Published on October 30th, 20180
Trump’s MLM Pitch Misled Consumers, Lawsuit Says
The bulk of the 160-page lawsuit centers on Trump’s endorsements of telecommunications marketing company and Direct Selling Association member ACN before turning to The Trump Network and The Trump Institute. And it ends by claiming defendants violated the Racketeer Influenced and Corrupt Organizations Act (RICO), conspired to violate RICO, and engaged in false advertising, unfair competition, unfair and deceptive trade practices, fraud, and negligent misrepresentation.
The allegations in the complaint can be summed up as follows:
- For at least 10 years, beginning in 2005, Trump secretly received millions of dollars in payments while deceptively marketing ACN to distributors by falsely telling them that they had a great opportunity to make money without risk, that he had personally done a lot of research into ACN and personally experienced the opportunity, and that his endorsement was “not for any money.” Trump even praised ACN on his reality TV show, “The Celebrity Apprentice,” posing with the company’s founders. ACN distributors paid a “$499 registration fee” to join. The four plaintiffs, each of which uses a pseudonym in the complaint, allege they made little to no money after their initial investment in ACN.
- From 2009 to 2011, Trump was secretly paid to endorse another MLM – The Trump Network – and he made deceptive claims about the demand for the product, in this case, vitamins, and the business opportunity, among other things.
- In 2005, Trump licensed his name to another company known as The Trump Institute. That venture purported to sell Trump’s real estate secrets of success through high-priced training seminars but despite Trump’s endorsements of the company he was not involved with it and his secrets were not disclosed in the seminars. Instead, consumers received plagiarized materials.
In a statement to The Washington Post, the Trump Organization, to which the White House referred comment, called the allegations “completely meritless” and the timing of the complaint politically motivated.
This is not the first time Trump has faced class-action litigation over his endorsements of a business opportunity. In 2016, while admitting no wrongdoing, then-president-elect Trump agreed to pay $25 million to settle class-action allegations of fraud against his defunct for-profit institute Trump University. As with The Trump Institute, that enterprise also promised consumers that they would learn Trump’s real estate secrets.
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Multi-Level Marketing – a way of distributing products or services in which the distributors earn income from their own retail sales and from retail sales made by their direct and indirect recruits.