|Founder||Charles E. Ragus|
|Patrick Wright (CEO) |
|Products||Dietary supplements, personal care|
|Revenue||US$ 400 million (est.) (2013)|
Number of employees
|247 (est.) (2013)|
AdvoCare International, L.P. is an American dietary supplement company and 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.
Charles Ragus founded AdvoCare in 1993 as a multi-level marketing (MLM) company that distributes 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 briefly played defensive end for the National Football League's Kansas City Chiefs in the 1960s. He died in 2001 at the age of 58.
In October 2019, the FTC ruled that Advocare was a pyramid scheme that swindled hundreds of thousands of consumers. According to the FTC, AdvoCare rewarded distributors not for selling product but for recruiting other distributors to spend large sums of money pursuing the business opportunity, and nearly all of them lost money after expenses. In a landmark settlement, 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.
AdvoCare sells health shakes, bodybuilding supplement, dietary supplements, and related products. AdvoCare sells products under the brand names Trim, Active, Well, Performance Elite, Fit, and 24 Day Challenge.
Prior to July 2019, AdvoCare was a multi-level marketing company. 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.
According to Advocare’s 2015 income disclosure statement, the company had 623,003 distributors who had purchased product or received a check that year. Among them, 28% (177,443) earned a check from the company in 2015, thereby being classified as “active distributors”; active distributors received a total of 1,294,716 checks with an average annual compensation of $1,586, not including expenses. For 2016, the company reported that 570,289 distributors had purchased product or received a check; 157,905 were active and their average annual compensation had declined to $1,429. The average annual compensation for active distributors in 2012 was $1,781.
In a 2010 court case Advocare said that it had around 60,000 active distributors, and had sold approximately 350,000 distributorships since 2003.
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.
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.
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.
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, saying that two independent laboratories had not found any evidence of Clenbuterol in the supplements.
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.
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.
Wendy Miller of the Beaumont Weight Control Center said AdvoCare's Herbal Cleanse is probably safe for many users, but she suggested that the same results could be achieved without the products.
In March 2016, Advocare was the subject of a critical exposée in ESPN The Magazine. The exposée argues that the company and a small number of distributors at the top of a distribution network makes most of its money from the signing-up of new distributors rather than sales of the product, while exaggerating the likelihood of financial success of distributors when only a few make a significant amount of money; that the company creates a cult-like atmosphere of not questioning the company's claims or the probability of financial success in new distributors, to the point where distributors will shun friends and family members who do so; and that the company is internally driven by divisions over 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.
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