Is AdvoCare a Scam?

[Editor’s Note 1: The FTC has forced AdvoCare to remove the pyramid recruiting scheme part of its compensation plan, so it may no longer be viewed as a scam.] [Editor’s Note 2: This article is long and I hope you find the information you need to make an informed decision.]

This article is updated with a section about the extensive ESPN exposé on AdvoCare, which is well worth reading. You can find almost all of the themes in almost all (or perhaps all) of the MLMs I’ve written about. Much of the rest of the article appears as it was originally published.]

In the last couple of months, I’ve received a lot of comments suggesting that I look into AdvoCare. Here are some examples. Each of them had one thing in common, they had someone they loved, a friend of family member sucked in. They seemed to be looking for a way deprogram their brainwashed friend. (Usually, I point people to What to Do When a Friend Loves Woo, which is the best resource I’ve found.)

When so many people ask about one company in such a short time, I make it a priority to give people what they want. I call it customer service 101.

It’s going to be a long article, so let’s get started with a bit of funny story. When I first read about AdvoCare, I thought it was related to avocados. It’s got most of the same consonants and I really like avocados. Also, they are generally healthy, so one can imagine marketing an MLM with them. Sadly AdvoCare is not about avocados at all.

The AdvoCare Truth Blog

In my research, I found the AdvoCare Facts blog full of information on Advocare. On the front page it mentions that it is home to… “to the recovered advocaretruth.blog. The original blog was ‘mysteriously’ shut down. This page is the new home for that blog.”

You can see an archive of that original blog here.

Often when people point out the scams of MLM companies their blogs end up missing. We’ve seen it Purple Horror criticizing MonaVie, The Bare-Faced Truth exposing Nerium, I Stopped Selling Rodan and Fields, and YPR Pariah criticizing Vemma. My guess is that lawyers for these companies threaten people with lawsuits, which is known as a strategic lawsuit against public participation (SLAPP). I myself have been threatened with lawsuits by no fewer than three MLM companies.

Getting back to the AdvoCare Facts blog, I particularly liked that they had an article on the company’s guiding principles by Charles Ragus. Anyone familiar with MLM would laugh at some of the language used. Here are some terms specifically invoked in the short space: God, faith, respect, dignity, honor, integrity, standard of excellence, loyalty and trust, pursuit of financial freedom, personal growth, build self-esteem, personal worth, most effective and highest quality products.

It’s hard to cram more brainwashing terms in there.

If you really want to learn a ton about AdvoCare, you’ll want to read this archived article on the original AdvoCare Truth blog. It is long and has 180 comments, but if you are going to put any time and money into the company, you should get a view from someone who isn’t a salesperson and doesn’t make money off of you.

I wanted to review some of the AdvoCare products and will probably update this post with some analysis, but my time is running short and this long. Also the AdvoCare Truth blog has found exactly what I’ve found with every MLM that I covered from $45 MonaVie juice to $4 Beachbody Shakeology shakes:

Does Advocare make a “bad” product? No, they don’t. What they produce seems to be just as good as any other run-of-the-mill supplement on store shelves right now. There is nothing great, special or unique about what they sell when compared with other brands on the market; brands that cost much less and without the many lies or hype needed to get you to purchase them. With a little research, you can find better products and pay much less.

When you see MLM products that are overpriced they look like a pyramid scheme. For example, The $100 Pen Pyramid Scheme covers this story:

“Say Mr Pyramid buys pens in bulk from Staples and sells them for $100 each. Who’s gonna pay $100 for a pen? But tell them that they can also sell pens for $100, and we’ll pay you $30 for every pen you sell, plus you can recruit people to sell pens as well, and you’ll get $10 for every pen they sell, and $5 for every pen their recruits sell. Three levels, $45 commissions total on a $100 sale. Everyone has to buy 10 pens a month for personal use to participate in the program. Just find three people who find three people who find three people…. In the end, yeah, you are buying 10 pens a month for $1000, but you are getting $3150 in commissions, so don’t sweat it. Why wouldn’t you join?

Product is moving. The pens get used. No recruitment revenue, only product commissions. Absolutely 100% a pyramid scheme. The only real reason people are paying $100 for a pen is for the opportunity to make money off the sale of pens. Completely unsustainable as eventually, you run out of people to sell to and those at the bottom get hosed buying $1000 pens but not being able to sell them. This is an extreme example, but if you look at the world of MLM, there are some pretty big name companies out there that somewhat fit this mold on a less cut and dry basis.”

So one (perhaps the AdvoCare Truth blog) could have the opinion that this is one of those situations.

This video should help you spot pyramid schemes posing as MLM companies:

Does AdvoCare look like a pyramid scheme to you?

Drew Brees and AdvoCare

A lot of MLM advocates like to point to celebrities supporting their stuff. It seems like the argument is, “Hey if Kim Kardashian likes it, it must be a great product.”

The logic is so bad, it would only work in the world of MLM where the goal is to recruit people who don’t understand the basic math behind the scam.

In the case of AdvoCare, Drew Brees is the paid endorser. He also has celiac disease, a sensitivity to gluten that would prevent from consuming many of AdvoCare products… as they are not gluten-free.

Brees also endorses Power Balance bracelets. Even that company admits it is a scam. Here’s a 24-second video where Mark Cuban calls them a scam:

Drew Brees is a fine football player, but his endorsements of products should carry no weight with consumers.

The ESPN Exposé on AdvoCare

On March 15, 2016, ESPN The Magazine and Outside the Lines published this AdvoCare research article. It is great reading, not just for those interested in AdvoCare, but about MLM in general since many have the same policies. As I wrote in Is Every MLM a Scam? it seems that these companies tend to copy what works to bring in distributors, which may not be in the best interest in selling products at retail to consumers.

I’m going to assume you have the article open (it will open in a new tab/window) as I’d like to cover the points it makes. I pick out notable quotes and give my thoughts/opinions on them:

“They cheered through countless inspirational speeches, pounding energy drinks and pumping their fists as higher-ranking members spoke about how they had turned their lives around with the help of AdvoCare… The event was called Success School, but it didn’t feel like an educational seminar, according to members who were there. It felt like a revival.”

This pep rally has been going on at MLM companies for years. I can easily trace it back to Amway in 1988, perhaps even before. If you were going to sell a “false hope” (ESPN’s quote), this crowdthink/groupthink style of event is perfect way to brainwash someone. It’s one of the reasons why people say that MLMs are cults.

“These independent distributors sell energy drinks, shakes and supplements directly to consumers.”

Some of the companies I’ve written about sell one or more of these 3 items: Vemma (shut down by the FTC for being a pyramid scheme), MonaVie (out of business), ViSalus (pyramid collapsed on them), One24 (seemingly out of business), Herbalife (a TWO-YEAR FTC probe into them being a pyramid scheme), Le-Vel Thrive

How many MLM companies do you really need to replace your Red Bull, Slimfast, and vitamins? Probably zero, which might be why most of the companies above have burned out quickly. There are some exceptions in the list above, but I don’t know if most consumers see a huge difference between One24’s NatraBurst and Herbalife’s Formula 1.

“But AdvoCare is pitching more than nutritional products. It’s also offering people a pathway to financial freedom — the opportunity to “design their own lives” by selling those products and to earn even more money by recruiting others to join the fold.”

So maybe this is the reason why MLM companies need to push the same few catagories of products? I like to ask, “Where is the MLM refrigerator company? Where is the MLM milkman?” You won’t find them.

“This pitch — the promise that if you sign up for AdvoCare, you can reap ‘rewarding’ financial results — draws tens of thousands of new distributors every year.”

This sounds like a slippery slope for AdvoCare as it seems to drawing people with the “promise” of “reap[ing] ‘rewarding’ financial results”. As we go through the rest of the article, let’s see if the company seems to deliver on that promise. If not, it would seem to me to be a misleading claim… the kind of thing a pyramid scheme might be guilty of.

“But an Outside the Lines/ESPN The Magazine investigation has found that few of those salespeople will ever achieve that vision. In reality, only a tiny fraction of AdvoCare members earn anything close to a modest income, even as they’re pressured by higher-ranking distributors to keep buying inventory.”

This is consistent with every MLM that I’ve looked at. In fact, studies of hundreds of MLMs show that more than 99% of people lose money.

“And while the company claims its primary objective is selling products, many of its distributors tell a different story. ESPN interviewed more than 30 current and former salespeople, the vast majority of whom said their focus, and the focus of their superiors, was on recruiting other distributors.”

This is important because the FTC guidelines say: “If the money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan. If the money you make is based on the number of people you recruit and your sales to them, it’s not. It’s a pyramid scheme. Pyramid schemes are illegal, and the vast majority of participants lose money.”

In my opinion, ESPN is painting a picture here that AdvoCare appears to be a pyramid scheme according to those FTC guidelines.

“[Chavez] had been reluctant to fly to Texas for the event, which cost $119, but he says his superiors pushed him to make the trek. “They told me, ‘Put it on your credit card. If your family doesn’t support you, go anyways,'” he says. Friends and family members who raise questions about AdvoCare are labeled ‘dream killers’ by other salespeople, according to several distributors.”

As a personal finance enthusiast, I’m really irked when people are told make bad financial choices.

More importantly, the “dream killers” theme is similar to this 60 Minutes interview with Amway’s Dexter Yager back in 1982. Yes, this kind of stuff has been going on for more than 30 years. In fact, CNN Money extensively covered the MLM “Mess” back in 1987.

Anyway, let’s get to the video (see this 10:30 mark):

This is a classic isolation technique that cults use to separate people from their loved ones (friends and family) who try to be “the voice of reason.” And importantly she makes the point that family members said, “Do you need eat, live, and sleep this business?” That’s really dubious and I advocate a life balance. A cult might want you to ignore everything else and focus on it.

“By 2013, Chavez had spent three years trying to build an AdvoCare business. He had taken out a loan on his 401(k) and quit his government job, dropping $15,000 on products that he struggled to sell. He had hosted innumerable parties in his living room, handing out samples to reluctant attendees, and printed business cards with Brees’ face on them. He barely broke even — but he kept at it, convinced that someday he would be the one on AdvoCare’s stage. ‘You’re always chasing the dream,’ he says. ‘And it never comes.'”

This ties into what Dexter Yager said just a minute later in the video that I referenced above. “You gotta keep telling them they can do it. You gotta keep giving people faith over and over.”

From what readers have told me and from what I’ve seen of the income disclosure statements of MLMs, Chavez actually did fairly well to “barely [brake] even.” Yes, he wasted three years of his life that could have used to make at least minimum wage, but at least they didn’t say he lost his entire $15,000. Some people do according to this Washington Post article.

However, it seems like the goal is to keep everyone on the treadmill (i.e. in the “system”) even if it isn’t working. Why? Well let’s continue…

“In the lobby, just inside the front door, the company has installed a bust of its founder, Charlie Ragus. A tall, charismatic Louisiana native who was briefly with the Kansas City Chiefs, Ragus died in 2001…”

This is the first hint of why they might hire Drew Brees as a spokesman, a star playing for Louisiana’s football team.

“[Allison] Levy [AdvoCare’s general counsel], who is sitting across from a framed Brees jersey, avoids the phrase ‘multilevel marketing.’ She says she prefers ‘direct sales’ because it’s ‘a better definition and a better word choice for what we do.'”

I vehemently disagree and believe that such statements should get Allison Levy disbarred. Let me explain: The term, “Direct sales”, involves someone going door-to-door, a yard-sale, and/or Ebay as well as some additional things. This is selling product directly and, by definition, involves ZERO recruiting of people into a business. It is describing a commissioned sales person. Multi-level Marketing (MLM) describes something different. It describes how someone can recruit salespeople and also use “direct sales” to them, which is very different according to the FTC guidelines.

For more on MLM using word games see: MLM vs. Network Marketing vs. Direct Selling

“This innovation, which kept MLMs afloat as traditional direct sellers fizzled out (remember encyclopedia salesmen?), also sent some companies down a slippery legal slope.”

Looks like ESPN agrees that MLM is not “direct sales” as noted by the encyclopedia salesman comment.

“Ragus, who cut his teeth at an MLM called Herbalife, started his own operation, Omnitrition International, in 1989. Three years later, a group of former Omnitrition distributors would sue both Ragus and the company, alleging that it was a pyramid scheme. But by then — the case was ultimately settled — Ragus had already left. In 1993, he launched yet another MLM, AdvoCare.”

So, Herbalife, which is being investigated for being a pyramid scheme by the FTC (see above), moved to Omnitritrion who was also sued for being a pyramid scheme. The Omnitritrion case is notable because it “suffered a resounding loss in the case by the 9th Circuit Court”.

This feels to me like George Costanza pushing himself as a Latex salesman for Vandelay Industries:

After Herbalife and Omnitritrion’s pyramid scheme accusations/battles, Ragus’ involvement in founding AdvoCare looks very bad to me.

“Occasionally, [AdvoCare former distributor Bruce Badgett] says, they even set up the players’ wives with lucrative distributorships. (The company denies that this practice occurs.)”

I’ve seen this happen with other MLMs. This practice (if it occurred) would make business, so I’m inclined to believe Bruce Badgett.

“Like other MLMs, AdvoCare created a ladder system for its salespeople; in order to climb the ranks — which range from “advisor” to platinum — and earn bigger bonuses, members had to recruit. Badgett, along with several other distributors who joined AdvoCare in its early years, rose to the pinnacle, earning millions. At one point, he says, he presided over a downline of more than 30,000 people, collecting commissions on sales from members many levels beneath him.”

When I try to reconcile this with the FTC guidelines this looks like the money is focused on the people recruited (rather than retail sales to people not involved) which would make AdvoCare seem to be a pyramid scheme.

“‘AdvoCare sponsors select ESPN-operated events and is also a sponsor across select ESPN platforms.'”

It is notable that ESPN, possibly at the expense of its own financial benefit, is producing this investigative report.

“William Keep, the dean of the College of New Jersey’s School of Business, says these sports deals are crucial to MLMs because they legitimize murky companies to the outside world… [One former distributor] can still recite the line she was fed: ‘If Drew Brees takes it, why wouldn’t you?'”

As you can seeat the 3 minute mark of How to Spot a Pyramid Scheme endorsements by professional athletes are common tactics. This seems like further evidence that AdvoCare fits that profile.

“[Athletes] are integral to a popular AdvoCare sales and recruitment technique called the ‘Bulletproof Shield.’ Distributors preach this method with the help of a chart: The salesperson sits in a bubble in the middle, flanked by ‘endorsements’ and a ‘scientific and medical advisory board.’ The basic concept is that the distributor should deflect questions about the company by replying, ‘Well, I don’t know about (X), but what I do know is’ — and then referencing specific athletes or doctors who have vouched for AdvoCare. ‘You sell the products and the opportunity with the heart and the eyes, not extensive knowledge,’ explains one training manual.”

If you are going to be making a business decision, you should be doing it with knowledge, not with emotion. This sounds like an obvious appeal to authority logical fallacy. That How to Spot a Pyramid Scheme video also shows how paid doctors (or a “scientific advisory board”) plays into the misdirection.

“The inventor of the Shield is a triple-diamond-level distributor named Danny McDaniel… who claims to earn a ‘substantial multimillion-dollar income’ through AdvoCare. In one video, McDaniel teaches salespeople how to react if someone asks whether the company is a pyramid scheme. ‘You could say, ‘I don’t know a whole lot about those pyramid deals, but here’s what I do know.’ He flips open an AdvoCare magazine, pointing to pictures of Welker and Brees. ‘I don’t think people like that want to be involved in some pyramid deal.'”

So AdvoCare has paid Danny McDaniel multiple millions of dollars, but failed to educate him on what a pyramid scheme is? And instead of educating himself by reading the FTC guidelines so he can help everyone else, he used the logical fallacy above.

“(AdvoCare forbids distributors from using sites like Amazon or eBay; widespread availability would undermine the direct-selling model.)”

In reality, Ebay and Amazon are probably the best examples of “direct sales” in the United States. Companies and individuals can sell directly to people rather than using independent distributors that MLMs tend to use.

If a company claims to be direct sales and prohibits actual direct sales (through sites like Ebay and Amazon), it would seem to be a pyramid scheme. It would seem like they are more concerned with selling the “business opportunity” to distributors rather than products to consumers.

“In order to qualify for commissions each month, AdvoCare distributors must achieve a certain amount of sales volume, a mandate that drives some members to purchase products for the sake of meeting the quota. Crossan wasn’t bringing on new recruits, but she kept buying products, goaded by the people above her in the organization.”

This is summed up well in this MLM lawyer’s article, which explains how these “Pay-to-Play” requirements lead to an MLM crossing the line to being a pyramid scheme (as he cites the FTC). This looks like another red flag against AdvoCare to me.

“Levy, the general counsel, says many distributors aren’t actually trying to make money — they’re just in it for the markdown: ‘We have hundreds of thousands of people that join our business, most of them primarily for a product discount.'”

This sounds like AdvoCare’s lawyer is condoning people misrepresenting themselves as distributors to get discounted product. The FTC guidelines note that distributors have make retail sales to the public, but if people can join to get a discount, there’s a disincentive for anyone to pay retail prices.

“One former distributor, who spoke on the condition of anonymity, says she did make a decent income through AdvoCare. But she acknowledges that almost no one in her downline made money. ‘It nauseates me to think of the people who spent $3,000 and didn’t make a dime, because they believed me — and the goal, and the dream,’ she says. ‘You catch people in a bad spot who maybe have hope that this could be a way for them to pay for their credit card and their kids, and you exploit them. That’s the bottom line.'”

This is why I write about MLMs and pyramid schemes. Let’s hope we can reach these people and prevent them from making these financial mistakes.

“One PowerPoint, titled “How to Present AdvoCare Properly,” says: “Health Crisis + Financial Crisis = Opportunity.” It goes on to claim that the direct-sales industry has “More Millionaires than any other industry.” (After being presented with questions about the Ferros’ site by ESPN, AdvoCare asked the couple to take several documents down.)”

So the first PowerPoint shows how to exploit people. The second claim is clearly a lie and not accurate. AdvoCare only acted when pressed, showing that it doesn’t do a good of policing its distributors. The action was not to eliminate the deceptive distributor as one might expect. I believe that’s because it would send a message to other distributors that there’s a penalty for deception. It doesn’t appear as if Mike and Sarah Ferro paid any kind of penalty.

“OVER THE PAST three decades, the government has brought only a handful of cases against MLMs. Critics say the companies escape scrutiny because they’re impenetrable; the industry’s trade group, the Direct Selling Association, successfully lobbied the FTC to shelve new transparency rules in 2012. But the tide may be turning. In 2014, the FTC announced it was investigating Herbalife. Last summer the agency asked a federal court to halt operations of another outfit, Vemma Nutrition Company.”

In reality an FTC Insider Explains Why the FTC Can’t Put an End to Pyramid Schemes. This article explains how the FTC has to start from zero against each one and make an extensive legal case that could last 7 years like a recent BurnLounge one.

So even if the FTC believes that AdvoCare is a pyramid scheme (and I’m not saying they do), it is easy for me to understand why they’d look the other way. There are more than 1400 MLMs in the United States claiming to be legitimate. That’s many, many years of legal battles the FTC would be taking on. The FTC doesn’t necessarily act very quickly either. Vemma was in business for around a decade before the FTC cracked down on them.

AdvoCare and Direct Selling Association (DSA)

I noticed on AdvoCare’s website they trumpet that they “adhere to the DSA Code of Ethics”. This sounds like something promising. Unfortunately, it is misleading to prospective business owners and consumers.

As the well-cited Wikipedia article on the DSA states:

“The Direct Selling Association (DSA) is the name of several similar trade associations in the United States, United Kingdom, Australia, Malaysia, Singapore, and New Zealand that represent direct selling companies, primarily those that use multi-level marketing compensation plans. On behalf of its members companies, the DSA engages in public relations and lobbying efforts against regulation of the multi-level marketing industry, and it funds political candidates through a political action committee.”

In short, the DSA is a group of MLM companies who want to prevent MLMs from being regulated. Sometimes we don’t need regulation, but the DSA has put out myths about pyramid schemes that don’t agree with the FTC’s guidelines.

When something appears to be a pyramid scheme, we shouldn’t trust an organization whose allegiance is to its member companies. The FTC does a terrible job of protecting consumers from pyramid schemes, but at least their guidelines on MLMs and pyramid schemes are in the right place. Plus you know that the FTC is at least on the consumer’s side.

Big companies like Avon have left the DSA citing risk of pyramid schemes. Tupperware has done the same.

Any company that willing associates itself with the DSA raises red flags about its own ethics in my opinion.

Dispelling a Few Myths

I read some reviews on AdvoCare. One person in MLM tried to suggest that all negative reviews are not valid because they have a common theme of “I didn’t make any money in it.” Well, consider this the negative review that is valid because I knew better than to attempt making money in it. Having studied MLM for 8 years, I know that that 99% of people will fail and that over ones’s effort doesn’t matter, failure in MLM is a mathematical certainty.

A claim that someone is complaining about AdvoCare because they didn’t make money is simply that person’s attempt to dismiss a possibly legitimate review as sour grapes. It’s true that most people will say that they didn’t make any money, but that’s because MLM is set-up that way. These claims should not be dismissed, but raise an additional red flag.

Scott Brown and AdvoCare

Recently (around July 5th, 2015), Scott Brown took to promoting Advocare on his Facebook page. It is covered by both
The Daily Beast and Wonkette.

It was full of contradicting information as The Daily Beast reported. One minute Scott Brown says that he’s been using it for 10 years and the next he said that he’s been turned on to it recently.

He also said he lost 42 pounds on it and also said it was “pretty short money, about $180 in total.” That money will buy you the 24-day Challenge. That would seem to mean that he’s lost 42 pounds in 24 days, which appears to me to be extremely dangerous. I don’t think any doctor would say that someone of Scott Brown’s size should be losing nearly two pounds a day for 3 weeks.

According to the Boston Herald, Brown is example #1 of why AdvoCare could be considered a pyramid scheme. He signed up as a distributor to get a 20% discount. He claims his intentions are to be a customer, yet he is not one… he’s a distributor. A real AdvoCare salesmen should quickly learn that there’s no chance to sell product at retail as required when customers can become distributors and save themselves 20%.

Of course, the story that Scott Brown signed up to get a discount doesn’t exactly fly either. The reporter in The Daily Beast article pointed out that he tried to sell her on becoming a distributor to save 20-40% off. That certainly sounds like the behavior of a salesman to me.

The Boston Globe reports that last year Brown “rented out his e-mail list” which resulted in people getting spammed with email such as “5 Signs You’ll Get Alzheimer’s Disease.” That sounds like the act of a salesman to me.

I keep going back to The Daily Beast article which said, “This is technically called ‘multi-level marketing,’ but you may call it a gigantic scam.” Sounds like something I wrote as long as we know and agree on what a scam is.

My Gift to You

If you’ve read this far, I appreciate your dedication. Whether you found what you were looking for or not in the article above, I want to help you with your financial situation. It’s what I do.

Here are two things you can do to put yourself in a better financial position:

• Create an Emergency Fund – Dobot squirrels small amounts of money from your checking account to its FDIC-insured account. It’s 100% free. You simply have to create a goal of having an emergency fund. You don’t have to think about it and you’ll likely never notice the small amount of money being moved. I’ve squirreled away more than $1100. You can read my Dobot review here.
• Track Your Money – Over the years, I’ve gathered so many financial accounts. Banks, Brokerages, Loans, I got multiple of them all. The best software for tracking them all is Personal Capital. You can’t get to your destination if you don’t know where you are to start. Personal Capital gives you that… and, like Dobot, it is completely free.

For more, visit my five minute financial fixes article. If neither of the above is helpful, I’m sorry. I appreciate you for just being here. The person recruiting you has a financial incentive to present only one side of the story. Kudos to you for searching for more information to make an informed decision.

Final Words on AdvoCare

If there’s ANY question at all that a business is a pyramid scheme, I’d stay as far away as possible. I vote with my dollars and my time to only work on businesses that are CLEARLY legitimate. If AdvoCare wants to claim legitimacy, I believe they should remove the questions of whether it is an illegal pyramid scheme. They can easily remove the multi-level compensation plan and pay everyone a straight commission for making sales.

These are my opinions that are based on the information available to me. It would be impossible for me to cite the thousands of MLM/pyramid articles that I’ve read over the last 8 years or so. Everyone is free to evaluate the information and come to their own conclusions.

Further Reading: Even after nearly 5000 words there’s still more to the AdvoCare story. Ethan Vanderbuilt opines on AdvoCare being a scam.

[Originally published April 24, 2015.]