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I had a reader send me a message to ask me how they can cancel their FHTM business. 

I scoured the FHTM web site and couldn't find anything about canceling, so I turned to the web and found and "eHow" article about how to cancel.  

Here is what I found:

Submit a written requests for a refund within 10 calendar days of the date of purchase. This is the process for purchasers who are at the manager level. Manager positions are purchased by individual representatives who have purchased the Optional Special Services Program. (You can find this policy in Section 11.4 of Policies and Procedures)

Return the Managers Sales Kit to FHTM within 20 calendar days after submitting your written request for cancellation. The kit has to be in excellent condition so it can be sold again.

Allow for a $40 reduction of your purchase price refund if you have attended the FHTM manager training program.

Wow.  10 days to cancel and even then you don't get all of your money back?

What do you think of this kind of return/cancel policy? Fair or unfair?

Update: A very angry reader emailed me, telling me that FHTM actually offers a full refund within 3 days.

Wow.  Three whole days.  Shame on me for getting my facts wrong. 

The reader went on to tell me to "Get you facts right and instead of dumping on the one MLM company in the industry which has the highest integrity...".

Not trying to pick a fight here, but you would think that the company with the "highest integrity" would have a lot less trouble with Attorney Generals and class action lawsuits:

FHTM Lawsuits and Attorney General Investigations

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Ty Tribble
Founder, MLMBlog

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Fortune Hi Tech MLM is in the news again.  This time for a Class Action Lawsuit filed in the State of California.  It is now very clear that FHTM has a target on it's back and it may be time for a reality check if you are currently involved with the company.

The newest lawsuit in California (see PDF) comes on the heals of the following:

Fortune Hi Tech Under Fire In Canada

North Carolina Attorney General Investigating Fortune Hi Tech Marketing

FHTM Class Action Pyramid Scheme Lawsuit (Kentucky)

Montana Shuts Down FHTM

North Dakota Files Cease and Desist against Fortune Hi Tech Marketing

Another State Attorney General is investigating Fortune Hi Tech Marketing (FHTM) as a Pyramid Scheme. At some point, the reps in the field are going to become weary of the story about several former attorney generals saying everything is OK at Fortune. North Carolina is the third state in a very short period of time to investigate FHTM.

StarNewsOnline:

A spokeswoman for the attorney general, Noelle Talley, said investigators with the consumer protection division are concerned about Fortune Hi-Tech Marketing's operations in North Carolina. Investigators are reviewing more than a dozen consumer complaints to determine if the company's activities violate state laws, and the office was contacting other attorney generals to exchange information and review what kinds of complaints they had received, Talley said. The investigation began earlier this fall.

This is after Montana and North Dakota shut down Fortune Hi Tech for periods of time.

Kevin Thompson, The MLM Attorney has posted information about a new Class Action lawsuit against Fortune Hi Tech Marketing (FHTM).

Here's a snip:

I cannot predict if the allegations will prove true or not because I know very little about the FHTM model; however, it seems like the complaint focuses squarely on the FHTM policies and the pay plan, which means there’s not much wiggle room for FHTM. It will be hard for them to defend their practice of paying commissions on training fees, which I think is their largest problem.

FHTM reps habitually say “we have former state attorney generals on our legal team.” Allow me to address this point: simply because a company has hired “former AGs” as their attorneys, it does not mean that those AGs understand the industry.

Read the rest of Kevin's post including a copy of the lawsuit.

Here's more on the lawsuit:

A class action lawsuit was filed against Fortune Hi-Tech Marketing (FHTM), its officers, directors, Presidential Ambassadors and all National Sales Managers claiming fraud, pyramid scheme and RICO violations in the Eastern District of the Federal Courts on September 2, 2010

Defendants listed in the lawsuit include: Fortune Hi-Tech Marketing, Paul C. Orberson, Jeff Orberson, Thomas A. Mills, David Mills, Billy Stahl, Simon Davies, Ruel Morton, Todd Rowland, Ashley Rowland, Todd & Ashley, Inc., Mike Misenheimer, Steve Jordan, Joel McNinch, Chris Doyle, Ken Brown, Jerry Brown, Bob Decant, Joanne McMahon, Terry Walker, Sandi Walker, Sherri Winter, Trey Knight, Kevin Mullins, Scott Aguilar, Molly Aguilar, Nathan Kirby, Dwayne Brown, Aaron Decker, Susan Frank, Ramiro Armenta, Angelina Armenta, Alexis Adame, Teresa Adame, Darla DiGrandi, Matt Morse, Matt Barrett and Roberto Rivera.

This is an action by plaintiffs on behalf of themselves and those similarly situated to recover damages caused by the defendants' operation of an inherently fraudulent pyramid scheme. The pyramid scheme is fraudulent because it requires the payment by participants of money to defendant Fortune Hi-Tech Marketing, Inc. ("Fortune"), in return for which participants receive (1) the right to sell products and (2) the right to receive in return for recruiting other participants into the program rewards which are unrelated to sale of the product to ultimate users.

This action is brought on behalf of a national class of persons who serve or have served as independent representatives for Fortune, pursuant to the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961-1968 ("RICO"), the Kentucky Consumer Protection Act, KRS Chapter 367, and the laws of Kentucky.

Under the Compensation Plan utilized by Fortune until at least July 1, 2010, IRs are able to earn compensation from two sources: (1) bonuses for recruiting and sponsoring new representatives; and (2) commissions from sales of products and services by themselves and by recruits in their "downline.

Fortune operates as an illegal pyramid scheme because this compensation plan affords IRs the right to receive in return for recruiting other participants into Fortune rewards which are unrelated to the sale of products or services to ultimate users outside of Fortune. Fortune's compensation plan involves an elaborate set of bonuses which are effectively the only way to earn money in Fortune and which are all tied not to real sales to outside customers, but rather to recruitment of new IRs.

To perpetuate the fraudulent pyramid scheme described above, Fortune claims to have special relationships with or to be a "partner" of several large major national companies whose products and services Fortune offers. These companies include, but are not limited to, AT&T, Verizon Wireless, Sprint, Dish Networks, General Electric Security ("GE Security"), DuPont and Home Depot. Fortune has used the trademarks of these and other companies in marketing materials and business presentations in order to convince prospective customers that Fortune is a legal business. In reality, Fortune does not have any sort of special relationship with these companies. Fortune is not a "partner" with Dish Networks. Rather it is a third-party independent contractor authorized to sell Dish Networks service. There are numerous other such third-party vendors of Dish Network.

All of the defendants in this action collectively form an "enterprise" under RICO, 18 U.S.C. § 1962, in that they are a group of individuals and entities associated in fact, although not a legal entity.

The defendants' promotion of an illegal pyramid scheme is a per se scheme to defraud under the mail and wire fraud statutes; thus, the defendants have committed racketeering acts by promoting an illegal pyramid scheme by using and causing others to use the mail and by transmitting and causing others to transmit, by means of wire in interstate commerce, writing, signs, signals, pictures and sounds, all in furtherance of and for purposes of executing a scheme or artifice to defraud, namely an illegal pyramid scheme.

I received an email alert from Len Clements tonight regarding the shut down of A.C.N. in the State of Montana.

Here is the full MarketWave alert from Len (posted with permission):

Earlier today the Montana Commissioner of Securities and Insurance Monica Lindeen (D) announced the issuance of a Cease and Desist Order and Notice of Proposed Agency Action against ACN, Inc. and several of its founders for allegedly operating a "pyramid scheme."

One of the primary concerns cited in the announcement was the allegation that Montana participants "must personally buy" and sell a phone service that is "largely not available for use in Montana".

The Commissioner also cited the low average earnings of ACN reps based in Montana. Allegedly, in 2008 ACN recruited 91 Montana participants who "paid approximately $61,741.69 to be a part of the program", averaging $678 each. All but two lost money, with one making $696 and the other making $700. In 2009 "over 300" Montana participants joined ACN and paid about $234,800, averaging about $775 each. According to the Commissioner's Office ACN's records show $896.86 was paid out to these participants, in total.

The Commissioner's announcement can be viewed here:

http://www.sao.mt.gov/news/20100803ACN.html

Commentary:

(click the dots to read more)

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Helena- Kentucky-based Fortune Hi-Tech Marketing (FHTM) agreed today to pay nearly $1 million to settle an allegation by Montana Commissioner of Securities and Insurance Monica Lindeen that the company was operating a pyramid promotional scheme in Montana.

On March 4, 2010, Lindeen ordered the company to stop operations in the state and filed an action against the company, arising from consumer complaints that her office received and investigated. “This agreement sends a clear message to businesses operating illegally in Montana that I am committed to protecting consumers,” Lindeen responded. “Montanans work hard to support their families and I will not tolerate the sale of false promises to them.”

The Order and Proposed Action alleged that FHTM representatives were marketing the company as income potential to participants who agreed to recruit new participants. Those individuals were asked to pay $299 to join the program. FHTM representatives also lured new participants by claiming it offered huge income opportunities through partnerships with large companies such as Travelocity, General Electric, and The Home Depot, when such partnerships did not exist.

Details of the Consent Agreement and Order with Fortune Hi-Tech Marketing (FHTM):

• FHTM agrees to refund up to $840,000 to more than 3,400 Montana participants.

• FHTM and the company’s founders, Thomas Mills and Paul Orberson, will pay a fine of $100,000 to the Montana’s general fund. Dianne Graber, a Montana FHTM representative, will pay a $5,000 fine to the general fund.

• FHTM will contribute $50,000 to the Investor Protection Trust, a non-profit organization that provides investor education in Montana.

• In addition, FHTM will be required to change its business practices in Montana:

-New participants in FHTM will only be required to pay $75.00 to become a representative,

-FHTM will conduct training seminars along with representatives of the Commissioner’s Office, in Billings, Bozeman, Great Falls, Helena, Kalispell and Missoula, and will conduct web-based training that is mandatory for all current or prospective representatives,

-FHTM will provide a disclosure brochure to each current and prospective representative outlining FHTM’s program, including the average amount of income achieved and the average amount of time in the program required to reach each level,

-FHTM will reinforce with representatives that product sales are not primarily for self-consumption but for sale to non-participants, and

-FHTM will require its representatives to maintain records of non-participant customers and submit those records on a monthly basis.

Approximately two weeks from the settlement, Montana FHTM representatives entitled to refunds will be receiving letters from Commissioner Lindeen outlining the requirements to get their money. The refund amount is equal to the participants’ cost less any earnings they received from FHTM.

The settlement agreement can be found at http://www.csi.mt.gov. For more information about FHTM, call the Montana Commissioner of Securities and Insurance at 1-800-444-2040.

Here is a video from a Montana news station report on FHTM:

Fortune Hi Tech Marketing has been ordered to cease and desist operating in the State of Montana according to a report from the AP:

HELENA, Mont. (AP) - Montana has ordered a Lexington, Ky.-based company to cease operations in the state, accusing it of running a pyramid scheme.

Monica J. Lindeen, the state Commissioner of Securities and Insurance, says Fortune Hi-Tech Marketing took nearly $1.9 million from at least 1,295 Montana participants between July 2006 and June 2009.

Lindeen says the company lures new members with income opportunities with companies such as Dish Network and General Electric. But, she says, members only benefit if they recruit others to join in the alleged scam.

Here is a copy of the Montana Complaint Against Fortune Hi Tech Marketing.

Here is a link to the FHTM Statement to Montana Reps.

This action comes on the heals of North Dakota taking similar action back in December where the State Attorney General files a Cease and Desist against FHTM.

Attorney General Wayne Stenehjem has issued a Cease & Desist Order against Fortune Hi-Tech Marketing of Lexington, KY and its principals Paul C. Oberson, Jeff Oberson, and Thomas A. Mills for violations of North Dakota transient merchant, consumer fraud, and home solicitation sales laws. The Order was filed late yesterday, December 10, 2009.