Premier Financial Alliance Insurance Pyramid Scheme Class Action

Premier Financial Alliance, Inc. (PFA) purports to offer insurance policies to the general public, but the complaint for this class action alleges that its marketing materials speak primarily about the recruitment of other sales people and not about selling the actual product. The complaint claims that PFA is nothing but a pyramid scheme, in violation of federal and California laws.

The class for this action is all participants in PFA’s scheme, from June 25, 2014 to the present, who paid more into the scheme than the amount they received from PFA.

To join the scheme as an “Associate,” a person must pay a non-refundable $125 to the organization and buy a life insurance policy. Part of each payment on the policy is give to PFA; the remainder goes to National Life Group Insurance, which provides the policy.

Next, the person must recruit six other people and obtain a license to sell insurance under their state’s insurance law. Obtaining the license requires a substantial input of time and effort.

According to the complaint, PFA keeps a database that tracks which associates have the most recruits and represents that recruiting others to the scheme is the only way to really earn money.

The complaint claims that “a Career Associate is urged to recruit at least ‘three people and submit three sales of minimum 9,000 points in the first thirty days of joining PFA.’ No marketing is done to retail customers.”

In fact, the complaint claims that the insurance policies are more expensive than the norm, making them difficult to sell to anyone other than friends and family. The focus therefore is on recruiting other Associates as the way to make money.

Still, the complaint claims that those involved at the top of the scheme promise that those who sign up can build strong businesses and have the financial freedom to live their dreams. They claim that Associates can make a “base income” of $13,800 per month and suggest that a single sale can earn an Associate as much as $2,500,000. However, the complaint claims that “Defendants have never marketed or sold insurance policies to any retail customers, but instead derive 100% of the scheme’s revenues from chain recruitment.”

Unfortunately, the complaint claims, “More than 95% of Associates average net losses. No persons, except the promoters and operators of Defendants’ scheme make any money.”

The complaint claims violations of California laws, such as its Endless Chain Scheme, Unfair and Deceptive Business Practices Claims, and False Advertising Laws. In addition, it alleges fraudulent concealment and federal securities fraud, 

Article Type: Lawsuit
Topic: Consumer
Tags: Pyramid Scheme