In this article, we will discuss the 5 famous pyramid scheme companies in US history. If you want to read about similar companies, you can go to 9 Famous Pyramid Scheme Companies in US History.
5. BurnLounge, Inc.
Ceased Operations: 2012
BurnLounge, Inc. was an online music store established in 2004 in New York City. By 2006, the company had 30,000 users. In 2007, the FTC sued BurnLounge, Inc. for being an illegal pyramid scheme, and in 2014 the company lost the case. The company’s website allowed consumers to preview and buy music and communicate via a dedicated app. To sell music on their own pages, consumers had to buy a subscription. The fees changed depending on the plan, with an annual fee plus a monthly fee option. The fees allowed consumers to earn sales points for BurnLounge products and consumers were allowed to exchange these points for cash, after paying an additional fee.
4. Fortune Hi-Tech Marketing
Ceased Operations: 2013
Founded in 2001, Fortune Hi-Tech Marketing was a Lexington, Kentucky-based company that used a multi-level marketing approach to sell consumer goods and services. However, in 2013 the Federal Trade Commission and regulators for three states took action against the company for being a pyramid scheme, ultimately shutting it down.
Fortune Hi-Tech Marketing used multi-level marketing to recruit representatives to sell a variety of retail services and products. The company had a sign up fees that ranged between $99 and $299. The representatives were paid a commission and bonuses for recruiting more representatives. The products sold by the company had low-profit margins, and representatives were paid a commission between 0.25% and 1%. The company sold a variety of products including mobile phones, Dish Network TV, and hair-care products, among others.
3. Telexfree
Ceased Operations: 2014
Telexfree was a multi–level marketing company based in Marlborough, Massachusetts, United States, that sold VoIP telephone services and other products. The company was founded in 2012 by James Merrill and Carlos Wanzeler and was declared a pyramid scheme in April 2014 by the Massachusetts Securities Division and the U.S. Securities and Exchange Commission. Telexfree marketed its services through a multi–level marketing (MLM) system, which allowed users to recruit other participants to sell Telexfree services in exchange for commissions. Participants were encouraged to invest in Telexfree in order to qualify for commissions, and were promised returns of up to 200%. Participants were also promised bonuses for recruiting new members, which was the main focus of the company’s marketing. The company’s MLM scheme was a classic pyramid scheme, in which money from new recruits is used to pay existing participants, and was declared a fraud by the Massachusetts Securities Division and the SEC in April 2014 and the company was forced to declare bankruptcy. Telexfree is one of the most famous pyramid scheme companies in US history.
2. WakeUpNow
Ceased Operations: 2015
WakeUpNow was an MLM company based in Provo, Utah, founded in 2009 by Troy Muhlestein. It sold health and financial management products, such as WUN Fit, Thunder energy drink, WUN MD, Awaken drinks, WUN Finance, Taxbot, WUN Protect and Vacation Club. The company closed US operations in 2015. Pyramid scheme expert, Robert FitzPatrick, told the Daily Herald that he views WakeUpNow as a pyramid scheme and an economic cult. WakeUpNow is one of the most famous pyramid scheme companies in US history.
1. Vemma
Ceased Operations: 2015
Vemma was a privately-owned MLM that sold dietary supplements. In 2015, the FTC closed it down for deceptive practices and operating a pyramid scheme. Vemma sold its products online and through independent distributors (called affiliates). In 2013, the company became an affiliate marketing company. In 2014, Vemma modified its compensation plan, and in 2015 the FTC sued the company, accusing it of running a pyramid scheme. The company has been defunct since 2015 and is ranked among the most famous pyramid scheme companies in US history.
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