FTC returns over $149 million to Advocare victims
The FTC has announced over $149 million has been distributed to victims of the Advocare pyramid scheme.
The FTC’s announcement was made on May 5th. It follows Advocare settling fraud allegations with the FTC for $150 million in 2019.
The Federal Trade Commission is returning more than $149 million to AdvoCare distributors who lost money as a result of the AdvoCare pyramid scheme.
The Commission is sending payments to more than 224,000 consumers who lost money to the AdvoCare pyramid scheme. The payments are being distributed via check and PayPal.
Consumers who receive PayPal payments should redeem their payments within 30 days, and consumers who receive checks should cash them within 90 days, as indicated on the check.
Advocare victims begun reporting receipt of checks on social media earlier today.
Today Advocare is still in business but ceased MLM operations in wake of the FTC settlement. Advocare distributors now only earn on personal sales to customers.
One interesting point the FTC tacked onto the end of its press-release is that the $150 million returned was a result of Section 13(b) of the FTC Act.
The U.S. Supreme Court ruled in 2021 that the Commission lacks authority under Section 13(b) to seek monetary relief in federal court going forward.
The money being returned to consumers today comes from settlements that were entered before the Supreme Court’s decision.
In 2021 the Supreme Court sided with scammers. The AMG decision effectively banned the FTC from seeking monetary recovery through 13(b).
Since the SC decision last year we’ve seen a decline in MLM litigation filed by the regulator. Existing MLM regulation from the FTC has also devolved into a drawn out mess.
The current status quo is scammers losing court cases but not receiving any monetary judgement or penalties. In other words, victims of MLM fraud targeted by the FTC get screwed.
The damage isn’t limited to MLM fraud either. FaceBook recently brought up AMG in an attempt to get out of a $5 billion antitrust lawsuit filed against it.
If FaceBook prevails, once again consumers get screwed.
These decisions also limit the FTC’s ability to settle cases efficiently …
Targets of FTC investigations now routinely argue that they are immune from suit in federal court because they are no longer violating the law, despite a likelihood of re-occurrence, and they make these arguments even when they stopped violating the law only after learning that the FTC was investigating them.
The FTC is working to restore its ability to go after MLM scammers but progress remains slow.
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