FTC Returns Money to MLM Distributors Deceived by Earning Estimates

The Federal Trade Commission is returning more than $149 million to AdvoCare distributors who lost money as a result of the AdvoCare pyramid scheme. The FTC sued AdvoCare in 2019, alleging that the multi-level marketing company operated an illegal pyramid scheme that deceived consumers into believing they could earn significant income as “distributors” of its health and wellness products.

In its complaint against Texas-based AdvoCare, its former CEO, and its top promoters, the FTC alleged that the defendants falsely claimed to offer a life-changing financial solution that would allow any ordinary person to earn unlimited income, attain financial freedom, and quit their regular job. In reality, the FTC alleged, the vast majority of AdvoCare distributors either earned no money or lost money.

AdvoCare, the complaint alleged, operated an illegal pyramid scheme that pushed distributors to focus on recruiting new distributors rather than selling products to customers. The compensation structure also incentivized distributors to purchase large quantities of AdvoCare products—even when they couldn’t sell the products—and to recruit a downline of other participants with the same incentives.

To recruit people, the FTC alleged, AdvoCare and the other defendants told distributors to make exaggerated claims about how much money average people could make—as much as hundreds of thousands or millions of dollars a year. The FTC alleged that distributors were told to create emotional narratives about how they gained financial success through AdvoCare and to instill fear in potential recruits that they would suffer from regrets later if they declined to invest in AdvoCare.

The Commission is sending payments to more than 224,000 consumers who lost money to the AdvoCare pyramid scheme. The payments are being distributed via check and PayPal. Consumers who receive PayPal payments should redeem their payments within 30 days, and consumers who receive checks should cash them within 90 days, as indicated on the check.

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Recipients who have questions about their refund should call the refund administrator, Analytics, at 855-744-1802. The Commission never requires people to pay money or provide account information to get a refund.

Steve Rhode

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