Matterport, Inc. and its chief officers face a proposed class action that alleges the parties have fraudulently misrepresented the supposedly “lucrative” nature of the 3D camera industry to those who bought into seller-assisted marketing plans.
According to the 25-page suit, the Sunnyvale, California-based defendants engage in the sale of business opportunities—referred to under certain state laws as “seller-assisted marketing plans”—for the purportedly lucrative and burgeoning 3D camera services industry. The suit says Matterport sells cameras capable of creating 3D models of real-world places, a technology particularly useful in connection with real estate sales.
Per the case, the defendants’ sales personnel represent that those who buy in, called “Matterport Service Partners (MSPs),” will receive marketing materials and filtered leads in their geographic area that will cover their initial investment in the Matterport 3D camera in six months.
In reality, however, it is “exceedingly difficult” for those who buy into Matterport’s plan to make a profit given the market for providing 3D camera scanning is over-saturated and devoid of new business leads, the complaint alleges. Proposed class members would not have bought into the defendant’s so-called “lucrative” 3D camera business had they known it was not profitable, the case contests.
More specifically, the suit claims Matterport misrepresented on its website that it could offer pre-qualified local leads seeking 3D scanning services and match service partners on local proximity leads who come in to request a scan service. The defendants’ sales reps also falsely claimed MSPs would receive marketing materials and “filtered leads” within three to 30 miles of their geographic location, the case says.
The representations disseminated by the defendants were merely part of a standard script communicated to potentially thousands of consumers in an attempt to induce potential buyers into purchasing a high-priced 3D camera and pay for related support and services, the plaintiff alleges. Similarly, Matterport’s claims that MSPs could “[b]e your own boss, set your own hours, and earn what you want” for only a $4,100 up-front investment with minimal training were also “false, deceptive and likely to mislead a reasonable consumer,” the case says.
“Through Matterport’s sales pitches, solicitations, advertisements, and promotional materials, consumers are enticed to purchase a piece of equipment for which they have very little personal use by the promise of a for-profit, cannot-lose business opportunity in what Defendants claim is a nascent, but exponentially growing, industry,” the case reads.
Further burdening proposed class members is that Matterport’s 3D camera requires MSPs to scan and upload images to the company’s computer systems and pay cloud service storage and software fees, the suit continues. After an MSP performs a handful of uploads, the individual is then bumped up from “purchaser” to “partner” and promised geographic limitations and inbound lead sales calls, according to the case.
The larger issue, the lawsuit describes, is that Matterport’s 3D camera and supporting services exist within a closed, proprietary system, meaning every 3D camera operation requires use of the defendants’ software, tech support, maintenance and server space. If a proposed class member fails to pay Matterport’s monthly fee for its cloud service plan, the 3D camera equipment for which they paid a premium—and which the plaintiff says requires constant software updates—is “rendered entirely useless” given it cannot be used without each component of Matterport’s techno-ecosystem, the complaint asserts.
Broader still, Matterport, despite promising to provide local business leads, has failed to inform proposed class members that their local areas are saturated with others selling the company’s 3D camera, the lawsuit claims. In addition to facing an oversaturated market, many MSPs also come to learn after signing on with the defendants that Matterport’s 3D cameras are not as easy to use as advertised, the suit alleges, adding that those in search of tech support may be hard-pressed to find any. From the complaint:
“Thus, in addition to the huge costs for the scanner and business start-up costs, Defendants failed to disclose the amount of technical expertise necessary to actually perform viable and usable scans, and failed to disclose that Defendants’ technical support team services nationwide were essentially in the hands of one or two people. The result was that MSPs, like Plaintiff, who relied on the need for technical support were denied such access and relegated to actually serving as a peer-to-peer technical support team.”
Additionally, the lawsuit charges the defendants have sold seller-assisted marketing plans for several years without complying with the statutory requirements of 21 jurisdictions—Alaska, Connecticut, Florida, Illinois, Indiana, Iowa, Kentucky, Maine, Maryland, Michigan, Minnesota, Nebraska, North Carolina, Ohio, Oklahoma, South Carolina, South Dakota, Texas, Virginia, Washington and Washington D.C. According to the case, the jurisdictions’ laws apply to promises or offers to engage in a money-making enterprise conditioned on the purchases of the seller’s goods, equipment, supplies or services.
The case alleges the defendants’ business opportunity contracts with proposed class members are voidable given the parties failed to provide required disclosures, comply with registration mandates and honor geographic limitations while offering participants “saturated ill-defined and non-lucrative markets.”
The lawsuit looks to represent all individuals who bought a Matterport Pro, Pro2, or Pro2 Lite 3D camera with Matterport’s cloud service plan, and became a Matterport Service Partner in any of the above-mentioned jurisdictions.
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