AdvoCare International, L.P.
The FTC alleged that AdvoCare operated an illegal pyramid scheme and used deceptive income claims to recruit distributors of health and wellness products. AdvoCare and its former CEO settled for $150 million and accepted a multi-level marketing ban.
Resolved. Refunded, settled, ceased operating, or the claim did not hold up. Kept for the record.
Identity
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- Registrations
- FTC v. AdvoCare International, L.P. (FTC case 162-3109, 2019)
- Locations
- Texas
- Jurisdictions
- United States (federal)
Pyramid-scheme allegations led to a $150 million settlement
The FTC alleged that Texas-based AdvoCare promoted a business opportunity through a large distributor network selling health and wellness products, including its Spark energy drink. According to the complaint, AdvoCare pushed distributors to recruit new distributors rather than focus on retail sales. Its compensation structure also encouraged product purchases and the recruitment of a downline.
The FTC alleged that AdvoCare and other defendants promoted the opportunity as a path to unlimited income, financial freedom, and leaving a regular job. The agency said the vast majority of distributors earned no money or lost money. In 2016, 72.3 percent of distributors received no compensation, 18 percent earned between one cent and $250, and 6 percent earned between $250 and $1,000.
AdvoCare and its former chief executive officer agreed to a $150 million judgment and a permanent ban on multi-level marketing. The order also required notice to distributors about the lawsuit, settlement, and changes to compensation.
In May 2022, the FTC announced that it was returning more than $149 million to more than 224,000 distributors who lost money. Payments were distributed by check and PayPal.
What is not established
The supplied FTC materials describe the conduct as allegations and the resolution as a stipulated final order. They do not report a trial finding in the supplied text.
Sources
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- Enforcement action October 2, 2019
- Enforcement action May 5, 2022
- Enforcement action May 5, 2022
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First recorded October 2, 2019 · Last updated May 5, 2022