Avon Products 2020
- Class Period: 01/21/2016 -- 11/01/2017
- Settlement Fund: $14,500,000.00
- Claim Filing Deadline: 12/19/2020
- Eligible Instruments: Common Stock
Every neighborhood in America once had an Avon Lady. You might know one. You might even be one. Avon itself is one of those products like Coca-Cola, Chevrolet, and Dwayne “The Rock” Johnson: almost synonymous with America. Well, that was true until 2010, when the Brazilian market for Avon surpassed the United States.
Technically speaking Avon Ladies are “representatives,” and not employees. The company operates via a multilevel marketing plan where they sell cosmetics directly to representatives, who then sell to their friends, family, and acquaintances. These representatives are thus the people who make most of the direct payments to Avon.
In an attempt to increase the number of Avon representatives in Brazil, Avon loosened its credit rules for new representatives. According to the plaintiffs’ complaint, “Representatives are generally precluded from submitting a new order for Avon products until the accounts receivable balance past due for prior orders is paid.” Plaintiffs allege that Avon eased their standards too much, and thereby created a situation where too many representatives were not paying their full balance, and that the company’s stock, and its investors, suffered losses as a result.
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