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Health Company Touted by Sports Stars Ran Pyramid Scheme, F.T.C. Says
AdvoCare will pay $150 million to settle charges that it duped customers into thinking they could earn “unlimited income” distributing its products.
ImageOver the years, AdvoCare gained prominence by forging ties with athletes and sports leagues. CreditCreditRoy K. Miller/Icon Sportswire, via Getty Images
By David Yaffe-Bellany
Published Oct. 2, 2019Updated Oct. 3, 2019, 12:18 a.m. ET
The N.F.L. star quarterback Drew Brees called it a “rewarding” opportunity, a chance to market health products trusted by thousands of people. Former President George W. Bush spoke at a sales conference in Texas designed to tout its “economic value.”
But there was more to the nutritional supplement provider and multilevel marketing business operated by AdvoCare International.
On Wednesday, AdvoCare agreed to pay $150 million to settle charges by the Federal Trade Commission that it operated an illegal pyramid scheme that deceived customers into thinking they could earn significant income as distributors of its products.
In addition to the financial settlement, the Texas-based company will be banned from the multilevel marketing business.
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For years, AdvoCare recruited hundreds of thousands of consumers across the country to market its health products, promising “the average person a financial solution that will enable them to earn unlimited income,” the F.T.C. wrote in a complaint filed in federal court in Texas on Wednesday.
In reality, the agency said, AdvoCare pushed participants to recruit distributors rather than sell products, instructing them to make exaggerated claims about how much money people could make through commissions. In 2016, 72 percent of the company’s distributors did not earn any compensation, while an additional 18 percent earned between 1 cent and $250, the complaint said.
“Legitimate businesses make money selling products and services, not by recruiting,” said Andrew Smith, director of the F.T.C.’s Bureau of Consumer Protection, in a statement. “The drive to recruit, especially when coupled with deceptive and inflated income claims, is the hallmark of an illegal pyramid.”
In a statement, AdvoCare denied that it operated as a pyramid. “We strongly disagree with the F.T.C. allegations, but we are committed to abiding by this agreement and moving forward,” said Patrick Wright, the company’s chief executive.
Mr. Bush was a keynote speaker at AdvoCare’s sales and training conference in Frisco, Tex., in 2018, and Mr. Brees has served as the company’s national spokesman since 2010. Representatives for Mr. Bush and for Mr. Brees’s National Football League team, the New Orleans Saints, did not respond to messages seeking comment. AdvoCare said that Mr. Bush had been hired to appear at the conference through a speaker’s bureau and that he had no relationship with the company.
Founded in 1993, AdvoCare markets products like energy drinks and dietary supplements, including the “alternatively sweetened Spark,” a drink that consists of a blend of vitamins, minerals and nutrients, according to the company’s website.
Over the years, AdvoCare has gained prominence by forging ties with professional athletes and major sports leagues. The company has been endorsed by the retired major-league pitcher Doug Fister, the N.F.L. quarterbacks Philip Rivers and Patrick Mahomes, and the hockey player Joe Pavelski, among many others. In 2015, AdvoCare became the “official sports nutrition partner” of Major League Soccer.
The AdvoCare settlement has echoes of the agreement the F.T.C. reached three years ago with Herbalife, the nutritional supplement provider, which paid $200 million to settle allegations that it deceived buyers and sellers of its products. In that case, the agency stopped short of labeling the operation a pyramid scheme.
Susan Beachy contributed research.
A version of this article appears in print on , Section B, Page 3 of the New York edition with the headline: F.T.C. Cites Pyramid Scheme in Fining Health Company. Order Reprints | Today’s Paper | Subscribe
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