Fortune High Tech Marketing Class Action Law Suit

  • September 7, 2010
  • By Team Business For Home

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Source: Kevin Thompson the MLM attorney

Fortune High Tech Marketing (FHTM) is based in Lexington, Kentucky, and was founded in 2001 by Paul Orberson.

FHTM offers products, services and opportunity to people across the United States as well as in Canada, the United Kingdom and Puerto Rico.

FHTM is a pending member of the Direct Selling Asociation.

FHTM offers a wide range of products and services for Independent Representatives to market to their customers, from the True Essentials line of health products to Dish Network’s television service to The Wireless Shop’s selection of name brand providers.

Kevin Thompson the MLM Attorney:

It was bound to happen at some point. Unlike the last lawsuit I posted about Fortune High Tech Marketing (which turned out to be a hoax), the below class action lawsuit against FHTM is legit.

I pulled it off of Pacer, which is where American court documents are made publicly available.

The complaint is long but the allegations are simple:

1) Fortune is allegedly a pyramid because:


a) Sales Culture: The sales culture focuses predominantly on recruitment over selling. An accomplished sales rep in FHTM was quoted as saying: “We’re not looking to sell you something; we’re looking for team members.” The lawsuit is basically alleging that the field completely disregards selling and that the recruitment culture is standard behavior in the FHTM organization, which leads to serious misrepresentation.


b) Pay plan does not lead to true external sales: There are no real incentives in the pay plan for selling to nonparticipants. Allegedly, the reps are required to accrue 3 customer points before they climb the ranks; however, those points are accrued by the reps themselves….one point is gained by simply paying for access to the company’s website for back office support.

c) Commissions from Training fees!: I just wrote about this last week about why it’s a bad idea to pay commissions on sales aids. The lawsuit alleges that FHTM pays commissions when “certified trainers” train their downline managers (after the downline managers pay a $200 fee). Since the training fee has no relevance for nonparticipants, the plaintiffs are arguing that this is mainly a clever transfer of money from new investors to older ones, which is illegal.

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. AGs have countless responsibilities and they might not understand the nuances in MLM law. I’m not saying FHTM’s lawyers are incompetent.

I am saying that if there’s any truth to these allegations, any attorney with knowledge of this field would have either gotten FHTM on the right track a long time ago or would have withdrawn his or her representation. If the former AGs were recently hired, it’s a different story (clearly they lacked the time to clean up the house). However, if they’ve been on board for several years….it’s not good.

Kevin Thompson

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Comments (23)

  1. It is about time these companies that sell dubious products and services have their illegal compensation plans catch up with them. The two go hand in hand. If you sell products which are not exclusive or unique and therefor have little value to the end consumer then you must design a comp plan that is merely pay to play. Where else are you going to get the margins on which to pay commissions?

    The mlm worlds needs to grow up and learn the realities of our business model. The only products that work in the model are those that have real value at the suggested retail price to retail customers. If you can buy the same product for the same price somewhere else it is not going to work…not long term

    There ought to be a 10 question quiz every MLM rep passes before being allowed to enroll in any company that certified they know what the hell they are doing. The slaughtering of lambs is only possible because if the endless supply of lambs

  2. The comment above “If you sell products which are not exclusive or unique and therefor have little value to the end consumer then you must design a comp plan that is merely pay to play.” pretty much says it all. Without genuine value in the product or service why should any business survive?

    It seems many companies are set up as a cash cow to make the promoters rich by ripping off the the public and their Reps. with pay plans ensuring only a tiny (well advertised) minority make any worthwhile money, never deliver on promises before finally closing their doors and moving to warmer climes and leaving a nasty smell and broken dreams behind them.

    To get into business with a truly unique FREE product offering genuine long term value to the Customer and where the Distributor can build a secure residual income even without sponsoring check out http://www.genieuk.biz. Given the speed at which this is growing – if you don’t look now, you will wonder why you didn’t in a few weeks.

  5. FHTM is a “middleman” concept, using a network marketing model
    to acquire customers for affiliate companies, (a satellite TV company,
    wireless carriers, the major internet providers, a nutritional company, etc., etc.)

    No money flows until the affiliate company has a confirmed customer,
    at which time an acquisition fee is paid.
    A monthly commission paid is paid each month that the customer remains active.

    Here’s the issue: Reps can be their own customer, (transfer cellphone service,
    switch TV service, change brands of nutritionals, etc.).
    FHTM P&P state that “the majority of customers must come from outside the household”

    Reps must also certify that fact, monthly.

    Richard(above, mentions “dubious products and services”, John the spammer concurs.
    They probably use many of the products and services every day.
    I guess they would prefer that the residuals and fees keep flowing to the
    more “traditional” marketers, (Best Buy, Radio Shack, GNC, etc., etc.).

    Most of us in the industry know that network-type marketing is the wave of the future,
    and that forward thinking companies will be using the model to market their products
    because traditional marketing channels are going the way of the Dodo,
    (because of the internet, satellite radio, TIVO. the mute button, etc.).

    There will be growing pains and fall out.
    I am confidant that Fortune High Tech Marketing is doing,
    and will continue to do all that it takes to stay “legal”.

  6. Listen, the greater industry is evolving and offers fantastic opportunity.

    If anyone offers you “wealth” without “work,” you should probably walk away. True networks have moderate to expensive products, but when you research and compare what is inside of the products with let’s say a “GNC” or “Hi-Health” you will fast realize that the mark-ups are valid and that the commissions have to be realistic but also attainable. Just don’t go and buy a “dream,” you are buying a “business” when you sign-up to share products from an organization.

    You “rep” yourself by the way. So research the company. Ask tough questions. Understand the science and need for the products. Read labels. If you can’t do this, you should not be in business for yourself anyway!!!

    I love seeing the promise of investing $25 to receive $19,500 in five weeks.

    Listen, your auto-ship and initial order is not an “expense” or a “cost.” It’s the biggest investment you will ever make, and every dime you spend is an “asset.” Once you put money down, you had better start developing your skills. Start reading more, ask questions, and become a “brand” yourself. Your confidence will attract people, and your knowledge and energy will inspire others to duplicate what you do.

    Never stop learning. Never stop sharing. This is a great industry, but make sure you do your research first.

    Sincerely,

    Peter Dean Bouloukos
    Facebook: -Peter Dean Bouloukos-

  7. It is amazing to me that people speak so flippantly about that of which they have no knowledge. I just returned from FHTM’s annual convention in Lexington, KY and was present during a presentation headed by Jim Summers, National Account Manager and Amir Ahmed, Senior Vice President for Dish Network TV. They were there to express their appreciation to all of the FHTM reps who have been such an essential part of their continued success in acquiring new subscribers for their satellite TV service. They also announced the opening of a new customer service center in Danbury, KY specifically set up to handle Dish customers who come through FHTM. Now, I have to ask Richard Brooke, is this the kind of “dubious products and services” that FHTM sells? Maybe you should inform the executive leadership of Dish Network. Oh, and, by the way, last week Paul Orbeson, the founder and President of FHTM was the personal guest of Charlie Ergen (president of Dish) in Denver, Co for a few days while they shot some commercials. Why would Dish allign itself so closely with such a “dubious” company as FHTM with an “illegal compensation plan”. Richard, do you really know FHTM better that the lawyers and executives of Dish Network. Or are you, as so many others love to do online, just spouting off your ignorance of that which you obviously know nothing. Go do your research before making rediculous and unfounded accusations. Oh, and while you are researching, you might actually want to check out…

  8. … check out their corporate website http://www.fhtm.net. While there, click on the link “Legal Council” and read about Mr. Robert Stephan the former Attorney General for 12 years in the state of Kansas who also served from 1996 to 2003 on the Lawyers Council and the Government Relations Committee for the Direct Sellers Association. I doubt he thinks FHTM’s compensation plan is illegal.

  9. One thing that does puzzle me about FHTM are the distributors. I’ve done my research and I do not like the misleading distributor websites I come across. It’s giving a misleading perspective. I understand not all distributors are the same, but my gosh, the misrepresentation has got to end.

    I also checked out the Legal council for FHTM as one person suggested and it’s the same attorneys that represent FHTM’s competitor ACN on their legal advisory committee…Interesting.

  10. ? Paul Orberson, Network Marketing Legend. Has Excel?s Million-Dollar-A-Month man created the best company ever?? https://www.goldenvisionforyou.com/training/PaulOrbersonMillionaireBlueprint.pdf

    The Fortune concept, its image and business practice are closely related to the business principles and philosophies of the founder and president of FHTM Mr Paul Orberson. I?d highly recommend you read this 11-page article written by Tom Spinks, the founder and chief editor of Millionaire BluePrint. He had dissected this company for two months and written his insight on this great company and this great person.

    In terms of recruiting people — build networks, there’s nothing wrong with that. As “the rich build networks, everyone else looks for work”. It’s same as McDonald or Tim Horton build thousands of sales outlets. The bigger the network the higher the sales volume.

    A Pyramid Scheme?
    I’ like to quote the answer given by Fortune ESM Theresa Voltner ?This company, it?s background and it?s owner have been very well researched, not only by the Government Regulators but also by Forbes.com (who referred to Fortune as one of the top 25 Emerging companies of the 21st Century, but also by Fox Business News (www.FortuneonFox.com) and many prestigious magazines, including ?Your Business at Home?, ?Success from Home? and ?Millionaire Blueprint? (www.MillionaireBlueprint.info). When you also consider the many, well respected Fortune 500 companies, who…

  11. When you also consider the many, well respected Fortune 500 companies, who have asked FHTM to represent them and their products & services in the marketplace ? you can see how ill-informed it would be to label Fortune Hi-Tech Marketing as an illegal pyramid. Somehow, I do not think that the aforementioned Fortune 500 companies would have been interested in associating their name with an ?illegal business? venture: companies such as AT&T, Dish Network, Verizon Wireless, Travelocity, Dupont etc. View the corporate video with testimonials by these companies: http://www.FHTMIntro.com ? Truth is, I am not sure where your education comes from with respect to a business of this type; however, please be assured that mine came from these excellent and well-informed resources , as well as a host of others who speak the virtues of Network Marketing – including books by N.Y. Times best selling author, Robert Kiyosaki, among others. Even Warren Buffet (yes, the world?s richest man) owns his own Network Marketing company, as do many others of the world?s richest people). We could continue our austere list with such well known celebrities as Bob Proctor from ?The Secret? & T.Harv Eker ?the list could go on and on! In your opinion, who do you feel may be the better educated on this business model, and on the Fortune Opportunity? In business since January, 2001 (8years), FHTM is not only financially strong, but also 100% debt free from inception. We have been called by Forbes.com…

  12. FHTM has been called by Forbes.com as one of the fastest growing businesses in America!”
    Hope above information helps. I strongly believe the more probing into the company and dissect it, the more the investigators will apprecite the value the company has brought into the market place and the more respect they have toward the integrity of the management and the whole business system design. As one Executive Sales Manager in Toronto, Ontario, I’d like to comment Fortune Hi-Tech Marketing Canada business is not affected since there’s no training commissions paid.We do provide various training through seminars, webinars, recorded training materials, brochures, training websites, email Q/As to help representatives grow.Finally, my testimony: Fortune has changed my life and many lives tremendously during the past 18 months. I’m proud of being a Fortune Representative! — Oliver Gu, MBA/MS, Personal Growth and Success Coach, Great Toronto Area, Canada https://www.GoldenVisionForYou.com

  13. A Pyramid Scheme?
    I? like to quote the answer given by Fortune ESM Theresa Voltner ?This company, it?s background and it?s owner have been very well researched, not only by the Government Regulators but also by Forbes.com (who referred to Fortune as one of the top 25 Emerging companies of the 21st Century, but also by Fox Business News (www.FortuneonFox.com) and many prestigious magazines, including ?Your Business at Home?, ?Success from Home? and ?Millionaire Blueprint? (www.MillionaireBlueprint.info). When you also consider the many, well respected Fortune 500 companies, who?

    ANSWER:

    All of those publications were paid advertorials. Tom Spinks is dead and never researched fortune. FHTM helped write the article. This is merely part of the FHTM deceit.

    The funny part is a comment from another website recently:

    It is amazing how prophetic Paul Orberson was at Fortune Fest the day before this lawsuit was filed. He stated that satan would attack this company and those associated with it because of his putting Christ first in his life and this company. He was absolutely right on target so he must be doing something right or the enemy would not be attacking him. God is good and he is on his side so we are confident that this will all turn out for the glory of God.

    IS THAT A JOKE OR WHAT????

  14. Olivergu, no editor from Forbes magazine has ever written a piece about FHTM or mentioned FHTM being the fastest growing business. If such incredible achievements was accomplished, you can bet FHTM’s website would have that plastered on their website to back it up, along with all the other bogus things FHTM reps say that you can’t find on the corp website.

  15. FHTM is a legitimate business. It enables individuals to become a middleman for a large number of products and services, some of which they use themselves (of course) and some of which they sell to others. MLM companies and pyramid schemes have some things in common, but they differ in that MLM companies sell products or services, and in well constructed MLM companies it’s possible to out-earn the people in one’s upline. Both of these things are true for FHTM.

    For a long time, it was possible to qualify your business based entirely on your own purchases, but this is no longer true. One could argue that enrolling people and having them transfer their point of purchase (for things they are already using) to their own business makes FHTM a pyramid, but I don’t see it that way and I doubt the court will.

    FHTM gathers a lot of customers for its affiliate companies, and in many cases people become customers for things they weren’t already using, through their own business. That makes us a powerful customer-gathering engine! And those customers stay loyal. It’s like a buying club, and it’s a really great way to make money.

    FHTM’s attorneys are experienced, and at least one is an MLM industry expert. You have to realize that in the spectrum of direct selling companies, FHTM is practically an infant, and has not had that long to test and adjust its business model. All companies do this, but they are usually not under legal scrutiny for the process. So that…

  16. I know a few people involved in FHTM and they are doing quite well, although not to the point that the sales hype suggested.
    I think FHTM did get off to a poor start originally, their recruiting system was the main push. It seems that they are now getting back on the right track promoting products. This is a good company with a good compensation plan and good potential growth. It is not easy to start any company without making some mistakes, theirs seem to be getting corrected.
    For anyone new to network marketing (MLM) I have a page on my website about the potential pitfalls. It is just information, no sales or hype. https://what-is-success.com/network-marketing-success.html

  17. Reading up on some old post and I couldn?t help but notice all the misleading stuff posted by olivergu. He said ?I do not think that the aforementioned Fortune 500 companies would have been interested in associating their name with an ?illegal business? venture: companies such as AT&T, Dish Network, Verizon Wireless, Travelocity, Dupont etc.?

    The truth is FHTM does business with Simplexity, Ocenture, Protection for Living, Trothop, which those business are the authorized dealers that do business directly with Verizon Wireless, Travelocity and the rest mentioned. So they are not doing business directly with FHTM. Most of the companies mentioned by olivergu wouldn?t know who FHTM is except maybe through a letter received by Montana State Auditor to confirm there is no partnership.

    Then olivergu said ??This company, it?s background and it?s owner have been very well researched, not only by the Government Regulators but also by Forbes.com (who referred to Fortune as one of the top 25 Emerging companies of the 21st Century, but also by Fox Business News (www.FortuneonFox.com) and many prestigious magazines, including ?Your Business at Home?, ?Success from Home? and ?Millionaire Blueprint? (www.MillionaireBlueprint.info). When you also consider the many, well respected Fortune 500 companies, who Home?, ?Success from Home? and ?Millionaire Blueprint? (www.MillionaireBlueprint.info). When you also consider the many, well respected Fortune 500 companies, who have asked FHTM to represent them and their products & services in the marketplace.?

    The truth Government regulators are currently investigating FHTM. N.C. Attorney General spokeswoman Noelle Talley said investigators are asking that anyone who has dealt with Fortune Hi-Tech Marketing to file a consumer complaint, either by calling 1-877-NO-SCAM or by filling out the complaint form at http://www.ncdoj.gov. This comes after numberous complaints. Then the Texas Attorney General’s office sent Fortune a “civil investigative demand” letter on Aug. 26. The letter asked for the names of all state residents enrolled in Fortune, how much they paid to get in and got in return, along with the gross product sales in the state. The letter also asks the names and earnings of the highest-ranking managers of the company, who is below them on their teams and how much comes from direct product sales as opposed to “commissions, bonuses or sales by others.” Jerry Strickland, a spokesman for Texas Attorney General Greg Abbott, says the office is reviewing Fortune’s response, and the “investigation is ongoing.”

    Now as far as the prestigous magazine comment, FHTM paid to be in the so called prestigious magazines, all of them, which, like most people, have never heard of them. Here is what USA Today says about one magazine ?Companies that are featured on the cover of Success From Home agree to buy at least $330,000 worth of issues, according to a description of the prerequisites obtained by USA TODAY.?

    Much of what olivergu said was untruthful and is part why FHTM has problems.

  19. It is so unfortunate that the FHTM reps who claim Paul Orberson is a GOD just cannot see through the smog to get to the truth. He preaches so many fallacies that its hard to figure out what is real and what is BS.

    Let me address some of these known facts.

    1. Orberson was in Excel and is the SELF-PROCLAIMED highest paid rep in that company. There is absolutely no proof of this claim other than the BS story he himself tells.

    2. Orberson did not come out of retirement to clean out the industry and create a company for reps. He did move back to Lexington and start Fortune because his first wife caught him cheating on him, divorced him and took most of his millions. His lifestyle suffered and he needed money.

    3. How can one claim that he puts God first as a true Christian when he got a divorce because he couldn’t keep his thing in his pants and was spanking another woman?

    4. Nobody that gets into FHTM today has the same opportunity to make the kind of money the top 6 do because those guys were paid big bucks, got special deals, ownership interest and brought their down-lines from Excel.

    5. Forbes said FHTM was a fast growing company 8 years ago. What they never said is FHTM was a legal company. Forbes has never evaluated MLM’s for legitimacy.

    6. Orberson has done a great job of buying articles in 2nd and 3rd rate magazines to make himself look like a guru when he is merely a crook.

    7. Why has GE threatened FHTM with a trademark infringement lawsuit if they didn’t remove their coveted logo from the FHTM Office assistant and literature. According to the FHTM rhetoric GE is a partner of FHTM. WOW, how can that be? Same happened with DuPont. Was it all a big lie to make them look legitimate? Isn’t that how the story from FHTM reps goes, “All of these major fortune 100 companies wouldn’t do business with fortune or partner with us if we were illegal”? That is a crock of crap!

    8. The washed up has been ex AG’s that FHTM recently hired couldn’t find their way out of a box – let alone determine if FHTM has a legal or illegal compensation plan. If the ex-Reagan assistant AG (Hammerschmidt) didn’t know they were illegal from the beginning, why have others overheard her say they are illegal and Orberson paid her in equity to shut her up?

    9. Bottom line – they are ILLEGAL PYRAMID SCAM. They haven’t been shut down yet because most states dont have the money to investigate after being burdened with Bank and Mortgage fraud.

    10. Two class actions in one year, multiple AG’s investigating their pyramid scheme….Not a good sign for these guys. Just my two cents from California.

  21. Benny et al.

    Paul Orbison was indeed the highest paid rep in Excel Telecommunication making at one point over $1 million per month (near the end). He did make a fortune.

    As for some of your other claims regarding divorce etc., I have no personal knowledge of how his marriage ended but I do my best not to judge people and circumstances I do not have specific knowledge of.

    My concern about FHTM is how the bulk of the money is actually made. Perhaps an existing fortune rep might anonymously share a real commission check to show “where the money is actually earned”. I was in Excel and I know for a fact that over 95% of Paul’s checks were based on the training and recruiting bonuses. An extremely small percentage came from the actual long distance usage. I strongly suspect the same thing is true of FHTM. Another former Excel founder Steve Smith is staring up a company called Ampegy and I will venture to guess that his compensation plan will be heavily laden with training and recruiting bonuses. It makes sense that both these gentlemen would create companies with business models that made them money in the past.

    I hate to see companies like FHTM being dragged into court, not because I think they are innocent, but because their business model and subsequent scrutiny cast a bad shadow on the entire industry. I wish no ill will on the existing FHTM reps who are making good money, but Bernie Madoff made a fortune on what was presumed to be “legal investment” programs. Just because someone says they are legitimate, and they make a lot of money, does not make their business model legitimate.

  23. Ok folks, it’s over! The class action lawsuits were all dismissed and thrown out by a Federal judge in Feb, 2012. For all you naysayers and predictors of doom for FHTM, it’s a new day, this company is on it’s way to the top! When all the other product based companies lose their luster, FHTM because of it’s adaptability to consumer interests will always be around. With the addition of gas and electricity and soon no contract cell phones on our platform we are going into outer orbit! If you know business then you must know that every successful company in this country at some point in time has had actions brought against it. Dogs don’t chase parked cars, only the ones that are moving fast! Check to see how many complaints there are right now against Walmart, AT&T, Verizon and the list goes on and on. Anyone or any group can file a complaint, that’s what’s great about our country and it’s also great that we live in a country that has a judicial system that exposes the truth. So all you dogs go find another car to chase because FHTM has left your neighborhood and has moved on to the freeway going fast and up to the highest ramp where you’ll never be unless you join us!

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