SANTA ANA, Calif. (CN) — Arbonne, an multilevel marketer of health and beauty products that claims to have generated $541 million in revenue last year, is a pyramid scheme, according to a class action RICO complaint in Southern California.
Lead plaintiffs Cynthia and Michael Dagnall sued Arbonne International and five of its top executives, who live in Arizona, Colorado, New Jersey, the United Kingdom and Australia. The Dagnalls say that despite Arbonne’s claim of $541 million in net revenue last year, 86 percent of the company’s “consultants” lose money.
They call it a “pyramid scheme masquerading as a direct seller of health and beauty products,” in their May 25 complaint in Orange County Court.
The Dagnalls, husband and wife, say that between them they paid Arbonne $2,840 in fees and product purchases, for which they received $30 in payments.
Cynthia Dagnall joined Arbonne in February 2015 and stuck with it until May 2016. Her husband enrolled a few weeks after her and left in May 2015.
Arbonne requires its thousands of consultants to pay for start-up fees and annual dues and “makes it a virtual necessity that the distributors purchase Arbonne products — lots of them,” the complaint states. But as in other pyramid schemes, consultants make the most money by bringing on other consultants to sell products.
“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,” according to the 13-page complaint.
As is typical in a pyramid scheme, nearly everyone but those at the top lose money; only those at the top of the pyramid, such as the five 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,” the complaint states.
The individual defendants are Donna Johnson of Cave Creek, Arizona; Cassandra House of New South Wales, Australia; Tarrah Brandsma of Parker, Colorado; Iain Pritchard of Chester, United Kingdom; and Deborah Neal of Pittstown, New Jersey.
The Dagnalls seek class certification, nullification of arbitration provisions in their contracts, and damages and costs for unfair and deceptive trade, unjust enrichment, and racketeering.
They are represented by Betny Townsend with Reid Collins & Tsai, in Austin, Texas.
Arbonne did not immediately respond to a request for comment through its website.