SPOKANE---Attorney General Christine Gregoire today announced that a Nevada multi-level marketing company has agreed to stop exaggerating income claims to potential Washington distributors of its products.
Equinox International Corporation, a nationwide distributor of various health and beauty products and water filter systems, signed an Assurance of Discontinuance (AOD) with Washington and 13 other states. The agreement requires the company to substantiate all claims of profit and product performance in its advertising to distributors.
"Promises of easy money and huge profits lure people into multi-level marketing ventures," said Gregoire. "Once the person makes a substantial investment, the huge profits quickly disappear."
According to Gregoire, distributors recruited by Equinox were misled about how much product they could reasonably sell and how much money they could expect to make.
Multi-level marketing companies use distributors to sell products and recruit others into the company. Each participant makes a profit from the sale of products by those they have directly or indirectly recruited into the company.
Washington will receive $10,000 from Equinox to cover legal costs and fees. Other states participating in this action will also be compensated for their legal fees. Those states include Texas, Florida, Illinois, Michigan, Ohio, North Dakota, Alabama, Wisconsin, Missouri, Nebraska, Nevada, Pennsylvania and New Mexico.
Gregoire urged people to be very cautious of investing in multi-level marketing schemes without doing research and carefully analyzing the way the company markets and performs as a business.
In Washington, sixty-four consumers filed complaints against Equinox.
In signing the AOD, which was filed in Spokane Superior Court, Equinox and Advanced Marketing Seminars, which trains Equinox distributors, admitted to no violation of the law or wrongdoing. They did agree to make the following business changes:
- Clarify to all potential distributors there are no guarantees of success nor do all participants make money;
- Refrain from misrepresenting income and profit levels;
- Clarify that Equinox is a business opportunity, not a guarantee of employment;
- Refund 100% of product purchases as long as distributorship is cancelled with five days of purchase;
- Require proof of sale of at least 70% of products to the public in order to prevent "front end loading" which requires participants purchase a certain amount of product to ensure participation in the plan;
- Limit initial purchase of product to $5,000.
Owen Clarke,Jr., Senior Assistant Attorney General and Sandra Estes, Investigator, both of Spokane, handled the case for the Washington Attorney General's Office.