The Federal Trade Commission on Thursday said it was returning $149 million to distributors of AdvoCare who lost money due to a pyramid scheme.
In 2019, AdvoCare International L.P., a multi-level marketer (MLM) of energy drinks, shakes and supplements, and its former CEO agreed to pay $150 million to resolve charges that the company operated an illegal pyramid scheme.
AdvoCare and several of its promotors claimed the company “offers the average person a financial solution that will enable them to earn unlimited income, attain financial freedom and eliminate the constraint of traditional employment,” an FTC complaint alleged. In reality, the government stated, most distributors earned nothing or even lost money.
FTC is sending, through checks and PayPal, payments to more than 224,000 consumers who lost money to the AdvoCare pyramid scheme, according to an FTC news release. Consumers who receive PayPal payments should redeem their payments within 30 days and those who receive checks should cash them within 90 days, the agency said.
The funds come from settlements entered before the U.S. Supreme Court ruled last year that FTC doesn’t have authority to obtain monetary relief in court under Section 13(b) of the FTC Act, the agency said, adding it has urged Congress to restore its ability to secure such monetary relief for consumers’ benefit.
AdvoCare CEO Patrick Wright issued a statement in response to FTC's announcement this week.
“We strongly disagreed with the FTC settlement issued in 2019 and continue to support that position today," he said in an email to Natural Products Insider, through a spokesperson. "Despite the FTC settlement three years ago, we still stand strong with U.S. consumers on the reputation of our highly valued health and wellness products and we have been successful in our new business model.”