BurnLounge - Alleged Online Pyramid Scheme Settles With FTC
BurnLounge was accused by the FTC of operating a pyramid scheme that primarily paid for the recruitment of new participants instead of retail sales of music and video. According to the FTC,
“The BurnLounge compensation program primarily provided payments to participants for recruiting of new participants, not on the retail sale of products or services, which the FTC alleges would result in a substantial percentage of participants losing money.
The FTC specifically alleges that the defendants operate an illegal pyramid scheme, make deceptive earnings claims, and fail to disclose that most consumers who invest in pyramid schemes don’t receive substantial income, but lose money, instead. These practices violate the FTC Act, the agency alleges.”
The company announced that it is ending its pyramid program and claims to have settled with the FTC.
Remember that networking marketing/MLM companies are legal. However, whether brick-and-mortar or online ventures, the BurnLounge compensation-type plan is an invitation to get nailed by the government for running an illegal pyramid scheme.
About the Author
With an advanced international law degree from Georgetown University and more than 14 years of real world legal experience, Attorney Mike Young shows entrepreneurs how to protect and grow their businesses online. He's the author of "Internet Marketing
Legal Secrets Revealed," "How to Create Your Own Internet Business Without a Lawyer for Under $175," and the creator of Website
Legal Forms GeneratorTM. Not just a lawyer who focuses exclusively on Internet and marketing law, Mike’s been working with computers for more than 27 years (his first computer was an Atari 400 with 8 KiB RAM) and started representing Internet businesses back in 1996.
