The dietary supplement company Advocare was fined $150 million by the federal trade commission. The FTC explained that the Avocare business model “was a pyramid scheme.”
Avocare operated for around 15 years claiming to be a ‘multi-level marketing’ company. However, like most MLMs it focused on recruiting rather than actual sales. After many run-ins with regulators, Advocare changed its business to no longer be multi-level marketing and settled with the FTC.
This is a good reminder that just because a company claims to be a legal multi-level marketing business does not mean their business model is legal. Many MLMs, like Advocare, are truly pyramid schemes.
CBS News: Advocare fined 150 million as ftc calls it a pyramid scheme
BuzzFeed News: AdvoCare Is Actually An Illegal Pyramid Scheme, The FTC Has Decided
Dallas Morning News: FTC says AdvoCare will pay $150 million fine for using illegal pyramid sales scheme
ESPN: AdvoCare punished by FTC for pyramid scheme
Fox 4: AdvoCare will pay $150 million penalty for operating pyramid scheme
New York Times: Health Company Touted by Sports Stars Ran Pyramid Scheme, F.T.C. Says
US News: AdvoCare, Endorsed by Quarterback Drew Brees, to Pay $150 Million to Settle Pyramid Scheme Charges
From the FTC:
Press Release: Multi-level marketer Advocare will pay 150 million
FTC Blog: Advocare business model was pyramid scheme