Fortune High Tech Marketing (FHTM), the darling of the multi-level marketing industry when it was launched by former recruiters of the bankrupt MLM, Excel Communications, has been hit by regulators in yet another state.
Texas consumers who were involved in the scheme may be entitled to refunds, totalling more than $1.3 million. The company has also agreed to pay hundreds of thousands of dollars to the state of Texas for legal costs of prosecuting the scheme. The Texas Attorney General’s office investigated FHTM for violations of the state’s Deceptive Trade Practices law. The recently announced settlement prohibits Fortune High Tech Marketing from engaging in a long list of deceptive trade practices that have been the subject of consumer complaints and news reports on Fortune High Tech Marketing.
Texas consumers must apply for their refunds within 30 days of being notified by FHTM by email of their right to seek restitution.
FHTM has also been prosecuted in Montana and North Dakota. Cease and Desist orders were issued in both states. In Montana, the company agreed to pay more than $1 million in refunds. Fortune High Tech Marketing is reportedly under investigation by other states, including Kentucky, North Carolina, Missouri, South Carolina, Illinois and Florida. FHTM has also been the focus of news media investigations. In October 2010, USAToday ran an extensive feature on the company’s operations and the consumer complaints for deception and financial losses. The article reported data presented by the state of Montana showing that a huge segment of participants make nothing or less than their costs of participating. Similar facts were uncovered in a report in the daily newspaper of Wilmington, North Carolina.
In North Carolina, where the Attorney General announced an investigation of the company, one highly visible recruiter in the Charlotte area was the wife of the former CEO of Bank of America, Ken Lewis, who was himself the subject of controversy for selling deceptive mortgages. Charlotte’s local NBC-affiliate television news featured some of the prominent figures in Charlotte who had joined the scheme.
In addition to questions as to whether the company is a disguised pyramid scheme, other controversies involved questions about whether the company was deceptively claiming partner relationships with brand name vendors that in fact did not exist.
Like consumers all over America, Texas consumers who invested in the FHTM “business opportunity” paid $299 for the chance to profit in the scheme. FHTM claimed to offer discounts on a wide range of products and services through relationships with major vendors. Each new participant could earn income after enrolling other consumers into the pay plan. The scheme’s structure had no end to the expansion program, promising each new recruit income based on “endless” extension of the recruitment chain.
Beyond multiple regulatory investigations and prosecutions and news exposés, FHTM was also the target of a consumer class action lawsuit. The suit details extensive claims of fraud and deception that result in large-scale consumer losses. It charges that FHTM’s pay plan is an illegal pyramid scheme.
The Texas Attorney General’s settlement with Fortune High Tech Marketing applies only in Texas. Victims who joined the scheme in other states are not eligible for refunds. The company is still recruiting consumer/investors all over the country with no significant change in business model or practices. The FTC has taken no public action against this company.