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FTC: AdvoCare business model was pyramid scheme

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Are you thinking about joining a multi-level marketing business to earn extra money? Before investing your hard-earned cash, make sure you’re not dealing with a pyramid scheme – a scam that can cost you dearly.

Today, the FTC announced a case against Texas-based AdvoCare International, a multi-level marketer of energy drinks, shakes, and supplements. AdvoCare claimed people could earn unlimited income, quit their day jobs, and gain financial freedom by selling its products and recruiting other people to sell them too. 

The company used endorsements from professional athletes, sponsorship of professional sporting events, conferences, podcasts, and more to pitch what it called a life-changing business opportunity. The FTC calls it a pyramid scheme and says AdvoCare swindled hundreds of thousands of consumers.

According to the FTC, people paid AdvoCare thousands of dollars to become “distributors,” buy inventory, and become eligible for cash bonuses and other rewards. But, the FTC says, AdvoCare rewarded distributors not for selling product but for recruiting other distributors to spend large sums of money pursuing the business opportunity. That push to recruit is a classic sign of a pyramid scheme.

The complaint alleges that 72 percent of AdvoCare’s distributors lost money or earned nothing from the company and 18 percent earned between a penny and $250 a year. When these distributors’ hefty costs are added, nearly all of them lost money. graphic of the FTC settlement with Advocare

Under a landmark settlement, AdvoCare and its former chief executive will pay $150 million for consumer refunds. They’re also banned from all multi-level marketing. Two of AdvoCare’s top promoters also have settled with the FTC for $4 million, most of which is suspended, based upon their inability to pay. They, too, are banned from multi-level marketing. The FTC’s case against two other leading AdvoCare promoters is continuing. 

The FTC will contact AdvoCare distributors whose losses may qualify them to get money back. The settlement also requires AdvoCare to notify its distributors about the case and remind them that AdvoCare offers a 100 percent refund for unused products to people who want to leave the business.

If you’re tempted by a sales pitch that says you can make lots of money selling products to people you know, check out the FTC’s consumer guidance for tips about spotting a pyramid scheme.

Blog Topics: 
Jobs & Making Money

Comments

Thank you for being there for us and saving souls. Your advice and support is very much appreciated.

As an Advocate distributor for 2 years from 2014 until 2016, I'd love to know where or how to file a claim.

An online work at home scheme that wanted some persons to get a credit card account and purchase some so called health products while claiming to advertise that persons business... I almost purchased their product at a loss...

Wow, I actually took the first steps in becoming a distributor for advocare. Something told me to pass on this one and thank God I did. Its good to see the FTC doing its job. Im thankful and im sure thousands if not millions of others are as well. Good work

Thank you! I’ve been going through this with AdvoCare for years. I spent the money to become and maintain an advisor And to hand out tons of samples, and have been asking for help from up line to create an income for myself and always was told the same thing. Make a list of people you want to “help”, contact them repeatedly and tell them how amazing the products are, and the way to make money is by getting them to get people to sign up underneath them! The spark worked well for me so I shared that, but once my upline realized I wasn’t willing to harass people and tell them I loved ALL the products, no one was willing to answer my calls or show up for a mixer.

I received a notice from the FTC in the mail. I'm a current distributor for Advocare. Unfortunately, I've misplaced the communication. How can I obtain a new copy?

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