A recently filed lawsuit alleges Nerium and Jeff Olson profited “substantially” from the sale of Brand Partner Launch Kits.
A company and its owner profiting when affiliates sign up isn’t anything new, except for the fact Nerium explicitly claims it sells the kits “at cost”.
The July 13th proposed class action was filed by plaintiff Kimberly Gerdo in Riverside County Court, California.
Gerdo signed up as a Nerium Brand Partner back in February, 2013.
To become a Brand Partner, Nerium required Gerdo to purchase a Brand Partner Launch Kit for $499.95.
Gerdo was informed that the Brand Partner Launch Kit would be sold to her at Nerium’s cost.
Evidence of this representation is provided as written in Nerium’s Policies and Procedures for the US;
The applicant purchases, at Company cost, a Brand Partner Launch Kit […]
This sum is not a service or franchise fee, but rather is strictly to offset costs incurred by the Company for educational and business materials.
Gerdo left Nerium “sometime thereafter”, only to decide she wanted to sign up again earlier this year.
On January 15th, Gerdo coughed up another $499 for a Nerium Brand Partner Kit.
On information and belief, Nerium did not sell the Brand Partner Launch Kit to Gerdo and all similarly situated Brand Partners “at Company cost.”
Instead, Nerium sold the Brand Partner Launch Kits at a substantial profit to both Nerium and Olson personally.
Gerdo alleges the Nerium purchases materials included in their Brand Partner Kits from Success Partners, a Texas-based marketing company.
On information and belief, Jeff Olson intentionally negotiated an inflated purchase price for materials purchased from Success Partners for the Brand Partner Launch Kits, and as part of this arrangement, Jeff Olson personally receives (either directly or indirectly) a “kick-back” from Success Partners for all Brand Partner Launch Kits which Nerium purchases from Success Partners.
In addition to the inflated purchase price from Success Partners, and the “kick-back” that Olson personally receives directly from Success Partners, Nerium substantially marks up the Brand Partner Launch Kits significantly above its actual cost, such that Nerium makes a large profit from the sale of all Brand Partner Launch Kits.
Gerdo has asked the court to approve a class-action that would add any Nerium affiliate ‘who purchased a Nerium Brand Partner Launch Kit since January 1, 2010‘ to the suit.
Specific allegations leveled at Nerium and owner Jeff Olson (right) include
- violations of the California Business & Professions Code
- unfair business practices aimed at deceiving (Nerium prospects) by misrepresenting the actual value of the Brand Partner Launch Kits
- unfair business practices and fraudulent and negligent misrepresentations, aimed at deceiving (potential Nerium Brand Partners) by misrepresenting that the Brand Partner Launch Kits were sold at cost
- the unfair or fraudulent taking away of money from Class members by conduct deemed to be in violation of the California Business & Professions Code
- obtaining monies from Class members via false pretenses and
- breaching the covenant of good faith and fair dealing toward the Class members
Nerium’s Policies and Procedures requires complaints such as this to be resolved through arbitration.
Gerdo however argues that Nerium’s arbitration provision is “procedurally and substantively unconscionable and unenforceable.
If Gerdo and the proposed class action succeeds, Nerium Brand Partners will be entitled to damages and whatever restitutionary disgorgement is awarded against Nerium (profit over what the kits actually cost to make).
The law firm Bohm Wildish & Matsen are trying the case. They request any
current or former Nerium brand partners who believe they were defrauded are encouraged to join this case by calling 714-384-6500 or by submitting an information request on the firm’s website.
While I have been provided a copy of the original July 13th complaint, note that I’m unable to follow filings in Superior Court cases.
Based on any further information we receive regarding the case however, we’ll do our best to keep you updated.