Arbonne a Pyramid Scheme is the complaint in a class action lawsuit filed by Cynthia Dagnall and Michael Dagnall in the State of California.
This lawsuit alleged Arbonne operated as a pyramid scheme defrauding thousands of innocent so-called independent consultants (Arbonne Consultants).
At the center of this Arbonne a pyramid scheme lawsuit is the argument alleging that the bulk of an Arbonne consultant income derived from the money paid by other consultants in the Arbonne mlm business opportunity, not from selling Arbonne products.
This Arbonne review discusses the differences between a legal mlm business and a pyramid scheme.
Arbonne, however, argues that they are operating as a legal mlm company under the laws.
Who is telling the truth? Is Arbonne a pyramid scheme? Let begins our review of the Arbonne MLM business.
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Arbonne Review
Individuals join the Arbonne pyramid scheme as an independent consultant.
- To become an Arbonne consultant, an individual is required to pay a registration fee of $49.
- This registration fee covers the cost of a starter kit, which includes a business opportunity guide, marketing materials, and product samples.
- There is also an annual consultant renewal fee of $29 should you wish to continue as an Arbonne consultant.
- The major costs under an mlm business opportunity are not the registration fee, but the monthly minimum personal sales volume required to stay active and receive commissions.
Arbonne requires an independent consultant to maintain a Personal Qualification Volume (PQV) of 150 QV to remain active.
The majority of Arbonne consultants have to purchase monthly products to meet the PQV level. This is the allegation in the class action lawsuit.
On average, an Arbonne consultant has to spend over $132 per month to achieve Qualified Status.
The monthly PQV seems to be the key factor in determining whether Arbonne is a pyramid or not?
In this Arbonne Review, I will analyze Arbonne business opportunity to provide you the answer to this question before investing with Arbonne.
What Is Arbonne?
Arbonne is an mlm company that promotes and sells products in the health and beauty industry through a network of independent consultants, the Arbonne Consultant.
Arbonne is operating in the same niche market with these mlm companies: Monat and Isagenix.
Arbonne was initially launched in 1975 by Petter Morck from Switzerland. The company was founded based on Petter vision of providing high quality and the best skin care products in the world.
Arbonne did not find success until 1980 when it relaunched in the United State with operating headquarters in Irvin, California. From this success, the company expands into Canada, Australia, the United Kingdom, Poland, and New Zealand.
In 2018, Arbonne reports a worldwide network of approximately 265,900 Active Independent Consultants and 2,800,000 Preferred Customers with sales revenue $553 million.
The biggest Arbonne Consultant network is from the United States with 174,200 members.
The Arbonne product line has been expanded from skin care to over 400 items including cosmetics, weight loss, bath and body, hair care, sunscreen, makeup, nutrition, and other inner and outer health and beauty products.
The company claims their health and beauty products are pure, safe, and beneficial. The company provides the following evidence to back these claims:
- Arbonne prides itself on being certified by the Vegan Society, the Gluten-Free Organization, the Banned Substances Control Group, the GI Labs, the Informed-Sport, the PETA Cruelty-Free, the OU Kosher, and the Non-GMO Project.
- The company declares it ‘NOT ALLOWED’ list to contain over 2,000 ingredients which are banned from their products.
The is no lawsuit against Arbonne products. However, many users have reported that Arbonne products are similar to health and beauty products that you can find in retail stores, except more expensive.
The high price of Arbonne products makes it impossible for consultants to resell the products that they are required to purchase each month to stay as a consultant.
According to the class action lawsuit, a small portion of a consultant income is from products resell, while the bulk of the income comes from other consultants in the same group.
When consultants are feeding off each other, this makes Arbonne a pyramid scheme.
If the statement above is true, then becoming an Arbonne Consultant is not a good business opportunity. Because every pyramid scheme is designed to make money for a small group at the top by feeding off the money paid by their downline.
Therefore, looking at Arbonne consultant earnings will help us understand more about the Arbonne mlm business structure, and your chance of making money investing in this mlm business opportunity.
Arbonne Compensation Plan
The Arbonne compensation plan is structured similar to other mlm opportunities.
Below is an overview of the Arbonne compensation plan. You can view the Arbonne full compensation plan by following the link.
Arbonne consultants are compensated or earn money in 3 ways:
1. Commissions on retail sales.
- 35% on direct sales at retail price
- 15% on sale to Prefer Clients
2. Override commissions on downline sales volume.
- 6% on your direct downline.
3. Cash Bonuses on recruiting efforts.
- $100 bonus when you sponsor 2 Independent Consultants and/or Preferred Clients.
Arbonne compensations increase as the consultant moves up the rank. Currently, Arbonne offers consultants the following rank promotions:
District Manager
A consultant is promoting to District Manager after meeting the sales volume requirements and recruiting requirements in one, two or three months.
Arbonne District Manager compensation increases from 6% to 8% with compensation up to the 3rd generation.
The biggest increase is $200 Cash Bonus on recruiting 5 new Independent Consultants and/or Preferred Clients.
Area Manager
Arbonne consultant achieves Area Manager after meeting the sales volume and recruiting requirements. You can view the volume requirements by clicking on the Arbonne compensation plan above.
As an Area Manager, the compensation includes all District Manager benefits and earnings plus 6% commission for the entire Area up to 3 generations of downline.
Area Manager also receives $400 Cash Bonus when recruiting 10 new Independent Consultants and/or Preferred Clients
Regional Vice President
Arbonne Regional Vice President compensation includes the District Manager and the Area Manager benefits and earnings, plus 3% commission on their region up to 3 generations.
Regional Vice President also enjoys the following bonuses:
$600 Cash Bonus for recruiting 30 new Independent Consultants and/or Preferred Clients.
The Mercedes-Benz Cash Bonus Program for purchasing or leasing a white Mercedes-Benz automobile affixed with the Arbonne car emblem.
National Vice President
National Vice President is the top rank an Arbonne consultant can achieve.
Arbonne National Vice President earning includes the District Manager, the Area Manager, and the Regional Vice President benefits and earnings, plus 1% commission on all sales volume up to the 6th
generation.
The Arbonne compensation structure is very disadvantage for a consultant. Arbonne consultant earnings are limited, only personal sales and direct downline.
It seems the best option to make money as Arbonne Consultants is by recruiting people into the mlm opportunity.
For every 2 new consultants, they receive $100. This is much easier to achieve than selling Arbonne products.
In the 2018 Arbonne Consultant compensation summary, it is reported that Independent Consultants average annual earnings of $839 with the top 50% earned $9,166 and the rest earned $18 per years.
Based on the earnings report above, all Arbonne consultants earn below the minimum wages. This is very discouraging.
So, even if you are the best Arbonne consultant and landed on the top 50%, you are still broke. This business opportunity is not very good.
One area of great concern is that the Arbonne compensation plan incentivizes recruitment over product sales. The is what the class action lawsuit alleged Arbonne as a pyramid scheme.
Is Arbonne Worth It?
Arbonne mlm business opportunity doesn’t look good. The consultant earnings report indicates that it is very difficult to make money with Arbonne.
I cannot offer you a yes or no answer to whether Arbonne worth it? I can only tell you that you should look at other business opportunities, such as Affiliate Marketing, before deciding if Arbonne worth investing.
Affiliate Marketing has become a popular alternative to mlm business. There are no recruiting or face-to-face marketing like mlm. You in control of the product that you like to promote. There is no monthly sales volume requirement either.
You can also use affiliate marketing to promote your mlm business and build a downline. Many people have found success in using this marketing strategy.
I’ll include a section at the end of this article to explain how this business strategy works. You can also read the Affiliate Marketing For Beginners to learn more.
The concern about Arbonne is the product price. It will be difficult for you as an Arbonne consultant to make money reselling the health and beauty products. This industry has become more competitive today than it was in 1980.
There are thousands of beauty products on the market today that are all-natural and are far less expensive than Arbonne. I don’t know how are you going to convince customers that Arbonne products are worth the price?
If you decide you join Arbonne, you need to understand the only way to make money with this mlm opportunity is through recruiting others into the program. Building a team seems to be the best method of making money as an Arbonne consultant.
It is very difficult to make money with an mlm opportunity that rewards recruitment over selling products. These operations are considered as a Pyramid scheme which Arbonne has been accused.
So, Is Arbonne Legit?
Under the law, Arbonne seems to be a legit mlm company. The company seems to successfully defend itself against the pyramid scheme lawsuit.
Arbonne is still in business, and still recruiting new consultants.
I never invest in a business just because it’s legit.
Yes, Arbonne is legit, but don’t you worry about the return on your investment? This question seems to be more important to me.
From the Arbonne compensation report, we know that Arbonne consultants aren’t able to sell the products. They make money from other consultants in the group buying the Arbonne products to meet the monthly personal sales volume.
This means you can make money with Arbonne if you are good at recruiting independent consultants. Recruiting is much harder than most people think.
I don’t like mlm business opportunity, even if Arbonne is legit. Why should I have to meet a monthly sales volume to get paid?
I should be receiving commissions on every sale. This is what makes Affiliate Marketing much better.
I cannot understand the concept of buying products to be able to earn commissions. If the products are so good and beneficial as Arbonne claims, then why require consultants to maintain monthly personal sales volume to get paid?
Both Cynthia Dagnall and Michael Dagnall, plaintiffs in the class action lawsuit, have spent thousands of dollars on products that they didn’t need and couldn’t resell. They filed this lawsuit to recover all these expenses.
The Truth About Arbonne Consultants
On April 11, 2018, Arbonne reaches a settlement with Cynthia Dagnall and Michael Dagnall to end the class action lawsuit.
This does not mean Arbonne is a pyramid scheme. It only means that future lawsuit accusing Arbonne as a pyramid scheme is unlike to win.
If you are investing with Arbonne or think of becoming an independent consultant, you need to know that it’s hard to make a full-time income with this business opportunity.
The top 50% of Arbonne Consultant makes less than $10,000 a year. If you can survive on this income, then Arbonne is for you.
Here’s the Best Way to Sell Arbonne Product
The best way to sell Arbonne products and build your downline is to use Affiliate Marketing.
Affiliate marketing has been a popular method for many mlm business owners to find success using the internet to help them sell and recruit downline.
What is affiliate marketing?
It’s an online marketing technique that uses content to promote products or services on the internet.
You can use content marketing to promote your own mlm business.
You can learn affiliate marketing for free with these 10 Free Affiliate Marketing Lessons. I build a successful online business using these same free lessons.
If you are struggling as an Arbonne Consultant or looking to join mlm businesses, I like to invite you to check out affiliate marketing and discover how this opportunity can help you build a successful mlm business.
You have more ways to make money with Affiliate Marketing:
- You can make money with the affiliate marketing business, and
- You can make money with mlm using affiliate marketing to promote and recruit downline.
Learning affiliate marketing is the best way to sell Arbonne products. Follow the link below to register for a free account and start your affiliate marketing training.
With the lawsuit has been dismissed, the answer to whether Arbonne a Pyramid Scheme remain unanswered.
So, what do you think? Is Arbonne a pyramid scheme?
