AdvoCare

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.[4] 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.[5]

Not to be confused with Advocare, the Medicare Advantage plan from Security Health Plan of Wisconsin.
AdvoCare International
Private
IndustryDietary supplements
Founded1993 (1993) in Carrollton, Texas
FounderCharles E. Ragus
Headquarters
Plano, Texas
,
United States
Area served
United States
Key people
Patrick Wright (CEO) [1]
ProductsDietary supplements, personal care
RevenueUS$ 400 million (est.) (2013)[2]
Number of employees
247 (est.) (2013)[3]
Websitewww.advocare.com

History

Charles Ragus founded AdvoCare in 1993 as a multi-level marketing (MLM) company that distributes dietary supplement products.[6][7] The name AdvoCare is short for "Advocates Who Care".[8] 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.[8][9][10] He died in 2001 at the age of 58.[11][12]

Advocare had 5 presidents/managers from 2001 - 2007

Todd Cash - fired February 2005

Lance Wimmer fired after 4 months

Bob Ulrich 2005 - May 2007

In May 2007, Richard H. Wright became president and CEO of AdvoCare. Wright had previously served as Chief of Staff for US Representative Jim McCrery.[6][13]

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.[4]

Products

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.[14]

Business

Prior to July 2019, AdvoCare was a multi-level marketing company.[15][16][17] 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.[5][18]

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.[19] 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.[20] The average annual compensation for active distributors in 2012 was $1,781.[21]

In a 2010 court case Advocare said that it had around 60,000 active distributors, and had sold approximately 350,000 distributorships since 2003.[22]

AdvoCare is a member of the U.S. Direct Selling Association (DSA), and participated in the 2010 DSA Code of Ethics Communication Initiative.[23] AdvoCare President Richard Wright served on the DSA Board of Directors in 2011.[24]

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.[4]

Trevor Bayne's AdvoCare-branded Ford Mustang in NASCAR competition.

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.[8] 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.[8]

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.[25][26][27] In 2012, AdvoCare partnered with the Major League Soccer team FC Dallas and became its jersey sponsor.[28]

In 2014, AdvoCare secured the naming rights of a professional sports practice facility located at The Greenbrier in West Virginia.[29] The facility was named the AdvoCare Sports Performance Center and hosted the 2014 training camp for the New Orleans Saints.[30][31][32] AdvoCare also became the title sponsor of the 2014 Texas Bowl.[33] In 2016, AdvoCare was to sponsor the Texas Kickoff and Cowboys Classic games.[34][35]

From 2011 to 2016,[36][37] AdvoCare sponsored several NASCAR racing teams and drivers, including Trevor Bayne and Roush Fenway Racing in the NASCAR Sprint Cup Series and Xfinity Series,[8][38] as well as races at Atlanta Motor Speedway and Phoenix International Raceway.[36][37]

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.[39][40] 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,[41][42] and she claimed in a subsequent lawsuit that the company's product was tainted.[43] AdvoCare sued Hardy for making false claims.[44] 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.[45]

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.[46] 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[46] 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.[47] 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.[48]

AdvoCare ceased offering KickStart Spark, targeted to youth age 4–11, after pediatricians had expressed concerns about the product containing 60 mg of caffeine.[49] 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.[49]

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.[50]

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.[8]

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gollark: Still, they're identical until you want to get a result from a command or send a message, and who needs that?
gollark: Ah, no, they're not quite identical - skynet uses `message` instead of `data` somewhere.
gollark: (it allows reconfiguring the server URL)
gollark: Disregarding its responses, you'd be able to probably switch skynet to use EXT's backend with no code changes.

See also

References
  1. AdvoCare International, L.P. Names Patrick Wright as New Chief Executive Officer | AdvoCare
  2. Barbara Seale (1 Sep 2013). "AdvoCare a two decade marathon". Direct Selling News. Archived from the original on 13 November 2013. Retrieved 13 Nov 2013.
  3. / AdvoCare Profile
  4. "FTC: AdvoCare business model was pyramid scheme". FTC Consumer Information. 2019-10-02. Archived from the original on 2019-11-06. Retrieved 2019-10-04.
  5. "AdvoCare to Revise Business Model" (PDF). facts.advocare.com (Press release). AdvoCare. 17 May 2019. Retrieved 26 September 2019.
  6. "Three CEOs Reinvent Themselves With Second Careers". D Magazine. August 2010. Archived from the original on 2011-06-19. Retrieved 2011-01-31.
  7. Candace Carlisle (19 Oct 2012). "Richard Wright and his wife don't just run AdvoCare International, they're customers". Dallas Business Journal. Retrieved 18 Oct 2013.
  8. Kimes, Mina (15 March 2016). "Drew Brees Has A Dream He'd Like To Sell You". ESPN The Magazine, Outside the Lines. Retrieved 3 April 2016.
  9. "Arrowheadlines: Kansas City Chiefs News 2/23". SB Nation Arrowhead Pride. 23 February 2014.
  10. "K.C. Has Bob McAdams And Send 3 Rookies Off". Lawrence Journal-World. Associated Press. August 28, 1965. Retrieved July 7, 2015.
  11. Obituary Central Archive
  12. Gary Abbot (4 June 2001). "AdvoCare Founder Charles Ragus, 58, passed away on Friday June 1". the Mat. Archived from the original on 19 October 2013. Retrieved 18 Oct 2013.
  13. Candace Carlisle (19 Oct 2012). "AdvoCare CEO shares his secrets to health, business success". Dallas Business Journal. Retrieved 18 Oct 2013.
  14. "Products". AdvoCare. Retrieved 1 Nov 2013.
  15. "Multi-level Marketing Or Pyramid Scheme? That's The Question". Valley News. Archived from the original on 6 November 2014. Retrieved 5 November 2014.
  16. Greene, Jody. "Is MLM a Bad Word?". Forbes. Retrieved 5 November 2014.
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  19. "2015 Income Disclosure Statement" (PDF). Advocare. Retrieved November 19, 2017.
  20. "2016 Income Disclosure Statement". Advocare. Retrieved November 19, 2017.
  21. "2012 Income Disclosure Statement" (PDF). Advocare. Archived from the original (PDF) on October 19, 2013. Retrieved November 19, 2017.
  22. "Advocare International v. Karen Ford, et. al" (PDF). Archived from the original (PDF) on October 19, 2013.  (11.0 MB) (page 23)
  23. "Member Companies Emphasize Ethics in Corporate Behavior". dsa.org. Retrieved 9 December 2015.
  24. "2011–2012 DSA Officers, Board Members, Elected During DSA's Annual Meeting". Archived from the original on February 9, 2012. Retrieved 27 June 2012.
  25. Roy Lang (28 Jan 2010). "AdvoCare Recommits to I-Bowl". Shreveport Times. Retrieved 5 Nov 2013.
  26. Goins, Adria (21 August 2013). "Longtime bowl expected to lose Advocare sponsorship". KSLA 12. Retrieved 6 November 2013.
  27. Dee, Chris (21 August 2013). "Advocare No Longer Title Sponsor For Annual Bowl Game". 1130am (Radio). Retrieved 6 November 2013.
  28. Botta, Christopher (27 June 2012). "FC Dallas Signs Multiyear Deal With AdvoCare To Serve As Jersey Sponsor". Sports Business Daily. Retrieved 25 September 2014.
  29. "AdvoCare secures naming rights for New Orleans pro football training facility". Plano Star Courier. 4 August 2014. Retrieved 25 September 2014.
  30. McFarling, Aaron (25 July 2014). "New Orleans Saints open camp in West Virginia". The Roanoke Times. Retrieved 25 September 2014.
  31. Johnson, Shauna (23 July 2014). "Saints receive big welcome in Greenbrier County". MetroNews. Retrieved 25 September 2014.
  32. Vingle, Mitch (21 July 2014). "Greenbrier unveils Saints facility". The Charleston Gazette. Retrieved 25 September 2014.
  33. Barron, David (11 February 2014). "Texas Bowl gets a new sponsor in AdvoCare International". Houston Chronicle. Retrieved 4 April 2014.
  34. Berman, Mark (28 July 2014). "University of Houston expected to open 2016 college football season against Oklahoma". My Fox Houston. Archived from the original on 14 February 2015. Retrieved 25 September 2014.
  35. Helman, David (16 July 2014). "Alabama, USC To Open 2016 Season At AT&T Stadium". Dallas Cowboys official site. Retrieved 25 September 2014.
  36. Spencer, Lee (August 21, 2013). "Bayne to team with AdvoCare in '14". Fox Sports. Retrieved 27 November 2016.
  37. "AdvoCare To Sponsor Leavine Family Racing's No.95 Ford". SpeedwayMedia.com. August 23, 2011. Retrieved 27 November 2016.
  38. Spencer, Lee (November 3, 2016). "Bayne signs multi-year contract extension with Roush Fenway Racing". Motorsport.com. Retrieved 27 November 2016.
  39. "Olympic swimmer Jessica Hardy: 'I'm innocent'". USA Today. 2008-07-26. Retrieved 2010-11-14.
  40. "Hardy presses forward with tainted-supplement defense". Seattle Times. 2008-08-04. Archived from the original on October 12, 2008. Retrieved 2010-11-14.
  41. Aschwanden, Christie (July 26, 2012). "Athletes, Stop Taking Supplements". Slate Magazine.
  42. Futterman, Matthew. "Trials and Tribulations of the Angry Swimmer". The Wall Street Journal. Retrieved 5 Nov 2014.
  43. "Swimmer Hardy blames company for failed drug test". USA Today. 2009-01-30. Retrieved 2010-11-14.
  44. "U.S. swimmer, supplement firm countersue". UPI. 2009-02-16. Retrieved 2010-11-14.
  45. "Supplement maker AdvoCare disputes Hardy panel findings". Seattle Times. 2009-05-05. Retrieved 2010-11-14.
  46. Tsai, Joyce (31 Aug 2009). "Jury returns verdict against AdvoCare". Dallas Business Journal. Retrieved 6 Nov 2014.
  47. "Advocare International, L.P. (Appellant) V. Bruce Badgett and Teresa Badgett (Appellees): Case No.05-10-00917-CV" (PDF). Court of Appeals for the Fifth District of Texas. Archived from the original (PDF) on 2014-11-07. Retrieved 6 Nov 2014.
  48. "AdvoCare International, L.P., v. Badgett, Bruce and Teresa Badgett". Justia.com. March 13, 2012. Retrieved 6 Nov 2014.
  49. "A Sports Drink for Children Is Jangling Some Nerves". New York Times. 2005-09-25. Retrieved 2010-11-14.
  50. Taking the 24-Day Challenge. ABC / WXYZ. 19 May 2011. Archived from the original on 23 May 2011.
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