrators induce others to join the scheme with the promise of high profits and rewards from a putative business. The reality of the schemes, however, is that rewards to those that join come almost exclusively from the recruitment of new participant victims of the scheme."

          Wayne (Mr Hillman) the founder of Life Force, and founding member of the Distributors Rights Association, has always focused on creating the best products in the areas of weight loss and nutrition. Which is why Life Force has more customers, than active reps. Throughout the the years there has been several millionaires created because of the Life Force business, and at times some teams have focused harder on recruitment, than moving products, however that was during a short retirement Wayne took at the beginning of this century. Since his return to day to day operations these folks have since left the company.

          We should also look at how the Life Force compensation plan limits and discourages "front-loading." Life Force pays a 55% Fast Start Bonus to upline sponsors on the first order of new distributors. Unlike some companies which pay a fast start bonus on total purchases, Life force limits the the bonus to 55% of a max of $224 BV. Plus the real cool part if the "Profit" side of things. Unlike the complaint against eFusjon, where the mandatory autoship plus shipping does not allow for the rep to make a profit, which pushes recruiting at all cost just to earn a profit. Life Force has a minimum $25 autoship to earn commissions on everything outside of of the distributors personal sales.

          Now let's take a look at Melaleuca.

          Frank VanderSloot may use a MLM compensation plan, but outside of the payout, it is hard to see how this company is MLM. When you hit their site, you do not see anything about compensation. Instead you see how they are helping people from the sale of products, to earning a part-time income by marketing products, not be recruiting new distributors. Frank is the only CEO who has ever gotten a law passed in the name of his company protecting his distributors from those who might leave and raid their downlines, stealing not just distributors, but customers.

          With $close to $900 million is sales last year, and again, when you read through their disclosures you see they have more customers buying products than active distributors. they also have created an MLM Diamond.

          So, NO we're not saying these companies are pyramid schemes!

          However, you are correct in thinking we are saying hundreds of others are MLM pyramids! All they focus on is building a shell game on recruting, by offering some flimsy product iwth little or no real value, in order to gain momentum, put millions in the pocket of the founders, at the expense of most distributors. And since none of us like to admit "we've been taken" we wall away thinking "I only lost a few hundred dollars, lesson learned."

          Yet, If we take a pre-launch company, which catches some momentum like eFusjon, when they talked about being part of Facebook, then it's easy to see how much can be taken in by the company, even if the majority of people do not stick. And it grows even bigger, when people are pushing front-loading.

          Hope this explains a little more. There are some fantastic MLM companies in business today. SOme old, some young, and some in pre-launch. Each of them have a story and focus on their product or services, not on some pie in the sky "money story."

          Helping people comes first, the money will follow.

          Living An Epic Adventure,

          Troy

    • Rob

      Mark,I would like to comment on your statement "healthy, energy drink" ! As a Sports Nutritionist, eFusion may be a liilte better than the Red Bulls,Monster etc. but it is far from a "healthy drink" my friend, all I am going to say is "Thermogenics" , Frutose, Clarified (watered down ) Acai, please don't put this drink in the healthy class.Sorry my friend looks like the company may lose in both product and the business departments.

    • J.B.

      Mark, the problem is sales requirements are not enforced, which in turn creates a self consumption business. That form of business, although lucrative, is in fact illegal. Maybe it should, maybe it shouldn't> the bottom line as of now, it is. This is not an opinion it's simply, and easily accessible information. Believe me if self consumption was legitimate – we'd all be rich.

  • Mark

    eFusjon's plan does not require people to buy inordinate amounts of product. 48 cans per month is less about 1.5 cans per day. That is not alot. Each can is about 8 ounces, so two cans would be 16 ounces, less than most people buy at a soda fountain. We go through our eFusjons way before our next shipment comes each month. You get great value for your money — the drinks are comparable in price to Monsters, Red Bulls, etc., and yet much better for you. The compensation plan, which includes getting on a monthly autoship plan, is very similar in that aspect to Mona Vie and other well-established companies. Many people buy the eFusjon drinks via autoship just to get the drinks, and not with the hope of making money. However, if they are able to make a little money by introducing their friends to a great product, that's not a bad thing.

    • http://intensedebate.com/people/troydooly troydooly

      Mark,

      On the surface I fully agree with you. Which is why it is so hard to determine legitimate MLM companies from MLM pyramids.

      You actually make the point of why the Efusgon business model is setup as a never ending pyramid, instead of an MLM Diamond.

      Based on what I read, and my brain computes, everyone, or at least the majority are on autoship, inside of the compensation plan.

      And in reviewing the complaint and reviewing the supporting evidence for filing the Class Action, it seems both the Efusgon and the complaint support what you are stating. Which again lands Efusgon right in the middle of the legal definition of an MLM pyramid.

      However, as I have said, I am open to share both sides, and I respect 100% where you are coming from as a Efusgon distributor.

      This case could have a huge impact on ALL companies and they way they do business. At the very midimum it will once agian show why using any form of Matrix compensation plan is very dangerous.

      Living An Epic Adventure,

      Troy

  • Bill M.

    The definition of a Pyramid is simple, there is no real product or service and any money made is from signup dollars from new distributors. You are right Troy, they are considered illegal.

    I have several successful MLM businesses I run, all promoting nutritional products. I know the people who run a resort of 8 Golf courses and they sell Red Bull everywhere, including the carts for $6ea. They asked me about a healthy option they could sell – I do believe a profit can be made unless efusjon or any other MLM beverage is priced higher – which I doubt they are…this is just one example.

    It's a business, if you promote the product as an "autoship" minimum strictly to new distributors, then certainly that is all your business will be made up as. Surveying the market, there is a HUGE hole with the healthy energy drink niche, and I have several Doctors, Pro and Olympic athletes, Colleges, High Schools all asking me the same thing: "Can you find us a healthy energy drink to market to youth and athletes?" Do you think I am making any money here on the "retail level"? —–>

    • http://intensedebate.com/people/troydooly troydooly

      Bill M.,

      Many pyramid schemes over the years have had viable products and services on the front-end. Poni schemes on the other hand usually are not backed up by a viable product or service.

      The wellness industry accounts for over 20% of our great profession, and there are serval great companies with wonderful products. And when you break it down to the mini-niche of energy drinks, you find a few companies inside of MLM who have not only developed solid products, they developed a compensation plan to go with them, which allow for both wholesale and retail sales. One in particular is now part of a larger company, and they have gone as far as to allow for a free preferred customer position (where the volume counts inside of the compensation plan) and they allow for the product to be sold in both small and large quantities to retail stores where it does compete side-by-side with Red Bull, Monster and Rock Star.

      In he case of eFusjon, the suggested retail price is less than the wholesale price + shipping. So if the company is promoting a suggested retail which is less than the total priced paid by the distributor to buy it, there is NO retail market. In this case ALL product must be sold inside of the compensation plan, in oder for a profit to ever be attained.

      However, if that is the case, when recruiting slows of stops, then the matrix collapses along with the company, because there was no retail or wholesale market for the product outside of the compensation plan. So you can doubt all you want, the facts are allover for eFusjon. In their own words, they have addressed the high shipping fees they charge and why.

      So, I am not sure what you read into what is written to assume I or others are talking about the mini-niche of Energy Drinks, we are focused on one company. I have friends who own Energy Drink MLM copanies who are doing very well. They have a great product, solid compensation plan, and a huge customer base outside of the compensation plan. At least three of my friends support the professional sports arena with their products because the products were created with athletes in mind.

      And at least one pre-launch company, has developed their new energy drink with one very famous athlete for a specific niche in the field of sports.

      I'm pretty sure we're on the same page!!!!

      Living An Epic Adventure,

      Troy

    • http://www.themlmdreamteam.vemma.com MLM Expert

      Bill, you need to get a hold of me! Verve, developed by several leading doctors, is the only healthy energy drink that has clinical studies on its formula, it has WADA certification from NSF and consumerlab.com, and is the official energy drink of 4 U.S. pro sports teams who are also distributors, which has never happened before in MLM history!

      In addition, Verve has one of the 2 highest ORAC scores of energy drinks tested to date, and it was just chosen 2009 Product of the Year by a leading U.S. fitness/health magazine whose judging panel included top fitness experts and leading doctors!

      It's the only healthy energy drink that can make ALL of the above statements! You can reach me at: kenstewartcalling@hotmail.com or visit our website: http://www.themlmdreamteam.vemma.com

      By the way, once you join our team, everyone we sponsor in the U.S. and 50 other countries goes below you as my partner and I (among the top leaders) are only building one leg!

      • http://intensedebate.com/people/troydooly troydooly

        MLM Expert,

        Glad to have you stop by and help out some of our community members.

        Living An Epic Adventure,

        Troy

  • Bill M

    (cont. – sorry, text box limited me) —->

    I don't know the entire beef here, but I think the real point is being missed – people make promises, don't build your own personal MLM business on promises (like Facebook, Broes or any of the other hype I heard people blindly following) but build it on a relationship you have developed with others in helping them identify a great product or service they can touch, taste and feel and everyone can benefit physically and financially partaking and sharing. And by the way, just about every MLM I know has an auto-ship, most require it and minimum volumes to keep your business active and qualified for commissions – business overhead that includes product/services. Or – maybe it's just me…

    All the best!

    • http://intensedebate.com/people/troydooly troydooly

      Bill M,

      It's easy to learn the real beef. Read the complaint.

      People do make promises. However, when the founders of the company are the ones making the promises, and you find out there are bold face lies, then where do you go for the truth?

      You are 100% correct relationships are the backbone. I host a daily radio show where I am sharing the inside scoop on the "Law of Connection" and how it is the glue which holds everything else together. But again, if the founders of the company are the ones spreading the hype, and it is not truthful, then the relationship is doomed from the very beginning.

      Bill, autoship has become a norm inside of the nutritional side of the business. However, the autoship should only be a qualifier for team overrides. If a company demands autoship for commissions off of personal sales then this is a "pay-to-play" trigger which is a no, no and illegal.

      By the way less than 40% of companies using a multi-level or network marketing compensation plan require an autoship, and these are mostly nutritional and service based companies, which make up 37.6% of the profession.

      Great conversation, and great throughts, thank you for sharing.

      Living An Epic Adventure,

      Troy

  • Brett

    Under a monetary system everyone is guilty of selling and someone always has something to gain.
    How much money is Kevin Thompson going to make if he wins this class action lawsuit?
    If not a cash amount, is the fame going to help him win more MLM corporate buiness?
    How much are current efusjon distributors going to lose in personal time, money invested, professional credibility and personal relationships?
    Why didn't Kevin approach efusjon ownership (outside of a lawsuit and as a real advocate of legitimate business), provide legal advice and allow them a chance to cure the allegations and modify the bad marketing behavior?
    If there are already laws in place in CA then why didn't Kevin make efusjon aware by shooting over the bow instead of making a full-on attack?
    Why efusjon? Why not make an example of a smaller start-up?…There are plenty to choose from.
    Because everyone has something to gain.

    • http://intensedebate.com/people/troydooly troydooly

      Brett,

      Thank you for stopping by and commenting. The issue is not how much a person gets paid, it is how they get paid. When the majority of income is from just recruiting new people into a compensation plan and not moving product to the end consumer outside the compensation plan its a pyramid.

      Read my current post on this issue. In the post I link to the eFusjon compensation plan to explain.

      If the class action goes in favor of the distributors then yes, Kevin will stand to gain as an advocate for the MLM profesison. And if the class action is dismissed, then he still wins as a fighter for the underdog.

      I can't answer for Kevin, but I can say win or lose he is standing for what is right, and on the side of distributors who are the underdogs in this case. eFusjon reps will not lose anything. In some cases they may be saves major fines and or jail time. In recent FTC cases the top distributors were also held responsible for decieving their downlines in MLM pyramids. With the class action suit active, the FTC may not go after eFusjon until they see what happens. As for the others they can file a deceleration and join the lawsuit.

      If the distributors read the complaint, review the case law quoted and review the compensation plan, then they will win and win big. We are all adult here, if you go after the quick buck, instead of doing the due diligence then we get burned. To try and blaim Kevin for filing a class action lawsuit for the back judgment of another adult in the USA is very strange. It's free enterprise, people have a right to make their own choices right or wrong, smart or not so smart.

      What gives you the impression Kevin or his partner did not approach the founder of this company or their MLM attorney Gerry Nehra?

      Again this goes beyond marketing issues, this is a compensation issue.

      What gives you the idea eFusjon is a large start-up? Their marketing?

      Great thoughts, and wonderful questions.

      Living An Epic Adventure,

      Troy

  • Brett

    I read the filing and it appears the allegations could have been simply corrected with changes in messaging, modification of compensation incentives for outside selling and resetting of retail pricing.
    Right now Kevin is selling "jump on my class action lawsuit bandwagon and slay the evil MLM dragons…."
    It appears from the threads there are a lot of efusjon distributors happy with the value being received by the product and the compensation plan. Some distributors were upset when the company adjusted the comp plan but that is a completely separate issue. Most of the upset distributors simply left the company.
    Free markets have a funny way of working on their own and when you aren't delivering value, people will stop buying.
    For Kevin's sake, I hope the monetary gain and personal notoriety are worth the destruction of efusjon.
    You don't have to 'win' a lawsuit like this to eliminate the company, the damage is already done and efusjon will either implode or die a slow death.
    Question everything,
    Brett

    • http://intensedebate.com/people/troydooly troydooly

      Brett,

      You still do not seem to fully understand the law and have not review the past case law. If what you just wrote happened, then the company would not be called eFusjon. A new compensation plan, change the marketing and increase the price of retail and you have a new company. Now someone would sue because of a bait and switch.

      Interesting way of describing the lawsuit, but I'm in. Every time we hit a recession we see these MLM pyramids come out of the woodwork, even more than in good times. But I have never seen an MLM attorney willing to put their reputation on the line for distributors. Most class action lawsuits are filed outsiders.

      This isn't about upset distributors. The complaint is very clear, this si about a company who is running a purported illegal MLM pyramid scheme.

      Are you saying nothing should have happened, just let the pyramid run it course and if people get hurt financially so be it?

      Are you saying it is not right to take a stand?

      Would you feel the same way if you saw someones constitutional rights being violated? Just walk away because the company is big? Just sacrifice the little folks?

      Maybe I am missing your point.

      Fee market is one thing. Running an pyramid scheme is another.

      This is the same attitude that kept the SEC agents from busting Madoff when they saw things which were wrong.

      Serously after reading the compensation plan, you want to tell me people are joining eFusjon because they think the product has value? They may $1.58 selling retail or $75 for recruiting a new distributor? Where is the vlaue… the product or the compensation plan?

      The lawsuit is to help stop other companies, not about beating eFusjon in and of itself.

      But, you are a great advocate for eFusjon and my hat is off to you for that.

      I am glad you have commented. It does give another side of the picture.

      Living An Epic Adventure,

      Troy

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  • http://www.facebook.com/djsartin DJ Sartin

    I truly don't know the specifics about eFusion's issues, however, I have heard so much, over the years regarding the issue of what constitutes a legal MLM that I have begun to seriously wonder also…what is the defining difference between an affiliate program that pays through more than one level, and a traditional MLM compensation plan, when it comes to determining legality?

    I have felt, for a long time now, that relying on laws, different in every state, that were put into place for other type businesses, has not served our industry well. We do need some actual laws in place that apply specifically to MLMs and Affiliate Programs. Because it seems the current system of governing these types of business leaves even the owners of the companies having to rely on attorneys who sometimes end up as shocked as the company owner by the court's decision if an issue arises.

    Appreciate your always objective views Troy,

    DJ

    • http://intensedebate.com/people/troydooly troydooly

      DJ,

      Thank you for stopping by. You truly ask some powerful questions. Although, this comment will not cover your questions in detail, I can give you the overview and if you read Kevin's book which defines the details you will find your answers.

      1. Affiliate programs focus on moving products to the end user 100% of the time. Some are one level, others will allow for sub-affiliates one of two levels deep. Anything over 3 levels is defined as an MLM.

      2. Companies using an MLM or Network Marketing compensation plan, (and contrary to popular belief those are not interchangeable words, they are two completely different compensation plans,) must NOT charge distributors a mandatory monthly charge in order to sell products or services of the company. In other words they can make commissions off their personal sales, and the sales of anyone their personally enroll. The second thing companies using an MLM or Network Marketing comp plan must do is offer a viable product or service at fair market value to the general public. In the case of eFusjon, the suggested retail is less than what it costs the reps wholesale to purchase. And third, their has to be a balance between internal consumption of the sales of products to end users who are not a part of the compensation plan.

      3. There are several federal regulations which do apply to affiliates and MLMs which all companies are to follow, along with affiliate and MLM laws in most states.

      One of the major issues is when the laws went into effect, the internet was not yet, playing a major role in MLMs or affiliates. SIne the invent of the net, companies can run virtually, here today and gone tomorrow. And, even when a company is doing their best to keep things right, distributors can hype the fire out of a product or comp plan, and screw it up for everyone else.

      Personally I do not believe the attorney's are shocked at anything. I think they fully understand the law, but because the money is so good either staying on retainer or launching a new company, they are willing to push into a gray area, knowing if the company gets hit, they will call on the attorney to defend them.

      Yes, I am biased, based on what I have seen lately. Great, and well respected MLM Attorneys who use to be very conservative are pushing the envelop. And in the end, it is the distributors who get hit the worst. What use to be "Built it right, built it once" is getting to be a thing of the past.

      That does not mean there are not great companies large and small, new and old who are doing things right. As a matter of fact most MLM companies never get in any trouble. It seems the young ones who push a HYPE based money story, or some over the top never seen before product or service are the ones who get hit. And each time they seem to have founding distributors or top field leaders who have had questionable backgrounds in the past.

      Hope that helps a little.

      Living An Epic Adventure,

      Troy

  • http://www.fullfusjon.com Efusjon

    This case has not yet been served to Efusjon so at this point it is just a speculative case. What it comes down to is that the plaintiff had was disgruntled and had some personal issues with a corporate staff member and decided to make a campaign against the company with the intention of damaging their reputation. This is nothing more than a frivilous attempt to discredit Efusjon. It is meant to make a bunch of noise and that is it.

    If you actually read the accusations contained in the document (which again has not been served), you will find some statements that clearly apply to all mlm companies. This is the reason this "threat of a lawsuit" is angering many people in other MLM companies, not directly associated with Efusjon. If this case were to go to court and won (which won't happen) then that would cause a domino effect of class suits against all MLM companies. Read the document for yourself and see what I mean. All it did for me was provide a little comedic relief…what's even more funny is that this is being taken seriously by people.

    If this case were to actually be served to Efusjon and go to court, Kevin will be up against a GIANT of a legal team…the same team that represents companies like Facebook and Toyota (the just won a massive case for Toyota). Believe me, you do not want to mess with these guys.

    Nope…this is just smoke and mirrors and people will see through it if they don't already.

    • http://intensedebate.com/people/troydooly troydooly

      eFusjon aka Jordan,

      WOW! this is very interesting. Let's take a look at what you wrote and see what is fact and what is subjective.

      1. the case is not speculative. It has been filed, and just because one party has not been served, negates the facts of the case.

      2. Seriously, "disgruntled!" Do you think we were under the impression the Plaintiff was a happy camper with eFusjon? However, if you or anyone truly believes an attorney is going to case a case just because someone has their panties in a wad, then you should stop drinking the kool aid your selling. I bet there is some solid evidence to backup the filing of the class action.

      3. If the class action lawsuit is just a "frivolous attempt to discredit eFusjon, and make a lot of noise" why do you feel you need to respond and give it any merit at all? Seems you must be concerned just a little to feel the need to respond.

      4. Yes, you are correct. All class action lawsuits are filed to protect a specific class inside of a specific industry. The rulings in this case will effect the whole direct selling industry. Specifically companies who use MLM or Network Marketing compensation plans. Although, there are a couple of others much larger than this one. Ignite which is 119 pages could go to court faster and get heard before the eFusjon case. And since we are still waiting on the Burn Lounge case, it could answer some of the questions in the eFusjon case.

      5. ROFLOL… Ok, let me get this straight. The case is a "frivolous attempt to discredit eFusjon and make a lot of noise", yet you are talking to people who are angry? Why, are they angry or concerned at all if the case is just about frivolousness and noise making?" Unless they are also in or running companies which do not do things legally.

      I have talked to hundreds of distributors and a dozen top CEOs and Founders and none of them are concerned at all. They all are glad some of these cases are finally going before a Judge. These folks have been running tight companies for years and are tired of watching people launch mlm Pyramids under the heading of legitimate MLM companies.

      6. I can see you have not done any due diligence on Kevin or his partner in this case. But let's take a look at your comment… GIANT of a legal team. Randy Jeffers had the #2 legal team in California when Destiny got hit. GIANT doesn't mean much, if they are clueless. Having a vey colorful background I can tell you I would not want Kevin to represent me in on a charge of "Attempted Vehicular Homicide" or "Assault with Deadly Weapon with the iIntent to Kill" because he is not a criminal attorney. NOr would I want my lead councel in a MLM case to be some GIANT legal brain from Facebook or Toyota. But, just so you know, it may surprise you to know, if Kevin feels he needs GIANTS in the corporate legal world, I think his former firm will have no problem coming to help one of their own. And their client base makes Facebook and Toyota look kind of small.

      Well, time will tell, nut there are far bigger cases than eFusjon we are all watching and following.

      Living An Epic Adventure,

      Troy

  • http://www.fullfusjon.com Efusion

    Hey Troy,

    I felt the need to respond so that others could hear the other side of the argument and hopefully see a different viewpoint on this issue…."panties in a wad"…lol … you must have just seen "Blind Side". That was a great move and a great line.

    Anyway, as is said, "Beware of one hand clapping". I'm just sharing what I feel to be true so as to bring the other hand to this debate.

    • http://intensedebate.com/people/troydooly troydooly

      Efusjon,

      I fully support your decision and it make complete sense. I would find it a privilege for you to stay up on this issue and have you come by and comment. I beleive showing both sides is a must for folks to fully decide where they stand.

      And for our subscribers and guests I want folks to know something. Although, Jordan and I do not fall on the same page when it comes to eFusjon, I can tell you if I were looking at eFusjon as a company, I would be looking for a leader like Jordan.

      So, if you are looking for a leader in eFusjon, and are willing to take the risk, while all this gets sorted out. Then I would suggest you contact my friend. He is the real deal!

      Living An Epic Adventure,

      Troy

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