Scam of the day – June 19, 2015 – FTC sending refund checks to victims of pyramid scheme

A year ago, the Federal Trade Commission (FTC) won a Court of Appeals decision against BurnLounge Inc, Juan Alexander Arnold, John Taylor and Rob DeBoer  relating to an illegal pyramid scam that had lured more than 56,000 people into investing in, what was represented to be, a multilevel marketing online digital music store.  Sometimes a legitimate multilevel marketing business may look quite similar to an illegitimate pyramid scheme, which is one of the reasons that so many people fall prey to these scams.  For every legitimate multilevel marketing company, such as Mary Kay and Amway, there are many that are just scams.  In a legitimate multilevel marketing company, investors make money by selling products to the public and by recruiting new salespeople.  In a pyramid scheme the source of profits is based primarily on the recruiting of new members or salespeople.  In the case of Burnlounge, the 9th Circuit Court of Appeals concluded “BurnLounge was an illegal pyramid scheme…because BurnLounge’s focus was recruitment, and because the rewards it paid in the form of cash bonuses were tied to recruitment rather than the sale or merchandise.”

TIPS

The FTC is mailing 52,099 checks worth almost 1.9 billion dollars to people who were victims of the BurnLounge pyramid scheme.  The checks are being processed for the FTC by Gilardi & Co.  and must be cashed within 60 days of the mailing date.  If you were a victim of this scam and have any questions about the refund program, you can contact Gilardi & Co. at 877-417-4484.  You can also find out more about this and other FTC refund programs by clicking on the “FTC scam refunds” link at the top of this page.

Anyone who is considering investing in what is represented to be a multilevel marketing business should always investigate the company and the terms of investment carefully before investing any money.  In addition, you should also check out the company with the FTC and your state’s attorney general to make sure that the company is legitimate before investing any money.  Here is a link to information from the FTC that you should consider before investing in a multilevel marketing business.  http://www.consumer.ftc.gov/articles/0065-multilevel-marketing