Case Study: The Federal Trade Commission

Satisfactory Essays
According to the Federal Trade Commission (FTC), there are two red flags that to warn consumers of a pyramid scheme (inventory loading and lack of retail sales). It was determined in a federal appeal court by the FTC that BurnLounge was working an illegal pyramid scheme. The decision was based on the fact that contributors had to pay to join the scheme and were mainly encouraged by recruiting others into the scheme instead of selling products. The courts did not rule that Herbalife’s commission produced from goods vended to contractors were unlawful. Unlike BurnLounge, Herbalife focused on both the recruitment of contributors and sells to consumers. The cost to join BurnLounge is an annually fee up to $429.95 and Herbalife fee is a one-time
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