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Notice: Pyramid Scheme Alert (PSA) provides current and historical news items that are of interest to our members and visitors. None of the reports or commentaries is intended to imply that any of the referenced companies have been charged or convicted as illegal pyramid schemes. |
FTC Charges MLM, Burnlounge, Is an Illegal Pyramid SchemeJune, 2007 The United States Federal Trade Commission (FTC) has filed a complaint in the U.S. District Court for the Central District of California against BurnLounge, Inc. and is seeking a permanent halt to the illegal pyramid practices as well as other illegal practices alleged in the complaint. BurnLounge is one of the hottest new multi-level marketing schemes. It's "product" is downloaded music, similar to i-Tunes. Some of its top promoters were previously big recruiters with the MLM, Excel Communications. It has attracted superstars from sports and the music industry to endorse it. Many musicians have been lured into the scheme. Tens of thousands of consumers have invested over the last several years. Despite thousands of consumers joining the scheme, the news media has largely ignored it and no state regulatory agency had brought action against it. The initiative to bring charges came from the South Carolina Attorney General's Office. Reportedly, the Attorney General of SC had been recruited (he did not join). Some top sports figures in SC were highly public promoters of BurnLounge. South Carolina was reportedly a "hot spot" of BurnLounge recruiting. BurnLounge recruited participants by selling them so-called product packages, ranging from $29.95 to $429.95 per year. More expensive packages purportedly provided participants with an increased ability to earn rewards through the BurnLounge compensation program.
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