AdvoCare
AdvoCare International, L.P. is an American dietary supplement company. AdvoCare is a former multi-level marketing company that was determined by the U.S. Federal Trade Commission to be operating a pyramid scheme. The company, headquartered in Plano, Texas, was founded in 1993 by Charles Ragus and employed roughly 250 people in 2013. When AdvoCare switched from multi-level marketing to single-level direct selling in 2019, it claimed a network of approximately 100,000 independent distributors. History. Charles Ragus founded AdvoCare in 1993 as a multi-level marketing (MLM) company to distribute dietary supplement products. The name AdvoCare is short  for "Advocates Who Care". Before founding AdvoCare, Ragus worked as a regional vice president for Fidelity Union Insurance, and as a multi-level marketing (MLM) distributor for Herbalife. He had initially founded the MLM company "Omnitrition International" in 1989. Ragus was in training camp with the National Football League's Kansas City Chiefs in the 1960s, but never made a team (https://www.pro-football-reference.com/search/search.fcgi?search=Charlie+Ragus). He died in 2001 at the age of 58. In May 2007, Richard H. Wright became president and CEO of AdvoCare. He had previously served as Chief of Staff for US Representative Jim McCrery. In October 2019, the  FTC ruled that Advocare had operated as an illegal pyramid scheme. According to the FTC, AdvoCare rewarded distributors for recruiting other distributors to spend large sums of money pursuing the business opportunity. The majority of distributors either made no money or lost money. AdvoCare and its former chief executive agreed to pay $150 million for consumer refunds and were banned from all multi-level marketing. Two of AdvoCare’s top promoters also settled with the FTC for $4 million, most of which was suspended, based upon their inability to pay, and were also banned from multi-level marketing . In a statement, CEO Patrick Wright denied the company had operated as a pyramid scheme. Products. AdvoCare sells health shakes, bodybuilding supplement, dietary supplements, and related products. AdvoCare also sells products under the brand names Trim, Active, Well, Performance Elite, Fit, and 24 Day Challenge. Business. Prior to July 2019, AdvoCare was determined to be a multi-level marketing company. In 2012, the average annual compensation for active distributors was $1,781. According to Advocare’s 2015 income disclosure statement, the company's average annual compensation for distributors was $1,586, not including expenses. In 2016, the average annual compensation  had declined to $1,429. Citing closed-door discussions with the Federal Trade Commission, AdvoCare ceased operating as a multi-level marketing company, and instead began only compensating distributors for sales of products to consumers. In 2019, it sold its Plano office to Opex Corp. AdvoCare is a member of the U.S. Direct Selling Association (DSA), and participated in the 2010 DSA Code of Ethics Communication Initiative. AdvoCare President Richard Wright served on the DSA Board of Directors in 2011. The company was still a member of the DSA as of October 2019. Sponsorships and endorsements. According to the U.S.  Federal Trade Commission, Advocare used endorsements from professional athletes, title sponsorship of professional sporting events, conferences, podcasts, and more to pitch what it called a life-changing business opportunity that was in fact a pyramid scheme that swindled hundreds of thousands of consumers. AdvoCare's contracted celebrity endorsers have included soccer player Carli Lloyd; Major League Baseball pitcher Doug Fister; CrossFit champion Rich Froning; NFL players Andy Dalton, Philip Rivers, Alex Smith, Sam Bradford, Wes Welker, and New Orleans Saints quarterback Drew Brees, who was described by ESPN as the face of the company. Celebrity endorsers are said to be  central to "the Bulletproof Shield," a key sales and recruitment technique used by the company: distributors place themselves at the center of a chart illustrating the company's endorsements and members of its scientific and medical advisory board, and deflects questions about the company by replying, "Well, I don't know about (X), but what I do know is" that particular athletes or doctors have endorsed AdvoCare. AdvoCare ceased offering "KickStart Spark", targeted to youth age 4–11, after pediatricians had expressed concerns about the product containing 60 mg of caffeine. AdvoCare was also the subject of criticism for its marketing  at youth athletic events. In 2005, the company paid $5,000 to sponsor a high school wrestling tournament in Sacramento but after negative publicity, AdvoCare officials said they would not sponsor any more school events. From 2009 until 2013, AdvoCare was the title sponsor of the Independence Bowl in Shreveport, Louisiana. The 2013 game was known as the AdvoCare V100 Bowl. In 2012, AdvoCare partnered with the Major League Soccer team FC Dallas and became its jersey sponsor. In 2014, AdvoCare secured the naming rights of a professional sports practice facility located at The Greenbrier in West Virginia. The facility  was named the AdvoCare Sports Performance Center and hosted the 2014 training camp for the New Orleans Saints. AdvoCare also became the title sponsor of the 2014 Texas Bowl. In 2016, AdvoCare was to sponsor the Texas Kickoff and Cowboys Classic games. From 2011 to 2016, AdvoCare sponsored several NASCAR racing teams and drivers, including Trevor Bayne and Roush Fenway Racing in the NASCAR Sprint Cup Series and Xfinity Series, as well as races at Atlanta Motor Speedway and Phoenix International Raceway. Controversy. In July 2008, Olympic swimmer Jessica Hardy tested positive for the banned breathing enhancer, clenbuterol. Hardy said  she had never heard of the substance, attributing the positive result to either a tainted supplement or sabotage. At the time, Hardy had been taking the supplement Arginine Extreme, which she had received for free from AdvoCare in exchange for making product testimonials, and she claimed in a subsequent lawsuit that the company's product was tainted. AdvoCare sued Hardy for making false claims. An arbitration hearing reduced Hardy's suspension after a scientific expert testified that the AdvoCare product was tainted. AdvoCare disputed the panel's findings, citing the fact that two independent laboratories had not found any evidence  of Clenbuterol in the supplements. Hardy was cleared to compete again in 2010. In 2009, a Dallas County jury awarded $1.9 million in damages against AdvoCare after finding that the company had engaged in deceptive trade practices and unfairly canceled agreements with two of its distributors. According to the lawsuit, litigants Bruce and Teresa Badgett of Arlington, Texas, had been active and profitable marketers of AdvoCare products for more than a dozen years before their distributorship was canceled by the company in 2006 "based upon vague and trumped-up charges." The jury found that AdvoCare engaged in false, misleading , or deceptive practices that damaged the Badgetts and that the termination provisions of the distributor contract with AdvoCare were unconscionable, according to court documents. AdvoCare disputed the ruling and on April 30, 2010, filed to appeal the decision on the basis that the plaintiffs were not customers and therefore did not fit the statutory definition necessary to be covered under the Texas Deceptive Trade Practices Act. The appeal was dismissed on March 13, 2012, and the company was ordered to reimburse the Badgett's for court costs related to their defense in the appeal case. In March 2016, Advocare was  the subject of an exposé in ESPN The Magazine. The exposé argued that the company and a small number of distributors at the top of a distribution network made most of their money from the signing-up of new distributors rather than sales of the product. It also argued that these individuals exaggerated the likelihood of financial success of distributors, and created a cult-like atmosphere of not questioning the company's claims. The exposé noted the company's strong use of religious affiliation as part of its business model, with more devout members of the organization using it to  gain and hold power in the organization and over its members.