AdvoCare International announced a significant restructuring of its business model, eliminating its multi-level marketing compensation plan for distributors following confidential discussions with the Federal Trade Commission. The changes, set to take effect on July 17th, will primarily impact more than 100,000 distributors who previously earned commissions based on downline recruitment.
The company stated the talks with federal regulators centered on how AdvoCare compensates its distributors. AdvoCare indicated that abandoning the multi-level marketing structure became "the only viable option" after those discussions concluded. Public details of any formal FTC investigation into the company have not yet surfaced.
This shift means AdvoCare will transition to a single-level direct sales model. From July 17th, distributors will only receive compensation for their direct sales to personal retail customers. Any income derived from the volume generated by recruited downline distributors will cease. The company confirmed that its retail and preferred customer programs will remain in place, allowing customers to continue purchasing products. Distributors who focused solely on direct sales to end consumers will see their compensation structure largely unchanged.
The FTC closely scrutinizes multi-level marketing companies to determine if their compensation plans prioritize recruitment over genuine retail sales. Federal guidelines generally consider a scheme a pyramid if commissions primarily come from recruiting new participants and selling products to them, rather than from selling products to legitimate end-users outside the distributor network. The agency has a history of enforcement actions against companies found to operate as illegal pyramid schemes, often requiring substantial changes to compensation structures or outright bans on the model.
AdvoCare's decision echoes allegations made in a class-action lawsuit filed against the company in federal court in 2017. That lawsuit claimed a vast majority of AdvoCare distributors were destined to lose money, not achieve the high incomes promoted by top-level affiliates. The suit specifically alleged that at least 95 percent of AdvoCare distributors paid more to the company than they received in compensation. In 2015, AdvoCare reported net revenues of $719 million, a figure likely under federal review to assess the source of those revenues – whether from retail sales or internal distributor purchases. That lawsuit remains active in the court system.
Many current AdvoCare distributors expressed shock and anger at the news. One long-term distributor, identified as a "top fan" on the company's official social media page, wrote, "I have built a successful business with you! 15 years and you're telling me I'm going to lose all of my downline. I am a business builder and I rely on my residual income!" Other distributors speculated about the company's motivations. One suggested AdvoCare management might be prioritizing its own financial interests. "I'm not convinced there was a real threat by the FTC," the distributor wrote. "I think this is the owners not wanting to use their profit to litigate on our behalf. This seems like cut and run by the owners under the guise of 'blame the government'. Advocare was a great company... the current leadership has some explaining to do."
The impending changes signal a significant shift for AdvoCare, which has operated as an MLM for decades, selling nutritional supplements and weight management products. The move could reshape the company's sales force and overall market strategy. The Federal Trade Commission often publishes details of settlements or enforcement actions following such confidential talks, though no specific timeline has been provided for any public announcement regarding AdvoCare. Former distributors impacted by these changes can find resources on the FTC's website regarding multi-level marketing practices and consumer protection.