Talk Fusion – Class Action Lawsuit

    Kevin Thompson is an MLM attorney, proud husband, father of four and a founding member of Thompson Burton PLLC. Named as one of the top 25 most influential people in direct sales, Kevin Thompson has extensive experience to help entrepreneurs launch their businesses on secure legal footing. Recently featured on Bloomberg TV and several national publications, Thompson is a thought-leader in the industry.

    Talk Fusion, a member of the DSA and a purported legitimate multilevel marketing company, was recently named in a class action lawsuit. The lawsuit can be found here and in its entirety below. The lawsuit was filed by Spreter Law Firm, based out of San Diego, California.

    It’s a meaty lawsuit, clocking in at 110 pages (plus an additional 200+ pages for exhibits). The attorney that filed the lawsuit, Geoff Spreter, did a fair amount of homework.

    Bob Reina, owner and founder of Talk Fusion, was also named as a defendant in the lawsuit.

    The gist of the lawsuit: Plaintiff is alleging that Talk Fusion and the other defendants conspired together to perpetuate a pyramid scheme. The conspiracy between the defendants is the basis for a RICO claim. RICO (Racketeer Influenced and Corrupt Organizations) fraud exists when multiple parties conspire together to engage in fraudulent conduct. The damages associated with RICO fraud can be quite large. Amway faced a similar allegation in a class action filed back in 2006. They ended up settling the case for $60+ million.

    The case is in its early stages. There are a number of battles that will need to occur before the pyramid issues are addressed. Mainly, the arbitration provision. Talk Fusion has an arbitration clause. They will undoubtedly move the court to dismiss the case and send the dispute to arbitration.

    Regarding the pyramid allegations, the complaint lays out some strong arguments (and provides a lot of exhibits to support those arguments). As a refresher, pyramid schemes exist when there are rewards unrelated to product sales. The mere act of selling a token “product” does not eliminate the risk of pyramiding. If an MLM sold $1,000 pencils, it would clearly be a pyramid scheme because the pencils would lack legitimate market value. In addition to looking at product value, courts and regulators look at the “operational realities” of the program. Regardless of what’s on paper, if behaviors in the field are crazy (heavy emphasis on recruitment), it can be indicative of a problem.

    Regarding products, there needs to be legitimate value. Value is demonstrated through several factors: retail sales, emphasis of the culture (product focus vs. recruitment focus), consumer safeguards, compliance measures, incentives in the pay plan, requirements to buy product to enhance earning potential, etc. Plaintiff is alleging that Talk Fusion is selling an over-priced token product. The pricing structure for Talk Fusion is below (available on their website here). The service consists of video email and video conferencing capabilities. The larger packages allow more attendees on the video calls (up to 500) and allow for more storage.

    Video_Communication_Technology___Video_Email___Pricing___Talk_Fusion

    Plaintiffs allege that there are free / cheaper alternatives readily available on the internet i.e. Skype, Google Hangout, Adobe, Webex, GoToMeeting, etc.

    In Talk Fusion, participants are paid by way of a binary compensation plan. The structure of the plan is not really the issue, it’s mainly the incentives that allegedly lead participants to focus almost exclusively on recruiting. The lawsuit provides some exhibits that show Talk Fusion associates aggressively pushing products, heavily emphasizing the financial gains associated with the business model (implying that product value is secondary to the benefits of the compensation plan).

    There are two sides to every dispute. Talk Fusion will get its chance to respond. If the case progresses to the point where the Court acknowledges the possibility that a pyramid scheme exists, Talk Fusion is going to have to provide answers to some very simple questions:

    How much revenue is attributable to customers (as defined as people outside the distributor network)? With a technology product, the data should be clean. With inventory based MLMs (companies that sell physical products), the retail sales can be harder to track because the inventory sometimes moves through distributors (they buy and re-sell). With technology MLMs, the data is clearer.

    What are the purchase patterns between customers and associates? If associates spend an average of $3,000+ per year and the average customer spends dramatically less, it’ll be an issue.

    What sort of compliance measures were implemented to stop aggressive income claims?

    When associates quit Talk Fusion, what percentage continue to pay for the product?

    Do associates actually use the Talk Fusion software? With technology MLMs, usage is always a factor.

    What is the average number of attendees per video conference? If the number is small when the majority of people choose to purchase a pack (the “pro pack,” retailing for $1500) that allows for 500 attendees, it could be a problem.

    How many associates actually use the software each month? How many times each month?

    Did associates teach other associates to upgrade simply to qualify for additional compensation? If that’s proven to be pervasive throughout the culture, it could be a problem.

    If the case proceeds beyond the arbitration issue, these are just a few of the questions that will be heavily litigated.

    Conclusion

    It’s going to be a street fight. I know Geoff Spreter from another action several years ago. I also know Talk Fusion’s lawyer, Lawrence Steinberg. Steinberg is on the other side in our lawsuit against Jeunesse. He was also BurnLounge’s attorney. It’s a good matchup. They’re both good lawyers. In the spirit of full disclosure, there’s a chance I get involved on the Plaintiff’s side as the lawsuit develops.

    If you’re reading this via email, click here to view the complaint.

    Talk Fusion Class-Action Complaint by Thompson Burton

      Kevin Thompson is an MLM attorney, proud husband, father of four and a founding member of Thompson Burton PLLC. Named as one of the top 25 most influential people in direct sales, Kevin Thompson has extensive experience to help entrepreneurs launch their businesses on secure legal footing. Recently featured on Bloomberg TV and several national publications, Thompson is a thought-leader in the industry.

      • This will truly be an interesting case to follow. During discovery, if it goes that far I am sure questions will be raised as to why so many past top earning field reps have been pushed out and sued.

        There may also be an issue raised as to the corporate and financial structure of the business itself.

        I can say Steinberg is one of the nicest Pitbulls I’ve ever had the pleasure of getting to know. He will truly put on one heck of a fight for his client!

      • Wow this is huge news.

        • Gia Bijou

          I agree! I am glad I found this site to find out about them.

      • Chris Cox

        Very bogus. As a former member of TF staff, I can honestly tell you the products are real and have real code and databases, etc.. behind them. Now, I can’t tell you if there are players in the industry that have fully copied the TF software stack, but I know just a couple of years ago, there were competitors (sure), but nobody had the mix of features, functionality and price that the TF products had. Selling software via an MLM is genius btw…. have the customers be your sales team.

        Go get em Bob!!

        • Kevin Thompson

          The issue Chris is not whether the product is real. The issue is whether the product was merely incidental to the pay plan (a side show). It takes more than code to prove product value. There’s objective data that’s important i.e. retail sales, purchase patterns, usage stats, etc. If TF has the data, good for them. If not, we’ll see what happens.

        • Just because some folks lead with the opportunity doesn’t mean we run a pyramid scheme. Personally, I lead with the product because is great. Video Email, Video Chat and Live Meetings alone are incredible products.

          Jeunesse is not the world’s first and only company that markes skin care products.

          Vemma is not the world’s first company that markets energy drinks.

          It’s hard to create a need when there is not already a need there.

          And of course we didn’t created video conferencing or video chat like Skype but that doesn’t mean we cannot make something better.

          So what? Just because there are other softwares means our products have no real value in the market place?

          Then Organo Gold is also a pyramid because they sell coffee.

          “Pff, you can get cheapest coffee in Starbucks”

          We certainly didn’t opened the doors to those technological trends but we did improve them.

          Why is that when someone lead with the opportunity in Network Marketing should be clue you run a pyramid scheme?!

          Just because they decide to lead with that doesn’t mean on his pitch or whatsoever he says:

          “Our products our bullshit but I love to make money so pay here and let’s get millionaire”

          Of course they talk about the product! Of course they talk about the Video Email, Video Chat and so on!

          But people (99%) Of those who join the profession do it because they see a chance to do something different.

          People do talk about products. How the heck you can say that we don’t love our products if you ain’t us? Have you talked to us? Have you made a survey?

          But most people that join not only Talk Fusion but the profession are more likely to post and upload videos and stuff like that to social media about the opportunity but that is not a bad thing.

          Go to Youtube and search for any company that comes to your mind and there always gonna be stuff about an opportunity.

          And again, product is important but if we decide to post something about a lifestyle or what can this industry can provide with both products and opportunity now that means we are criminals because we run a pyramid scheme.

          From my perspective a distributor is also a customer.

          What about other traditional business that make INCOME CLAIMS?!

          Oh, nobody does anything because isn’t MLM.

          What about that photo? Those are not MLM based companies making INCOME CLAIMS!

          Why nobody sue them?

          Yes, Skype and Video Chat are similar but not the same.

          Try any other video conferencing service, Skype and any platform for video emails you can find even for free on Google and then try our products and let’s see who offer the most value.

          Understand that we’re a technological company just like Google that happens to use the Network Marketing model to distribute their products.

          I love our products!

          And, at the end of the day, we all wanna make a commission to feed our families, make some extra income to pay our debts and live a little bit better.

          So now because we want to make a side small income is a bad thing?!

          I read the lawsuit and it really disappoint me to see people who seems to now perfectly what does a pyramid looks like but have absolutely no idea what Network Marketing is and what we stand for because you can’t talk about what you don’t know.

          Plus, you cannot judge a whole company for what some distributors might do.

          Personally, I do the right things and as I say; You can’t be wrong by doing the right and you can’t be right by doing the wrong.

          Our products are great and the value is clearly.

          The fact that you can find a product that seems to be like ours doesn’t mean that what we have developed is shit because is Skype was first and it will remain king forever.

          Come on!!

          Opinion ain’t facts folks.

        • Gia Bijou

          Well, it sounds like this Bob fella is on his way to jail if the FTC follows-up with criminal charges so I am not sure why you are cheering him on???

      • Just because some folks lead with the opportunity doesn’t mean we run a pyramid scheme. Personally, I lead with the product because is great. Video Email, Video Chat and Live Meetings alone are incredible products.

        Jeunesse is not the world’s first and only company that markes skin care products.

        Vemma is not the world’s first company that markets energy drinks.

        It’s hard to create a need when there is not already a need there.

        And of course we didn’t created video conferencing or video chat like Skype but that doesn’t mean we cannot make something better.

        So what? Just because there are other softwares means our products have no real value in the market place?

        Then Organo Gold is also a pyramid because they sell coffee.

        “Pff, you can get cheapest coffee in Starbucks”

        We certainly didn’t opened the doors to those technological trends but we did improve them.

        Why is that when someone lead with the opportunity in Network Marketing should be clue you run a pyramid scheme?!

        Just because they decide to lead with that doesn’t mean on his pitch or whatsoever he says:

        “Our products our bullshit but I love to make money so pay here and let’s get millionaire”

        Of course they talk about the product! Of course they talk about the Video Email, Video Chat and so on!

        But people (99%) Of those who join the profession do it because they see a chance to do something different.

        People do talk about products. How the heck you can say that we don’t love our products if you ain’t us? Have you talked to us? Have you made a survey?

        But most people that join not only Talk Fusion but the profession are more likely to post and upload videos and stuff like that to social media about the opportunity but that is not a bad thing.

        Go to Youtube and search for any company that comes to your mind and there always gonna be stuff about an opportunity.

        And again, product is important but if we decide to post something about a lifestyle or what can this industry can provide with both products and opportunity now that means we are criminals because we run a pyramid scheme.

        From my perspective a distributor is also a customer.

        What about other traditional business that make INCOME CLAIMS?!

        Oh, nobody does anything because isn’t MLM.

        What about that photo? Those are not MLM based companies making INCOME CLAIMS!

        Why nobody sue them?

        Yes, Skype and Video Chat are similar but not the same.

        Try any other video conferencing service, Skype and any platform for video emails you can find even for free on Google and then try our products and let’s see who offer the most value.

        Understand that we’re a technological company just like Google that happens to use the Network Marketing model to distribute their products.

        I love our products!

        And, at the end of the day, we all wanna make a commission to feed our families, make some extra income to pay our debts and live a little bit better.

        So now because we want to make a side small income is a bad thing?!

        I read the lawsuit and it really disappoint me to see people who seems to now perfectly what does a pyramid looks like but have absolutely no idea what Network Marketing is and what we stand for because you can’t talk about what you don’t know.

        Plus, you cannot judge a whole company for what some distributors might do.

        Personally, I do the right things and as I say; You can’t be wrong by doing the right and you can’t be right by doing the wrong.

        Our products are great and the value is clearly.

        The fact that you can find a product that seems to be like ours doesn’t mean that what we have developed is shit because is Skype was first and it will remain king forever.

        Come on!!

        Opinion ain’t facts folks.

        • Kevin Thompson

          Thanks for your comment, Carlos. We’ll see how the proof shakes out.

          • Thanks Kevin

            • Tara Woodruff

              Good Points indeed/. I wonder if it shouldn’t be a matter that The MLM law isn’t the problem. Why does the MLM law work to delegitamize the industry as a Business, A real business. I Know there are Sharks out there, There are sharks at the local convenience store, At my Doctors office, You name it. Why does the individual not take more responsibility, Why does it always fall as a fault of the MLM company? I am in a Health and Wellness company, I know my Product is TOP NOTCH, However I pay Far more for my products than I would If I went to the local Health and wellness Franchise. I CHOOSE the Company, Because I trust them to be Honest about ingredients verses that Franchise’s products. I choose the MLM because they are held to a higher standard, And I pay a pretty penny for it, GLADLY.

              • Exactly! It makes more sense to buy products from Network Marketing companies whether from retail or as a distributor.

                (Who therefore is also a customer in one way or other)

                WHY? Couple points I wanna cover here.

                MLM companies are forced to add more value to their products so it makes more sense to customers or distributors buy from them rather from buying from their local store.

                Starbucks has no necessity of improving their coffee’s or making them more healthy, adding FDA certifications, awards, etc because there’s no need for.

                On the other hand; As you said MLM companies are held to a higher standard from a product standpoint.

                So we can come to the conclusion that hands down MLM products are far better from a traditional company who also sells that product.

                I drink Organo Gold coffee.

                I drink Verve and Bode from Vemma when I work out.

                I use Jeunesse products because I like their products.

                But now the US law or FTC claim working for money at least in MLM is illegal because you’re running a pyramid scheme.

                Really? Then what, you want us to work for free?

                Now, I know making income claims and those things are forbidden however, the lawsuit against us is a clear example how this type of things are the start of a war against not only Talk Fusion but the MLM profession.

                The core values and philosophies of our profession since their early stages almost 75 years ago was an opportunity for the average person to make a couple extra hundred bucks to live a better live.

                50% product and 50% opportunity

                My grandpa says he went an Amway meeting years after he moved from Germany (Second world war) to Canada and there were Rolls Royce, lifestyle stuff, free beaches vacations and stuff like that.

                That’s what makes this profession so big!

                That’s why we generate over $200 Billions per year!

                “Oh sorry, I forgot that we can’t make income claims or talk about money at all because then we’ll be criminals who run pyramid schemes.”

                Now, based on this ridiculous lawsuit those guys seems to say that now talking about the opportunity to make money is a bad thing because you don’t lead 100% with the product.

                Then Brian Tracy is a criminal running a pyramid scheme because he’s making income claims because I don’t see an income disclosure there!

                http://www.harvekeronline.com/brian-tracy-special-message/?ssid=108ca349-954e-4533-bcf3-dc8ada286392

                http://www.harvekeronline.com/zero-multimillionaire-green/invite/brian-tracy.php

                Also this guys should be arrested because I don’t see an income disclosure in his website.

                http://www.timothysykes.com/

                “Oh, sorry, I also forgot that not MLM based people or businesses can’t get sued by making income claims.”

                SUMMARY:

                We’re not a pyramid scheme

                You can’t find products with the same quality like ours

          • Gia Bijou

            Do you think the FTC is investigating and will shut them down soon?

      • Tara Woodruff

        You know, I was just wondering the other day How TF could stay in business as it was a few years ago, Considering the Product is ‘Out Dated’ Because of so many Viable Free or More affordable Options available in the Market. Considering the points of law, that the product can not be over inflated cost wise, TF is in trouble. Not that Their costs aren’t high Or that The mark up isnt legit, That I do not know, However Considering that This WAS Cutting Edge, Im surprised that They are not able to Keep up with Tech in a viable way. I Loved the product however it was not cost effective to continue to use when I stopped promoting. It wasn’t long until I had Viable more affordable and reliable products to Replace what I was missing.

        • I agree with you.

          I joined Talk Fusion almost 4 years ago.

          The service was pretty basic, designs, etc. Not the big deal but I saw Bob’s vision for the company and that’s why I’m still here.

          As you said; Our products weren’t that great back then so it could make sense to see Google Hangouts, WebEx or GoToMeeting a good option as well.

          PS (The price has never been te issue because those companies offer just 1 product whether Video Email or video conferencing at $1K+)

          I’ve here since then and every year we’ve got better.

          The Talk Fusion of 4 years ago is completely different from the Talk Fusion now.

          If you try our products again now you’ll be blown away.

          As I said; Bob’s vision is really rock solid and crystal clear for our future.

      • Tonguç Akarca

        What was the result of the case?