There have been multiple lawsuits filed against Wealth Builders, a company that provides business opportunity training and coaching services. The lawsuits allege that Wealth Builders is a pyramid scheme and that the company has engaged in deceptive and unfair business practices.
Allegations of Pyramid Scheme
The plaintiffs in the lawsuits allege that Wealth Builders is a pyramid scheme because it primarily relies on the recruitment of new members to generate profits. The plaintiffs also allege that the company’s compensation plan is designed to reward recruiters rather than actual sales of products or services.
Under the Federal Trade Commission’s (FTC) definition of a pyramid scheme, an endless chain of recruitment is at the heart of the scheme. Pyramid schemes typically involve participants paying a fee to join and then being encouraged to recruit new members. Participants earn money primarily from the fees paid by new recruits, rather than from the sale of products or services.
Deceptive and Unfair Business Practices
The plaintiffs also allege that Wealth Builders has engaged in deceptive and unfair business practices, such as:
- Misrepresenting the potential income that can be earned
- Making false claims about the company’s products or services
- Pressuring participants to invest large sums of money
Legal Developments
Several of the lawsuits against Wealth Builders have been consolidated into a multidistrict litigation (MDL) in the U.S. District Court for the Central District of California. The MDL is currently in the pretrial phase, and it is unclear when a trial will take place.
In addition to the MDL, there have been a number of individual Wealth Builders lawsuits filed in state courts across the United States. Some of these cases have already resulted in settlements for the plaintiffs.
FTC Investigation
In 2018, the FTC began an investigation into Wealth Builders. The investigation is ongoing, and it is unclear whether the FTC will take any action against the company.
Recommendations for Consumers
If you are considering joining Wealth Builders or any other business opportunity company, it is important to do your research and understand the risks involved. You should carefully review the company’s business plan, compensation plan, and any available disclosures. You should also be aware of the FTC’s definition of a pyramid scheme.
If you have been the victim of a pyramid scheme, you may be able to file a lawsuit against the company. You should contact an attorney to discuss your legal options.
Here are some additional resources that you may find helpful:
- Federal Trade Commission: https://www.ftc.gov/
- North American Securities Administrators Association: https://www.nasaa.org/
- Council of Better Business Bureaus: https://www.bbb.org/
