Here are some highlights from Kevin’s letter which I find every important for all MLM distributors to understand.

At the bottom of this post I have added two links where you can read the whole open letter to distributors.

Class v. eFusjon – Industry Impact
Posted: 08 Dec 2009 08:32 PM PST
Re. Implications of the eFusjon lawsuit

Dear Distributors,

“When I started The Advocate Group in March of 2009, I made a commitment to be part of the solution to the problem that’s plaguing the network marketing industry. Currently, the industry is littered with companies that “sell” token products and rely almost exclusively on recruitment and internal consumption from distributors. When distributors are unable to make customer sales due to product prices or a lack of legitimate demand, they will undoubtedly be encouraged to “buy for themselves” and endlessly recruit others to do the same. This is known as “opportunity driven demand” and it leads to people buying things they otherwise would never buy at prices they would never pay in quantities they would never consume.”

Kevin went on to write…

“When the only way to earn income in a MLM is through endless recruitment, various leaders will resort to hype, hyperbole and blatant misrepresentations in their efforts to sponsor the next distributor. “

Retail Sales

“Most MLMs today have some form of a retail sales rule. Unfortunately, a lot of these rules are merely cosmetic with very little, if any, enforcement.”

Why eFusjon?

“In eFusjon’s case, they’ve skipped the formality of having a cosmetic retail sales rule. You read that right. eFusjon has no retail sales rule. With eFusjon, there are absolutely zero requirements of outside sales before distributors can earn bonuses from downline volume.”

The lawsuit and its implications in the MLM industry

“The efusjon lawsuit will not cause a wave for legitimate companies. As President Obama often says, “Let me be clear.” The crux of the lawsuit is eFusjon’s lack of retail sales and their unprecedented pay plan that basically forces people to purchase products lest they lose their spot in the business.”

“I want to quell some concerns that we, plaintiffs’ counsel, do not agree with the practice of paying commissions on volume from distributor consumption. The law is clear in that product consumption from distributors is commissionable. The practice is perfectly fine. However, the law also requires some modicum of selling for the several reasons stated above. eFusjon has no such requirement. Not 10 customers, not 5 customers, not 1 customer. Nothing. It’s another reason that causes problems for eFusjon, both with our lawsuit and with regulators. It’s their greatest source of growth and it’s their greatest weakness.”

Our client

“I like our client here. We represent average people. We’re not representing a large leader that’s working on an exit. We’re simply representing misled distributors that purchased their cases, got their friends and family involved, bought into the hype and misrepresentations, stayed on autoship and were harmed as a result. Some lost some physical possessions while others lost a piece of their dignity. We fight for those people. I’ve seen the nasty effects a pernicious scheme can have on a family/community and I’m fully committed to keeping their interests top priority. It’s the purpose behind the www.classvefusjon.com website.”

Conclusion

“I’ll be transparent about my greatest worry with respect to this lawsuit. eFusjon will be shut down by a state regulator before they’re given the opportunity to fix their business and make the class whole. If they dig in their heels and try to defend their current model, it’ll spell trouble for both current and future distributors. The lawsuit will not create a vortex that will consume good companies. On the contrary, it should serve as a wake-up call to pyramid schemes disguised as legitimate MLMs that the days of exploiting unsuspecting distributors are over. Products need to be marketable and sales thresholds need to be met.”

You can download and read Kevin Thompson’s letter here.

You can subscribe and read Kevin’s posts on his blog Here.

You can also keep up on what is happening at Facebook.

Living An Epic Adventure,

Troy Dooly

Now, don’t mistake my question above. I know the answer, or at least have a very strong opinion. However, this is a question which I keep hearing over and over.

Let’s take a look at some of the facts in the eFusjon class action lawsuit.

1. The company has a suggested retail price of $140.00 per case or $2.92 per can of the eFusjon Energy Drink. Which is less than it costs the distributor at wholesale. At wholesale the eFusjon distributor pays $120.00 per case, plus shipping of around $36.00 or more. Making the wholesale cost per can at $3.25 or higher, providing the eFusjon distributor with a loss of $0.33 per can. There is no way for the distributor to retail product and make any kind of a profit, outside of recruiting into the eFusjon matrix compensation plan.

2. Now some may say “eFusjon allows their reps to retail the eFusjon energy drink via their replicated websites.” Which is true. The product can be bought in units for $35.00 with a commission to the rep of 4.5%. So for ever $35.00 of retail product an eFusjon rep earns $1.58. Yet for every new eFusjon rep they sponsor into the matrix compensation plan they earn $75.00. So what is the incentive to retail eFusjon product?

3. For every $360.00 in new volume (according to the compensation plan pdf, new volume is 3 new distributors at $120 each), the eFusjon distributor earns a $200.00 bonus. Again, all the volume and money is coming through the matrix, not from retail sales.

4. As an eFusjon associate (someone who has paid $30.00 and who is forced to be on $120.00 autoship) doesn’t earn any money from their personal sales, or the personal sales of the first two distributors they enroll into eFusjon. It is not until a distributor recruits 3 people into the eFusjon matrix before they are allowed to earn any commissions. Not even from the retail sales through their replicated eFusjon website.

This is just four examples of why eFusjon falls under the legal definition of a MLM pyramid scheme, “pay-to-play” and why this class action lawsuit was file on behalf of former and current eFusjon distributors.

The Purpose Of The Class Action Lawsuit

eFusjon Compensation Plan Document

eFusjon Class Action Lawsuit

The Attorneys Involved

Request More Information On The eFusjon Class Action Lawsuit

Follow the eFusjon saga on Facebook

Although I have strong beliefs on this case, I am 100% open to feedback and comments.

Living An Epic Adventure,

Troy Dooly

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.

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