Last month, a class action lawsuit was filed in California federal court against Talk Fusion International alleging that the video conferencing company amounts to nothing more than a pyramid scheme.
Lead plaintiff, investor Dennis Gray, alleges in his class action lawsuit that while Talk Fusion billed itself as “the biggest invention in the history of the Internet,” it turned out to be a multi-level marketing scheme that duped consumers out of sign up fees and commissions.
According to the pyramid scheme class action lawsuit, Talk Fusion used a system where it paid recruits a commission for referring new recruits into the company; however, the products and services advertised by the company are “irrelevant.”
“Talk Fusion’s business model relies on the recruitment of new associates to sustain itself, as opposed to actual sales of products and services to end consumers,” said a representative for the plaintiff in a statement.
According to the Talk Fusion class action lawsuit, so-called recruits were required to pay a $39 sign-up fee as well as purchasing Talk Fusion products ranging from $250 to $1,499 and monthly storage fees of $35 to $215. Grey alleges that paying for this “business opportunity” would entitle recruits to receive bonuses and commissions for picking up other recruits into the business and selling products.
Gray also alleges that Talk Fusion also promised recruits “[m]oney coming in week after week, month after month, for years to come,” and that Talk Fusion pitched “[t]rue residual income … sitting-on-the-beach money.” According to Gray, this lifetime residual income was marketed as “going into your cash-card account even when you’re sun-bathing on the beach.”
Gray further alleges in his pyramid scheme class action lawsuit that Talk Fusions’ products were next to worthless, however. He alleges that Skype, YouTube, Google, and other commonplace websites offer similar services for free or at much lower rates than Talk Fusion.
“Additionally,” Gray alleges in the Talk Fusion class action lawsuit, “nationally recognized, long-standing brands such as Adobe, Webex, Centrix, and Cisco offer a product similar to Talk Fusion’s – without the $250, $750, and $1,450 signup fees.”
According to the Talk Fusion class action lawsuit, “With little-to-no name recognition, Talk Fusion’s associates’ jobs are made even more difficult in their attempt to earn meaningful sales commissions.”
“Many of the supposed competitors of Talk Fusion, in the area of business videoconferencing, have never even heard of the company,” said a representative for the plaintiff. The plaintiff further alleges that Talk Fusion was not feasibly profitable because of the high sign-up fees and low-priced competition for the same services.
Gray also alleges in his class action lawsuit that the owner of Talk Fusion has a history of muti-level marketing, pointing out several other companies, including Cash Card and Travel City.
He seeks to represent a Class of customers who joined the alleged pyramid scheme, an injunction on the practice and damages. The plaintiff also claims that Talk Fusion should be held liable for RICO violations, unfair trade and false advertising.
Gray is represented by Geoffrey J. Spreter of Spreter Law Firm, APC.
The Talk Fusion Pyramid Scheme Class Action is Gray v. Talk Fusion Inc., et al., Case No. 15CV2665 JLBLAB in the U.S. District Court for the Southern District of California.
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