Were you victimized by AdvoCare? Tell us about your experience.
Are you facing a problem with AdvoCare and now you’re a little worried they might be a pyramid scheme? Have you read about AdvoCare in the news but you’re still not sure what you can do to solve the problem they caused. If so, you’re not the only one.
AdvoCare was a pyramid scheme out of Texas that distributed health and wellness products like its shakes, supplements, and energy drink called Spark. They also sold dietary supplements with a range of products designed to promote things like better energy, better sports performance, and weight management.
At first the complaints came in the form of consumer complaints especially from the people who were hired as distributors but eventually the allegations and lawsuits against the company reached the federal level.
AdvoCare International has agreed to pay $150 million dollars to resolve charges from the Federal Trade Commission. The company operated an illegal pyramid scheme and deceived their customers into believing they could earn significant income as distributors for the wellness and health products.Part of this settlement was that the former Chief Executive Officer would not be involved in any multi-level marketing businesses in future.
Two of the top promoters also paid a settlement for promoting the illegal pyramid scheme and misleading consumers about what income potential they could achieve, settling a judgment of $4 million dollars and the surrender of substantial assets.
This company, according to the Federal Trade Commission is considered a pyramid scheme, and illegal pyramid scheme because it made its money by recruiting. Legitimate businesses make their money selling products and services but this company had to drive to recruit people under deceptive and inflated claims of the potential income those people could make. The director of the Bureau of Consumer Protection said that this is the hallmark of an illegal pyramid scheme and that this company pushes their distributors to focus on recruiting new people rather than selling the healthcare products the company had.
The compensation structure that the company had incentivised Distributors to individually purchase large quantities of the AdvoCare products and then recruit other participants using the same incentives rather than focusing on the sale of those products. The FTC stipulated that the income for advisers and distributors was based on their success at recruiting more people and their bonuses were contingent upon recruiting the highest number of people and generating the highest purchase volume from those people. Legitimate businesses reward individuals for selling the product line or service.
More importantly, consumers were told that they could make hundreds of thousands of dollars a year or even millions of dollars per year and that distributors were told to use an emotional narrative for those who are struggling financially and to instill fear in potential recruits if they declined to invest in the opportunity when in fact this level of success and profit was not feasible. In 2016, nearly 75% of distributors didn’t earn any compensation, 18% earned between one penny and $250, and the remaining 6% earned only between $250 and $1,000. Real companies would give all of their employees access to legitimate income or at the very least something much closer to the potential that was used in a sales pitch during recruitment.
AdvoCare distributors who were victim to this pyramid scheme, however, are not all involved in the consumer protection charges from the Federal Trade Commission. You may have worked as a distributor and earned no money or in fact lost money because of these inflated income claims but if the settlement from the Federal Trade Commission didn’t help you get your money back, there are still options including consumer arbitration.
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