2023 1129 - Affidavit - Marco Moukhaiber - [Always Marco] - Primerica - 118p
- 1 - 3. From my personal experience and in the research I have conducted. MLM companies often prey on marginalized, vulnerable consumers, causing them to suffer significant financial and personal losses. I have found that the risks associated with joining MLM companies are not widely known. or at the very least. not communicated in a transparent and effective manner, leading me to educate members of the public on these companies and their tactics.
- 1-2 - 4. I started creating educational content on MLM companies in 2019. To reach a wide audience who is likely to be targeted by MLM companies, l record videos and post them on various social media platfoms, including YouTube. This allows my research and findings on MLM companies to be widely disseminated, and helps people to make informed decisions before joining one.
- 2 - My Analytical Approach to Understanding and Reporting on MLM Companies
- [Cults] - 10. It is my opinion that MLM companies operate as commercial cults. This opinion is formed by my research into cults and MLM companies, and comparing the techniques employed by both.
- 3 - Process for Publishing a Report
- 4 - Primerica Publications - [Marco]
- 6 - 21. At the start of the July 11, 2023 Video, I include the following disclaimer3:
- “All statements in this video are my personal opinion. This video is intended for the purposes of consumer education and consumer protection. This video is not intended to incite hatred towards any group or individual.
- All individuals identified in this video by face or name are public figures.
- According to YouTube Privacy Guidelines, it is not required for the names or faces of these individuals to be concealed. The footage in this video was captured with adherence to Canadian one-party consent law and does not violate the privacy of any individual that appears in this video.”
- 6 - Primerica Findings - [Marco]
- [Pyramid Scheme / Pyramid Selling] - 25. I also concluded that Primerica and its practices meet the descriptions of pyramid schemes or pyramid selling, as defined by the Federal Trade Commission and Canadian Competition Bureau.
- [Scam] - 26. I understand that a pyramid scheme is a scam that is often disguised to appear like a legitimate MLM business opportunity. The FTC describes pyramid schemes as follows4:
- “Pyramid schemes are scams. ......
- [Criminal] - 28. The Canadian Competition Bureau describes pyramid selling and multi-level marketing as follows6:
- “Pyramid selling focuses on generating profits by recruiting others and not primarily from the sale of products. Thus, even when these schemes offer products, the products may have very little value, or few incentives for their sale.
- It is a criminal offence to establish, operate, advertise, or promote a pyramid selling scheme.
- Multi-level marketing plans, although a legal business model, have rules for operators or participants. If they make a representation relating to compensation, such information must be fair, reasonable and timely.”
- 29. Section 55.1 of the Competition Act also makes it illegal and to constitute pyramid selling if a multi-level marketing plan were to do any of the following7:
- offer compensation for recruitment;
- require purchases (other than a start-up kit sold at cost) as a condition of participation;
- require participants to buy a large amount of inventory that cannot be resold or used within a reasonable amount of time (inventory loading)
- fail to offer a buy-back guarantee on reasonable commercial terms;
- 30. A well-known researcher on illegal pyramid schemes, Robert Fitzpatrick, outlines that an illegal pyramid scheme can be identified using the following four characteristics8:
- pay to play;
- endless chain recruitment model
- emphasis on recruitment;
- extreme money transfer from the majority of participants to the less than 1% at the top.
- 9 - 33. According to my research, Primerica does indeed operate an illegal pyramid scheme, or at the very least, some of its prominent agents and promoters openly engage in these techniques. It appears that Primerica has not reigned in or stopped these individuals or entities from making these representations or employing these tactics.
- 9 - 36. If not a pyramid scheme, the Plaintiffs are an MLM company. The FTC defines an MLM company as follows10:
- 37. In the six months that I researched and investigated the Plaintiffs, I discovered multiple instances where they or their agents engaged in conduct and tactics that the FTC and Competition Bureau defines as being a pyramid scheme.
- 41. Together, I used these documents to contrast the official stance Primerica takes regarding deceptive earnings and lifestyle claims, and the actual, real-world conduct of Primerica distributors.
- 11 - 44. I believe that the necessity for government licensing is a means of deceptively appearing more legitimate in the eyes of authorities and regulators, as well as the general public. It also serves to confuse regulators on jurisdiction as it pertains to disciplinary intervention of Primerica, since MLMs are regulated by the FTC/Competition Bureau but the insurance industry is separately regulated by the respective state/provincial regulator.
- 46. The starting sales commission that a Primerica distributor is entitled to is 25%.
- 47. I understand that this commission percentage is drastically lower than other non-MLM insurance companies offer their sales force.
- 49. I understand that the Financial Services Regulatory Authority (“FSRA”) in Canada has recently initiated an enforcement action against World Financial Group (“WFG”), a company that operates almost identically to Primerica as an MLM insurance company with an almost identical compensation structure. In this enforcement notice, the FSRA references the irregularity of WFG paying commissions on multiple layers of downline recruits; I have learned that the norm in the insurance industry is only one level of override commission might ever occur. This would disprove Primerica’s claim on their website that they use an insurance agency model11.
- 51. From my investigation, I concluded that the primary emphasis in Primerica is the recruitment of new distributors who pay $99.00, whether or not they end up obtaining their insurance license.
- 52. My investigation revealed a calculated means of operating a pyramid scheme under the guise of an insurance sales company. The way Primerica does this is by first enticing prospective new recruits with deceptive earnings claims. Once the new recruits have paid $99.00 to join Primerica as a distributor, upline leaders emphasize the recruitment of new distributors and the sales of insurance policies. The new recruits are then encouraged to repeat the process. This idea is attractive to the new recruits because it is less challenging than trying to make insurance sales as an independent salesperson through a direct sales system.
- 12 - 56. In this portion of the July 11, 2023 Video, Vivian projects that new recruits could earn up to $18,000.00 in their first month as a licensed agent with Primerica, by following this “simple” strategy.
- 12 - 60. Primerica’s independent contractor workforce has a churn rate consistent with that of companies who have been shut down for being pyramid schemes14.
- 13 - 64. I have documented reliable and verifiable evidence that Primerica does not incentivize nor focus on making genuine sales to retail customers who are not themselves invested in the Primerica “business opportunity”, but rather, that Primerica’s top recognized distributors perpetrate a deceptive and misleading image of wealth and success on social media in order to recruit new participants into the scheme. Primerica reports “sales” of its affiliated products and services but fails to disclose whether or not those sales were made to genuine customers, or simply to the next generation of recruits.
- 65. It is because of this, that I have concluded Primerica operates similarly to a pyramid scheme, as it cannot prove the existence of genuine customers, but rather provides evidence that its income is derived from internal consumption (the Plaintiffs’ distributors are the customers).
- 66. However, aside from the title of the July 11, 2023 Video, I never state in the main video that the Plaintiffs operate a pyramid scheme.
- Instead, I state “Primerica is certainly a legal company16,” and never refer to it as an illegal pyramid scheme in that video. At the end of the video, I outline the FTC’s four warning signs of a pyramid scheme and provide examples from my video of instances where these warning signs appeared from high-ranking Primerica distributors.17
- 67. I have not sought to classify Primerica as an illegal pyramid scheme, I have merely shown that the criteria used by regulatory authorities such as the FTC and Competition Bureau to identify pyramid schemes correlates with my own findings of Primerica’s operation. I allow the audience to draw their own conclusions based on the information presented in the video.
- 14 - 69. The motive of my investigation and reports was my concern for the public interest and the potential danger associated with joining Primerica as an independent distributor.
- 14 - 70. I understand that based on the true earnings of Primerica distributors, claims that one can make "unlimited income", "achieve financial freedom", or make "thousands of dollars a week" are deceptive, misleading and false.
- 71. I have not fabricated any information presented in my videos or purposely said anything that I know to be untrue.
- 72. Many other publications exist that outline the same concerns about the Plaintiffs. These videos and blog posts all echo the same experience of deception, misleading promises, emphasis on recruitment, cult-like atmosphere, pyramid scheme indicators, lost money, etc. Attached at Exhibit "N" to this affidavit is a hyper linked list of these videos and posts.
- The Interim Injunction Has Caused Significant Losses
- 75. I have suffered financial damages as a result of having to remove my videos, especially the July 11, 2023 Video
- more
- Source Material for Statements in Video
- 77. Attached as Exhibit "0" is a copy of a chart that highlights the statements made in the July 11, 2023 Video and sources for the statement.