Melaleuca Distributors Sued

ScamBuster · #1 05-07-05, 12:36 PM

As a work-at-home mom, I am always looking for new income producing efforts. I came across a job posting for a marketing executive with The M.O.M. Team. Going to their website, I was quickly impressed with their compassion for home-bound moms and for their plan to sell environmentally safe products via the internet (Melaleuca - www.melaleuca.com. Sounded like an e-tailer situation to me so I requested more information.

Two days later I received a call from "Donna" telling me more about the company, the products and inviting me to participate in a conference call the following evening.

Something Amway-ish rang out of the call, but there was absolutely no mention of a down-line or recruiting. I certainly never found anything of the sort on their website.

But after the call, I decided to do more digging and due diligence into The M.O.M. Team.

1. They are an MLM. To be successful you must build a down-line. It took some time, but I found evidence of this.
2. The members spam in a fashion that they call drip.
3. Ads for The M.O.M. Team are smathered across every message board on the internet, fishing for victims.
4. The commission structure is deceptively described.

I have included a copy of a posting from ezboard.com from an ex-M.O.M. team member. She sums it up nicely.

"I'm going to go way out on a limb here because I really need to clear up lots of confusion about MT. I'm an ex-MT. I'm going to state the facts, clear and simple.

MT (sic - The M.O.M. Team) has over 3,000 members now, all of which are being taught to post 10 to 15 ads per day on the internet, preferably on message boards. They are given a list of message boards and free classified ad sites. So, in effect, they are being 'taught' to spam.

After my experience with them, I came out feeling as though I'd left a cult. These gals worship the founder, and will abide by anything she tells them to do.

They have so many rules that it makes it virtually impossible to effectively run an internet marketing campaign without being deceptive.

You cannot mention the name of the company.
You cannot e-mail information to people (I used to break that one).
You cannot take no for an answer. "No just means now's not the right time."
You are to create a drip file for people who say no and send follow up letters.
The latest rule is that if you create your own website, you are no longer allowed to mention MT on it, or link to your MT website from it. So there goes any hope of creating any sort of individual identity.

Your goal on MT is to enroll anyone you can get your hands on. It's a numbers game. They beg people to join. Any warm body will do.

Some of them prey on people who are down on their luck.

Some of them have unkind things to say about people who cannot afford to pay the $29 enrollment fee.

They are misinformed, and because of this, they misinform others.

For instance, what they tell you is that you will earn 7% on your customers' monthly product purchases. Wrong!! What you will earn is 7% on your customers' base points purchased. Big difference!! Mel (sic - Melaleuca) has a minimum monthly base point requirement of 35, which translates to about $55-60 depending on what you buy (they'll tell you $43). You get paid 7% of the 35 base points, or $2.45, NOT 7% of the $55 or 60.

They will also tell you that once you enroll 8 people and reach Director, your commission goes up to 14%. What they DON'T tell you is that your monthly base point requirement goes up too!! Way up to 75 base points!! That's more than double.

They tell you that when you reach senior director you get a $400 car allowance. What they don't tell you is that you have to actually buy a brand new car, and as long as you remain a senior director, Mel will give you $400 a month toward your car payment.

And then there are the phone bills. My phone bill was at least $100 a month. For an internet business?

All in all, I sunk at least 1k in MT. My biggest check was $23.00. I paid for offline advertising because of all of the message board spam and bad reputation they'd established on the internet, and I still couldn't get anyone to join because people would figure out that it was a pyramid. And, although I didn't want to admit it to myself at the time, I guess in a sense it is. After all, the founder(s) of the MT made out like a bandit, and everyone at the bottom is left with nowhere to go. At least not on the internet!"

Be wary of The M.O.M. Team. As a "Teamer" your hard work makes no money.

Roc****e
Centennial, Colorado

http://ripoffreport.com/reports/ripoff34248.htm

techcrafters · #2 06-23-05, 04:35 PM

And, of course, there's always the fact that they just never seem to get around to telling new prospects that there is no way to create a walk-away, residual income with the company anymore - the only way to continue to receive a bonus check from them is to continue to recruit new people.

-Mary
http://coachme4success.com

Scrub · #3 07-15-05, 07:19 AM

Yep, here is another person sharing her experience with the MOM Team aka Melaleuca Aka The Welliness company.

Melaleuca - The M.O.M. Team BIG RIP OFF. Idoha Falls Iowa *REBUTTAL employee ..Melaleuca and The M.O.M. Team

Company Address
Melaleuca - The M.o.m. Team
3910 South Yellow Stone Hwy
Idoha Falls Iowa 83402
U.S.A.
Phone Number:
800-282-3000

I too have been involved with Melaleuca Aka The Welliness company.

I was told i could not use the name Melaleuca so for a while i have trained myself not to say the word. My exprence has been short lived only a couple of months.

Finally figured out that the only one making money was the company. I tried to bring others in and Thank God I was not successful. I don't want to be cause of anyone else loosing hard earned money.

The M.O.M. team everything i have heard from this group of women is praise praise praise. for the company they are like a bunch of little brain washed machines. I personaly got the feeling that they were like a Cult.

YES i said Cult. They want to set in on all these phone presentations and everyone is just like the other. Praise for the products. They are good products But a few of the women i have spoken are out there This company is there GOD and i get the feeling if you don't believe the way they do then they won't nothing to do with you. Although I did purchase the product and i have to say I do like them but not enough to stay with the company and spend $60-$70.00 per month or more. I just can't afford that.

My biggest problem with the company is that everything you want to buy from the company is now on eBay. take a look. just type in the word melaleuca and you can find it. From everything i heard and read myself this is breaking all the rule.

They tell you over and over again not to use their name and people are out there selling the stuff on eBay. I myself sale on eBay but i never used it to sale their products.

I don't understand why the company is not doing anything about this it is taking money away from the people who are trying to make a go of it. I've been told that there is proubly going to be a law suit against those selling and against eBay. We'll just have to see.

The company is makeing their money the ones loosing are the ones like myself who tried to play by the rules and not sell to the open market.

I guess i will have to wait and see if anything comes about. I did request a refund of my $29.00 I hope i get it. but again i'll have to wait and see.

Debbie
carrollton, Georgia
U.S.A.

Scrub · #4 07-15-05, 07:22 AM

WhoIs Lookup performed by Karen's WhoIs
http://www.karenware.com/

Whois Server Version 1.3

Domain names in the .com and .net domains can now be registered
with many different competing registrars. Go to http://www.internic.net
for detailed information.

Domain Name: MELALEUCA.COM
Registrar: NETWORK SOLUTIONS, LLC.
Whois Server: whois.networksolutions.com
Referral URL: http://www.networksolutions.com
Name Server: NS2.MELALEUCA.COM
Name Server: NS1.MELALEUCA.COM
Status: REGISTRAR-LOCK
Updated Date: 21-oct-2004
Creation Date: 29-jul-1995
Expiration Date: 28-jul-2010

>>> Last update of whois database: Fri, 15 Jul 2005 04:23:29 EDT <<<
Registrant:
Melaleuca, Inc
3910 South Yellowstone Hwy
Idaho Falls, ID 83402
US

Domain Name: MELALEUCA.COM

Administrative Contact, Technical Contact:
Melaleuca, Inc. domadm@MELALEUCA.COM
3910 S YELLOWSTONE HWY
IDAHO FALLS, ID 83402-4342
US
208-522-0700 fax: 208-535-2320

Record expires on 28-Jul-2010.
Record created on 29-Jul-1995.
Database last updated on 15-Jul-2005 07:21:12 EDT.

Domain servers in listed order:

NS1.MELALEUCA.COM 12.152.168.130
NS2.MELALEUCA.COM 12.152.168.131

Scrub · #5 09-09-06, 05:21 PM

False TV Advertisments Submitted: 7/16/2005 12:48:45 PM
Modified: 8/31/2006 1:38:23 PM

Melaleuca please read, I have done 2 years of research on this Idaho Falls Idaho *REBUTTAL employee ..I agree with this persons comments

Company
Melaleuca
Address:
melaleuca.com
Idaho Falls Idaho
U.S.A.
Phone Number:

Fax:

I have been reading this site for many months and never thought that I would respond, but I think I need to. I have two college degrees and own my own retail business. I had a baby one year ago and since then decided I wanted to own my own business and not be gone 40-50 hours a week. (I opened the store 6 months ago and am making no money from it yet)

I have spent 2 years researching home businesses, pyramids, mlm's, any scam you can think of and lost much money in the process. In researching, going to seminars, filling out forms, sending money, phone calls, internet searcing, Better Business Bureau's, etc... here is what I have found... and what I have found works for ME.. not necessarily you.. but for myself.

Quixtar(might have the spelling wrong) sounded so good to me at the meeting. It made sense to buy products from a company and have others shop there too and make money from that. After attending the meeting, I did a lot of research and decided because of it's affiliation with Amway it gave everyone a negative feel and I didn't want to deal with it. I have since learned that the people who make money with Quixtar make it from selling tapes, learning materials, etc. Not for me.

I have checked into herbalife twice. The products may be fine, never tried them. What was a problem for me was the way they represented themselves. I know now that when on the internet these companies don't like to say who they are because they want to get you into their informational meeting first. Fine. That's fair. What was upsetting for me was when I was in the middle of one of the phone information meetings, they still wouldn't tell me who they were. If you were proud of your company you should say so. The first time I lost 39.95 for their informational booklet and could never get a refund. That was about 3 years ago. This time, after getting angry and they finally told me they were herbalife about 3 months later, 4 e-mails and 3 messages via phone I was refunded. I still get e-mails from her all the time. I just don't respond, doesn't bother me that much, just annoying. So, for me I wasn't impressed with the individuals I came across with herbalife. So, not for me.

I have also lost money in the envelope mailing scams, taking pictures of property (can't remember what that was called), but he wouldn't give me my money back unless I sent several letters to companies trying to make this work) I didn't want to go thru it so I just let him have my 29.95, I figured he needed it more than I did.

I am still trying surveys and so far have only made money from survey savvy. All of the rest are entering you into drawings to win money. Big deal. Or, you will get money if you sign up for offers from "our trusted sponsers". What happens is the fine print says you are signing up for a monthly fee. So you don't make any money. I learned this the hard way. I do have a friend that says her husband does surveys and test drives cars etc and makes money. I have yet to get the names from him. I am still trying.

I have signed up for 29.95 to be a mystery shopper. Have yet to recieve a call. I will take blame for this though. I feel as though I didn't fill out everything I should have.

So, as you can see I have tried many things, and will keep trying. Now I will tell you my melaleuca experience if you are not bored to death yet!

2 years ago my girlfriend got me to go to a melaleuca presentation. I am so skeptical... I must have asked 30 questions, ripping on this and ripping on that. I felt bad if I didn't join.. so I joined the preferred customer for 29.95. I didn't get the value pack, 199.00 was just more than I wanted to spend. So, we bought a few cleaning products and started with that. I never ordered again. My attitude was, you can't con me, and yeah right this stuff does what you say it does. I didn't order again, said I couldn't afford it. My friend was fine with that, didn't want me doing anything I didn't want to. I cancelled immediately and never received a back up order or any problems.

About 5 months later, maybe less, I noticed that I was out of the tough and tender(I use it to clean bathroom, kitchen etc.) I realized I wanted more and got a bottle from her that she had extra at home. She never bothered me about it and I forgot about it. I had worked with another gal and another job in the meantime that spoke highly of it. I didn't engage in conversation about it, I thought, oh boy she is brainwashed too.

About 3 months ago, this same girlfriend told me that she is making about $4-500 a month from Melaleuca. I was shocked. This was just from getting friends and family introduced to it.

I decided I needed to check into it again. I didn't want to bug family and friends, so a friend of hers was going to help me online. I was still afraid that the products might be bad or it might be a bad company etc. Well, here is what I have found.

Melaleuca has been around for 20 years and they are debt free. I am not trying to offend anyone by this, but most of you aren't sure what the definition of a pyramid is. I wasn't either until I did alot of research. A pyramid is when there is no product involved and you only make money from others joining. For example, you send 500.00 to 10 people and they make money.. etc etc.. So, for all practical purposes this is not a pyramid. I can see why people think that, like I said I did too. They don't like to say they are an MLM and I had a problem with this too. Because they are set up like one. I did a lot of research on this, and honestly can't remember most of why it isn't a "true" mlm. But I will tell you what I remember. In an MLM only the top guys make money, fact is that is not true with Melaleuca. Also, you have inventory in a true MLM. You do not distribute the product or carry inventory with this. Again, I had a problem with this too. But here's what it boils down too. It is OK if it is an MLM. MLM's are not illegal. There are plenty that are ok, Mary Kay for example. Everyone, including myself has been so scared of the word MLM because some are fraudulent, but in and of itself, being an MLM is not illegal. Frank Vandersloot the founder of Melaleuca uses the term consumer direct marketing because that is what it is. I think they want to stress that becasue of all of the negativity with the MLM word.

I also found that Melaleuca is not chemical free. I originally thought they were. They do not have amonia, bleach, or formeldehyde in any of their products. I spent hours and hours making sure of this and looking at other name brand products to see if they did. Alot of them do. The two that were most shocking for me were johnsons baby shampoo and mouthwash. Anyway, I am not here to preach that. But I had to find it out for myself. So, they use chemicals, but not ones that are harmful.

I personally can't stand the smell of melaleuca oil, so I don't like one of the toothpastes, and the naturals handsoap. There are other options that smell better. But the oil has many uses and has been around for hundreds of years. There is no research because fda doesn't research herbs.

I had a hard time believing all of the health benefits that have happened for people as a result of the "pharmacy" products. What I have learned is that some things may help some, and not others. They don't claim that it will cure anything, so I am happy they don't. I have heard in person many people whom I trust tell me health benefits they have seen.

So, where am I at?? If anyone is still with me! I rejoined 3 months ago. My parents mr. and mrs. skeptical became customers and I didn't want them too. I didn't want anyone I knew blaming me later if they didn't like something. They were buying tons of vitamins etc every month from Skaklee and said why not get them from here so you can make a few dollars. How do you argue with that? So, from them buying the value pack, and I got a bonus becasue I restarted with a value pack too, my first check was $56.00. That worked for me. I haven't tried to talk to anyone else I know yet, because I didn't want to bug them. I have decided to invite a few people to a presentation at my house next month. If they don't want to join, that's cool. But if they are going to hear about it at some point, why not hear about it from me. I don't feel so bad asking them to see a presentation now, because I remember all of the candle, basket, pampered chef, mary kay etc parties I have went to for them.

I am going to give Melaleuca a try. The company is solid, can't find anything wrong with it's structure etc. The products are good, what it boils down to is switching stores. This is not for everyone, just as some people like Covergirl and some like maybeline. It's a different brand. But Covergirl doesn't give me a chance to refer others and make money. I will take it slow, because I am still cautious. But so far so good.

There are sales people within any company who will mislead, be pushy, etc. Don't blame this on the company. I can't tell you how many mary kay people or arbonne have relentlessly tried to sign me up. I don't blame this on mary kay, it's just not for me. I am finding that Melaleuca is a reputable company and I have seen people who are making a couple thousand or more a month. But, they have worked very hard for this. Nobody has told me I am going to get rich off of this, it is up to me what I put into it. So, if you want to switch stores and get some of the cancer causing chemicals out of your house and maybe make some money, this is for you. If not, don't sign up. It's really that simple.

Thanks for listening!

Lanae
minneapolis, Minnesota
U.S.A.

Source: Ripoffreport.com
http://www.ripoffreport.com/reports/ripoff150004.htm
http://www.ripoffreport.com/results....=&searchtype=0

Scrub · #6 09-09-06, 05:40 PM

Quote:

This business is not a SCAM. There have been complaints filed against Melaleuca. Please see Better Business Bureau

BBB Reliability Report
The Better Business Bureau®
Serving Eastern Idaho and Western Wyoming
320 Memorial Drive, Suite 2
Idaho Falls, ID 83402-3615
(208) 523-9754
Idaho Falls: Home

Melaleuca Inc
3910 S Yellowstone
Idaho Falls, ID 83402
Telephone: (208) 522-0700
Fax: (208) 528-2063
Melaleuca: The Wellness Company

The BBB reports on members and non-members. If a company is a member of the BBB, it is stated in this report

BBB Definition:
report - A summary of activity reflected in a company's BBB file. Includes basic business background, BBB membership information, and Bureau complaint activity over the previous three years. Also reports may include any known government actions, advertising issues or other information that results from activity conducted by the BBB. .

Local Start Date: September 1985
Principal: Mr. Frank VanderSloot, President/CEO
Customer Contact: Ms Julie Miller, Legal Dept - (208) 522-0700
Entity: Corporation
Incorporated: August 1985, ID
Employees: 2324
File Open Date: October 1987
TOB Classification: Manufacturers & Producers, Cosmetics-Wholesale & Manufacturers, Health & Diet Food Products-Wholesale/Manufac, Marketing Consultants, Product Development & Marketing
BBB Membership: This company is a member.

Additional DBA Names
Iglide.net
Melaleuca The Wellness Company

BBB Membership Status

This company has been a member of this Better Business Bureau since October 1987. This means it supports the Bureau's services to the public and meets our membership standards.

Program Participation
This company has agreed to use special procedures including arbitration

BBB Definition:

arbitration - US National BBB.org: Dispute Resolution Services

, if necessary, to resolve disputes through their participation in the following programs: Membership Identification

BBB Definition:

Membership Identification - A BBB program that allows members to identify themselves as BBB members in off-line media when the member signs a formal commitment to resolve disputes, if necessary, through arbitration.

, BBBOnLine

BBB Definition:

BBBOnLine - A national BBB dispute resolution program offered to companies who transact business via the Internet and allows the company to display the BBBOnLine Reliability Seal. Refer to https://www.bbbonline.org/reliability/Rel_EN.asp for a fuller description of the program and eligibility requirements.

Nature Of Business

The company lists itself as a Direct Marketing Company. The company contracts with independent marketing executives to sell its various lines of nutritional, pharmaceutical, personal care, household cleaning, and pet care products. They also offer travel, phone and credit card services. Independent Marketing Executives are required to order a minimum monthly product supply, but are not required to maintain an inventory of products. The company states that it offers a "Satisfaction or Money Back Guarantee".

Customer Experience

Based on BBB files, this company has a satisfactory record

BBB Definition:

satisfactory record - A business identified in our report as satisfactory has, based on Bureau files, been in business for at least one year, and has voluntarily provided the Bureau with all information requested about the business and its product or service. If any complaints have been received about the business, their number has not been considered by the BBB to be extreme, given the nature of the company's business and the volume of business transacted. Complaints are also generally typical of what might be expected for this type of business. A business stated to be satisfactory has not been the subject of any recent law enforcement actions concerning its dealings with the public. If the business has been contacted by the BBB about its advertising or selling claims, it has modified or substantiated its practices to the Bureau's satisfaction. In addition, the BBB has a clear understanding of the company's business, and the business is not in an industry which has raised significant marketplace concerns.

with the Bureau. A satisfactory record

BBB Definition:

satisfactory record - A business identified in our report as satisfactory has, based on Bureau files, been in business for at least one year, and has voluntarily provided the Bureau with all information requested about the business and its product or service. If any complaints have been received about the business, their number has not been considered by the BBB to be extreme, given the nature of the company's business and the volume of business transacted. Complaints are also generally typical of what might be expected for this type of business. A business stated to be satisfactory has not been the subject of any recent law enforcement actions concerning its dealings with the public. If the business has been contacted by the BBB about its advertising or selling claims, it has modified or substantiated its practices to the Bureau's satisfaction. In addition, the BBB has a clear understanding of the company's business, and the business is not in an industry which has raised significant marketplace concerns.

means a company has been in business for at least 12 months, and properly addressed matters referred by the Bureau. The company does not have an unusual volume of complaints, or any government actions involving its marketplace conduct. The Bureau understands and has no concerns about the company's products, services and type of business.

This location is the headquarters location for this company.

When considering complaint information, please take into account the company's size and volume of transactions, and understand that the nature of complaints and a firm's responses to them are often more important than the number of complaints.

The Bureau processed a total of 355 complaints about this company in the last 36 months, our standard reporting period. Of the total of 355 complaints closed in 36 months, 105 were closed in the last year.
Advertising Issues

BBB Definition:

Advertising Issues - Claims alleging print or electronic media advertised claims or practices misrepresent the service or product offer.

Resolved

BBB Definition:

Resolved - The company resolved the complaint issues.

1 - Company resolved the complaint issues. The consumer acknowledged acceptance to the BBB.
2 - Company addressed the complaint issues. The consumer failed to acknowledge acceptance to the BBB.

Contract Issues

BBB Definition:

Contract Issues - Claim of alleged failure to honor contract or agreement, work performed without authorization, or invalid contract.

Resolved

BBB Definition:

Resolved - The company resolved the complaint issues.

5 - Company resolved the complaint issues. The consumer acknowledged acceptance to the BBB.
6 - Company addressed the complaint issues. The consumer failed to acknowledge acceptance to the BBB.
Administratively Closed

BBB Definition:

Administratively Closed - The BBB determined the company made a good faith and reasonable effort to resolve the issues, although the complainant was not always satisfied with the outcome.

1 - BBB determined the company provided proper verification that indicated there was no obligation to resolve the issues of the complaint.

Billing or Collection Issues

BBB Definition:

Billing or Collection Issues - Claim alleging billing errors, unauthorized charges, or questionable collection practices.

Resolved

BBB Definition:

Resolved - The company resolved the complaint issues.

9 - Company resolved the complaint issues. The consumer acknowledged acceptance to the BBB.
1 - Company offered a partial (less than 100%) settlement which the consumer accepted.
66 - Company addressed the complaint issues. The consumer failed to acknowledge acceptance to the BBB.
2 - Company offered a partial (less than 100%) settlement which the consumer failed to acknowledge acceptance to the BBB.
Administratively Closed

BBB Definition:

Administratively Closed - The BBB determined the company made a good faith and reasonable effort to resolve the issues, although the complainant was not always satisfied with the outcome.

6 - BBB determined the company made a reasonable offer to resolve the issues, but the consumer did not accept the offer.

Sales Practice Issues

BBB Definition:

Sales Practice Issues - Claims of alleged sales presentations made in person or by telephone that contain misrepresentations of the product or service, high pressure sales practices, failure to disclose key conditions of the offer, and verbal representations not consistent with written contractual terms or agreements.

Resolved

BBB Definition:

Resolved - The company resolved the complaint issues.

5 - Company resolved the complaint issues. The consumer acknowledged acceptance to the BBB.
23 - Company addressed the complaint issues. The consumer failed to acknowledge acceptance to the BBB.
2 - Company offered a partial (less than 100%) settlement which the consumer failed to acknowledge acceptance to the BBB.
Administratively Closed

BBB Definition:

Administratively Closed - The BBB determined the company made a good faith and reasonable effort to resolve the issues, although the complainant was not always satisfied with the outcome.

4 - BBB determined the company made a reasonable offer to resolve the issues, but the consumer did not accept the offer.
2 - BBB determined that despite the company's reasonable effort to address complaint issues, the consumer remained dissatisfied.

Delivery Issues

BBB Definition:

Delivery Issues - Claims alleging delayed delivery of ordered merchandise.

Resolved

BBB Definition:

Resolved - The company resolved the complaint issues.

2 - Company addressed the complaint issues. The consumer failed to acknowledge acceptance to the BBB.

Service Issues

BBB Definition:

Service Issues - Claims of alleged delay in completing service, failure to provide promised service, inferior quality of provided service, or damaged merchandise as a result of delivery service.

Administratively Closed

BBB Definition:

Administratively Closed - The BBB determined the company made a good faith and reasonable effort to resolve the issues, although the complainant was not always satisfied with the outcome.

1 - BBB determined that despite the company's reasonable effort to address complaint issues, the consumer remained dissatisfied.

Customer Service Issues

BBB Definition:

Service Issues - Claims of alleged delay in completing service, failure to provide promised service, inferior quality of provided service, or damaged merchandise as a result of delivery service.

BBB Definition:

Customer Service Issues - Claims alleging unsatisfactory customer service, including personnel's failure to provide assistance in a timely manner, failure to address or respond to customer dissatisfaction, unavailability for customer support, and/or inappropriate behavior or attitude exhibited by company staff.

Resolved

BBB Definition:

Resolved - The company resolved the complaint issues.

14 - Company addressed the complaint issues. The consumer failed to acknowledge acceptance to the BBB.
Administratively Closed

BBB Definition:

Administratively Closed - The BBB determined the company made a good faith and reasonable effort to resolve the issues, although the complainant was not always satisfied with the outcome.

1 - BBB determined the company made a reasonable offer to resolve the issues, but the consumer did not accept the offer.
Product Issues

BBB Definition:

Product Issues - Claim alleging a product does not meet the expectations of the complainant, including defective merchandise.

Resolved

BBB Definition:

Resolved - The company resolved the complaint issues.

2 - Company resolved the complaint issues. The consumer acknowledged acceptance to the BBB.
1 - Company addressed the complaint issues. The consumer failed to acknowledge acceptance to the BBB.

Refund or Exchange Issues

BBB Definition:

Refund or Exchange Issues - Claim of alleged failure to honor company policy or verbal commitment to provide refunds, exchanges, or credit for products or services.

Resolved

BBB Definition:

Resolved - The company resolved the complaint issues.
30 - Company resolved the complaint issues. The consumer acknowledged acceptance to the BBB.
154 - Company addressed the complaint issues. The consumer failed to acknowledge acceptance to the BBB.
5 - Company offered a partial (less than 100%) settlement which the consumer failed to acknowledge acceptance to the BBB.
Administratively Closed

BBB Definition:
Administratively Closed - The BBB determined the company made a good faith and reasonable effort to resolve the issues, although the complainant was not always satisfied with the outcome.

8 - BBB determined the company made a reasonable offer to resolve the issues, but the consumer did not accept the offer.
1 - BBB determined that despite the company's reasonable effort to address complaint issues, the consumer remained dissatisfied.

Issue Not Defined
Resolved
BBB Definition:

Resolved - The company resolved the complaint issues.

1 - Company addressed the complaint issues. The consumer failed to acknowledge acceptance to the BBB.

Additional File Information
General information comments: Prospective participants in any marketing plan should realize that successful achievement and advancement depends on the sale of products to customers. The bureau suggests that participants weigh all facts involved in establishing an independent business and check all state and local requirements.

Industry Tips

BBB - Better Business Bureau - Idaho Falls

Scrub · #7 09-09-06, 06:11 PM

Melaleuca Distributors Sue their Upline
and the Company

March, 2000

Fourteen Melaleuca distributors have sued their upline and the company on charges that have become all too familiar to followers of MLM lawsuits. The crux of this case rests on claims that the company and its representatives knowingly, fraudulently and persistently misrepresented their distributor retention rate.

Distributor retention is vital to the success of any MLM endeavor, because you have to be able to sponsor new people faster than the old ones quit. In the landmark FTC decision of 1979, Amway testified to a 50% retention rate, which was excellent for the direct sales industry. This means that, in any given year, 50% of the distributor force quits. Anyone wanting to succeed at sponsoring would have to sponsor two for every one they want to keep.

Melaleuca, on the other hand, represented its retention rate to be a whopping 94.5 percent, according to the plaintiffs' petition:

"For Melaleuca to have a retention rate of 94.5 percent tells the prospective distributor that the products must be very good for so many people to continue to use them, and that the ability to build and maintain a business with such a retention rate is guaranteed. This was, indeed, the message and representation by Defendants."

The petition further explains:

"Plaintiffs were able to build large and successful groups. However, after a time, Plaintiffs each saw their numbers diminishing. Distributor after distributor was being dropped from the active lists. Rather than a positive, upward trend which would be expected as a consequence of the greatest retention rate in the history of multi-level marketing, Plaintiffs saw their numbers either decline or become stagnant, despite new distributors being added all of the time. When asked, Defendants would blame the numbers problem on their own lack of effort and initiative, saying that harder work would bring Plaintiffs back into the same realm as the rest of the company. . ."

This led to the plaintiffs experiencing

"a gradual diminishment of their monthly income. Each of these Plaintiffs could not continue to participate in the business which required so much attention and so little in return. As a consequence, these Plaintiffs have disrupted careers and dashed hopes, dreams and expectations."

James Holton, along with his wife Kim, had been neglecting other businesses in order to focus on the Melaleuca distributorship. They had sponsored a great many family and friends, relying on the company's information. Then the shoe dropped. According to Holton, his upline, the Hagans, admitted at a large sponsoring meeting that

"At this meeting, the Hagens confessed, for the first time, that the 94.5 percent retention rate was not at all what had been represented. It was not 94.5 percent over time, it was not 94.5 percent per year, the Hagens said. Instead, it was more along the lines of 94.5 percent per month."

So (according to the complaint), instead of an average attrition rate of only 5.5% per year, as they had been led to believe, the Holtons discovered that the annual dropout rate was really 66% per year -- an enormous difference. Kim Holton, who had sponsored people she cared about, was thrown into a serious depression and eventually committed suicide, leaving her husband and son.

The petition outlines other distributor plaintiffs complaints of fraud and deceptiveness on Melaleuca's part. Distributors' businesses were terminated arbitrarily, and without just cause. Compensation plans were changed. Promises were never delivered. The plaintiffs, who all had invested significant time and effort and had achieved some measure of success, were left with nothing to show for their effort, while the company had profited considerably.

Sadly, this case has been tried, and a jury found in favor of the defendants.

The case was heard in District Court, in Harris County, TX. Texas has recently seen some significant changes in the tort, or personal injury, laws. Certainly there have been abuses in recent years. But if this courtroom climate is any indication, then it would seem that no consumer will be able to successfully sue any business. That's a scary thought. And who is taking credit for this tort reform? None other than Presidential hopeful George W. Bush.

Anyway, enough of politics. Read the entire text of the pleadings here.

Source: MLM Survivors

Scrub · #8 09-09-06, 06:12 PM

Melaleuca's Response

May 22, 2001

Today, this website owner received the following letter from Melaleuca's Vice President and General Counsel, Kenneth J. Sheppard.

Re: Melaleuca, Inc.
MLMSurvivor.com

Dear Ms. Carter:

We have reviewed the information contained in your MLMSurvivor.com web site under the title "Melaleuca Distributors Sue their Upline and the Company." We note the disclaimer on your home page which states that the site exists "to provide factual information for prospective and current MLM distributors," and to give people "a chance to get all the facts before they spend their time and their money." You also state that, to the very best of your ability you present accurate information. We would like to take this opportunity to clarify certain false and misleading information contained in your report on the Holten v. Melaleuca lawsuit so that you can revise your report to truly provide factual information.

The Holten v. Melaleuca lawsuit was brought in a Texas state court in Houston. The principle plaintiff was Mr. Jim Holten, a resident of a suburb of Houston. The case was tried before a jury comprised of 12 people who live in the Houston area. The plaintiffs were represented by well qualified counsel and were given a fair and impartial trial. The jurors heard evidence from both sides, were given the opportunity to deliberate on the evidence and found no wrongdoing on Melaleuca's or any of the other defendants' part.

Please bear in mind that statements taken from the Complaint are mere allegations made by plaintiffs and their attorney. Given the outcome of this case, your restating the plaintiffs' allegations as if they are fact is false, misleading and libelous. For example, you state that "Melaleuca, on the other hand, represented its retention rate to be a whopping 94.5 percent!" Melaleuca did not and does not make that representation. The jury agreed. Such allegations were rejected by the jury and should no longer be asserted as either allegation or fact. What Melaleuca does accurately report is that, on average, 95% of the customers who ordered from us last month will order again this month. Additionally, Melaleuca's 95% monthly reorder rate does not equate to a 66% annual dropout rate as you claim. Your statement concerning alleged confessions by the Hagens at a large meeting are also based on mere allegations that, again, were not proven at trial. In fact, the claims against the Hagens were dismissed from the lawsuit before the case ever went to the jury.

Your mentioning Kim Holten's suicide is unfortunate and insensitive. Kim Holten's death had nothing to do with Melaleuca. Mr. Holten's misguided claims regarding is [sic] wife's suicde were dismissed before the trial even started.

Finally, Melaleuca did not terminate any distributors' businesses arbitrarily and without just cause. Each of the plaintiffs whose Melaleuca businesses were terminated had seriously violated Melaleuca's policies. The plaintiffs received several hundred thousand dollars in compensation from Melaleuca while they were actively promoting their Melaleuca businesses. Therefore, they did have plenty to show for their efforts. Ironically, two of the plaintiffs actually re-enrolled with Melaleuca after pursuing a competing business opportunity.

Your conversations with two persons present at the trial did not reveal anything to you about the judge's behavior, except the opinions of two people who were not pleased with the outcome of the case. The judge acted wisely and honorably in upholding her responsibilities as an adjudicator of the law applicable to this case. Had she not done so, the plaintiffs would have had ample grounds to appeal the decision in this case. The plaintiffs did not do so.

We respectfully request that you honor your stated commitment to present accurate information by removing the false, misleading, deceptive and libelous statements about Melaleuca and revising your report about the lawsuit in the light of the above information.

If you have any further questions about this case please feel free to call me at 208-522-0700.

Sincerely,
Kenneth J. Sheppard
Vice President and General Counsel

Mr. Sheppard's letter mixes fact (some of it irrelevant) with opinion as if both are equally weighty. He takes statements which are clearly summaries of the plaintiffs' petition, and accuses me of publicizing "false and misleading information."

In fact, the article clearly states the disposition of the case, as well as summarizing the plaintiffs' complaint and giving my own opinion of certain elements of the case.

However, Mr. Sheppard would like me to publicize his (in other words, Melaleuca's) version as if it were fact.

As someone who routinely receives large numbers of complaints about a variety of MLMs, I am just as entitled to have -- and to express - my point of view as Mr. Sheppard is to express the point of view of his employer.

More About Melaleuca

Source: http://www.mlmsurvivor.com/mel_intimidate.htm

Scrub · #9 09-09-06, 06:18 PM

Melaleuca Distributors Sue their Upline
and the Company

March, 2000

Fourteen Melaleuca distributors have sued their upline and the company on charges that have become all too familiar to followers of MLM lawsuits. The crux of this case rests on claims that the company and its representatives knowingly, fraudulently and persistently misrepresented their distributor retention rate.

Distributor retention is vital to the success of any MLM endeavor, because you have to be able to sponsor new people faster than the old ones quit. In the landmark FTC decision of 1979, Amway testified to a 50% retention rate, which was excellent for the direct sales industry. This means that, in any given year, 50% of the distributor force quits. Anyone wanting to succeed at sponsoring would have to sponsor two for every one they want to keep.

Melaleuca, on the other hand, represented its retention rate to be a whopping 94.5 percent, according to the plaintiffs' petition:

"For Melaleuca to have a retention rate of 94.5 percent tells the prospective distributor that the products must be very good for so many people to continue to use them, and that the ability to build and maintain a business with such a retention rate is guaranteed. This was, indeed, the message and representation by Defendants."

The petition further explains:

"Plaintiffs were able to build large and successful groups. However, after a time, Plaintiffs each saw their numbers diminishing. Distributor after distributor was being dropped from the active lists. Rather than a positive, upward trend which would be expected as a consequence of the greatest retention rate in the history of multi-level marketing, Plaintiffs saw their numbers either decline or become stagnant, despite new distributors being added all of the time. When asked, Defendants would blame the numbers problem on their own lack of effort and initiative, saying that harder work would bring Plaintiffs back into the same realm as the rest of the company. . ."

This led to the plaintiffs experiencing

"a gradual diminishment of their monthly income. Each of these Plaintiffs could not continue to participate in the business which required so much attention and so little in return. As a consequence, these Plaintiffs have disrupted careers and dashed hopes, dreams and expectations."

James Holton, along with his wife Kim, had been neglecting other businesses in order to focus on the Melaleuca distributorship. They had sponsored a great many family and friends, relying on the company's information. Then the shoe dropped. According to Holton, his upline, the Hagans, admitted at a large sponsoring meeting that

"At this meeting, the Hagens confessed, for the first time, that the 94.5 percent retention rate was not at all what had been represented. It was not 94.5 percent over time, it was not 94.5 percent per year, the Hagens said. Instead, it was more along the lines of 94.5 percent per month."

So (according to the complaint), instead of an average attrition rate of only 5.5% per year, as they had been led to believe, the Holtons discovered that the annual dropout rate was really 66% per year -- an enormous difference. Kim Holton, who had sponsored people she cared about, was thrown into a serious depression and eventually committed suicide, leaving her husband and son.

The petition outlines other distributor plaintiffs complaints of fraud and deceptiveness on Melaleuca's part. Distributors' businesses were terminated arbitrarily, and without just cause. Compensation plans were changed. Promises were never delivered. The plaintiffs, who all had invested significant time and effort and had achieved some measure of success, were left with nothing to show for their effort, while the company had profited considerably.

Sadly, this case has been tried, and a jury found in favor of the defendants.

The case was heard in District Court, in Harris County, TX. Texas has recently seen some significant changes in the tort, or personal injury, laws. Certainly there have been abuses in recent years. But if this courtroom climate is any indication, then it would seem that no consumer will be able to successfully sue any business. That's a scary thought. And who is taking credit for this tort reform? None other than Presidential hopeful George W. Bush.

Anyway, enough of politics. Read the entire text of the pleadings here.

Source: MLM Survivors