A multi-level marketing scheme expanding into Langley is under investigation in the U.S. and is facing allegations of unsavoury practices there.
Fortune Hi-Tech Marketing calls itself a "network marketing" or "relationship marketing" company, using personal connections and social networking to sell a variety of products.
The company has come under fire for its practices in the United States, largely because it pays its members for signing up new members.
That's a warning sign that a company may be a pyramid scheme, say government and business watchdogs.
Gabrielle Tasse of the Competition Bureau of Canada said standard multi-level marketing companies make their money selling products.
"[Pyramid schemes] make their money off recruiting others," Tasse said.
She couldn't comment directly on FHTM, or say whether there have been complaints or if there are any investigations at present.
The Langley Advance sat in on a recent FHTM meeting, held in the Langley Township's council chambers on a Wednesday evening. The first portion of the meeting was held to recruit new members. The emphasis for much of the hour and a half meeting was on signing up still more members.
A top rep for the company in B.C. said reps undertake a two-step process: step one is selling products and services, step two is introducing the program to others.
"New guests in the room, your job is to build teams of 12," said Derek Sheane.
Along with Jessica Ward, Sheane told the crowd the couple joined 10 months ago and have quit their regular jobs to focus on FHTM full time.
Sheane and Ward emphasized that "anyone can do this business," and encouraged those signing up to then go out and sign up more people.
"Then we help them do the exact same thing," he said.
New members must pay $250 to join. Members then get a $125 direct deposit payment for each new recruit they sign up.
The company does sell a number of products online, including vitamins (from a firm owned by the FHTM founder), travel services, a roadside assistance package, VoiP services, and cellphone coverage. When a product is sold, the sales rep gets a percentage of the value of the sale. For an ongoing contract such as cellphone service, the percentage is received every month.
Rewards and promotions within the company's structure include a strong emphasis on developing a large network of recruits. Free trips, and even leased Lexus sedans, are available for people who hit certain targets.
Sheane and Ward recently qualified for a Lexus.
The reps also encouraged people to sign up for many of the products themselves.
Susan (not her real name) never got anywhere near a Lexus in her brief time with FHTM. Unemployed since she was laid off several years ago, Susan was invited by a friend who was already a member.
The Maple Ridge woman signed up two months ago, paying $299 to become a member. She then had to immediately accumulate three "customer points" to begin selling and recruiting.
She paid for the company's online office system, which has a video site and telephone service, and keeps track of sales.
"It came to another $150 bucks on top of that," she said.
"At first, they seemed very helpful," she said of the company's reps.
Susan quickly realized that the system was not for her. Within a week of joining, on Sept. 30, she had decided to leave the company, and she tried to get her money back.
She had been told she could get her $299 fee back within 10 days, and when she phoned a rep, she was told it would be no problem.
Then she received an email saying she would have to return the binders and info packages she'd been sent, and that she would have to fax in a signed statement saying she was quitting.
Susan said she believes she sent everything back in time, but she still hasn't got any of her money back.
She said she's going to keep trying to get her money returned.
John, a Langley man who asked that his last name not be used, attended one of the FHTM meetings at Susan's invitation.
He said he was immediately suspicious, and he didn't think most of the products were worth the price.
"The prices were just horrible," he said.
While the reps talked about how they're affiliated with big-named companies such as Starbucks, Travelocity, and Best Buy, they are essentially just referring or re-selling when making most sales.
But the biggest issue for John was the emphasis on signing up new people, as opposed to selling products.
John estimated about 90 per cent of the time at the meeting he attended was devoted to talk about signing up more reps.
John said he's worried that many of the young people he saw at the meeting won't know the warning signs and will put their money into the company.
FHTM settled with Montana's state securities commissioner recently, paying $1 million, including $840,000 in reimbursements to many of its members.
The company did not admit to any wrongdoing as part of the settlement.
FHTM also had to agree to change its business practices in Montana. It now only charges $75 there to become a representative.
The firm has a C- rating from the Better Business Bureau, recently raised from a D. It had an F a few months ago.
The firm has more than 50 complaints from across the continent, although none of them come from B.C., and about 80 per cent have been resolved.
In Langley, the firm has been holding its meetings in the Township hall's council chambers for about a month.
David Leavers, who oversees Township facilities, said that after he was contacted by the Advance about FHTM, he checked to see if they have a local business licence. They didn't, so a letter has been sent asking them to apply for one in the Township.
Local FHTM reps did not answer questions about the firm's marketing practices, and referred all questions to their Lexington, Ky. head offices.
A written list of questions has been forwarded to the company, as per chief operations officer David Mills's request. He did not respond by deadline Monday.
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