It was just a few days ago that I told you about the Federal Trade Commission’s legal action against Vemma Nutrition Company, which the FTC described in its court complaint as an illegal pyramid scheme that preyed primarily upon college students and other young people.   Four years after the initial court actions against  were filed against Vemma, the FTC is sending checks totaling more than 2.2 million dollars to the victims of the scam.  The money was derived from funds paid by Vemma to the FTC to settle the claims.  Now the FTC is announcing another pyramid scheme settlement.  This time the settlement was with AdvoCare International and its former CEO who under the terms of the settlement are banned from operating further multilevel marketing businesses and were ordered to pay 150 million dollars to the FTC to be refunded to consumers.  As more details regarding the refund become available, I will let you know what you need to do to apply for a refund if you were a victim of this scam.  AdvoCare promoted health and wellness products such as its Spark energy drink, but its profits came from recruiting new distributors rather than selling products which is the hallmark of a pyramid scheme.    AdvoCare routinely misrepresented and lied to people about the operation of the company.  Among their misrepresentations were that the distributorships would routinely provide hundreds of thousands or even millions of dollars of profit annually to people who signed up to be distributors.  The truth is that in 2016, 72.3% of distributors earned nothing, 18% earned no more than $250 and 6% of distributors earned between $250 and $1,000 while the distributors paid thousands of dollars in fees to join and maintain their status each year with the company.

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.

TIPS

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

For more information about this particular refund program check out the “FTC Scam Refunds” tab in the middle of the first page of www.scamicide.com. You also can find information there about the mailing of the refund checks.  There is no cost or fee to file a claim or get a refund.  Anyone who tells you differently is trying to scam you.

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