WASHINGTON, Oct 2 (Reuters) - AdvoCare International LP, the multilevel marketing health and wellness company endorsed by celebrity athletes, will pay $150 million to settle U.S. Federal Trade Commission charges that it operated an “illegal pyramid scheme,” the FTC said on Wednesday.
AdvoCare “pushed distributors to focus on recruiting new distributors rather than retail sales to consumers,” the FTC said in a statement. Multilevel marketing companies such as AdvoCare typically enlist consumers to sell their products and to enlist other people as distributors for a commission, saying the opportunity can earn them money.
Texas-based AdvoCare sold health and wellness products such as energy drinks and weight loss supplements through its distributors. But consumers were charged $59 to become a distributor and had to spend between $1,200 and $2,400 on AdvoCare products to earn “all possible forms of compensation,” the FTC said.
The company is endorsed by celebrity athletes from bodybuilders to football players, including its “national spokesperson” Drew Brees, quarterback for the New Orleans Saints football team.
In a commercial for AdvoCare, Brees encouraged consumers to become distributors, saying “the financial benefits can be just as rewarding for those who want more and decide to build their own AdvoCare business.” (Reporting by Bryan Pietsch Editing by Chizu Nomiyama)