FTC Returned $392 Million to Consumers After Law Enforcement Actions
The Federal Trade Commission (FTC) returned $392 million to consumers in 2022 after recovering the money in law enforcement actions.
About $248 million of those refunds came from cases in which the FTC sent the first distribution payments in that year, with the remainder being additional distributions from earlier cases, the agency said in a Tuesday (June 6) press release.
The largest first distribution for the year — totaling $149 million — was sent to consumers who allegedly lost money in AdvoCare’s illegal pyramid scheme.
In that case, the FTC sued AdvoCare, a multi-level marketing company, alleging that it operated an illegal pyramid scheme in which it deceived consumers that they could earn significant income as distributors of its health and wellness products.
Most distributors — more than 224,000 — earned no money or lost money as AdvoCare pushed them to focus on recruiting new distributors rather than selling products, the agency said in a May 5, 2022, press release.
The second- and third-highest first distributions in 2022 totaled about $24 million and $23 million, respectively, according to the “2022 FTC Annual Report on Refunds to Consumers.”
More than $24 million in refunds went to consumers who lost money in a Next-Gen sweepstakes scheme in which the defendants sent millions of mailers to consumers, falsely telling them they had won or were likely to win a cash prize in exchange for a fee, according to a July 19, 2022, press release.
More than $23 million in refunds went to consumers who paid for My Online Business Education (MOBE), a business coaching scheme in which the defendants falsely claimed the program would enable people to earn substantial income quickly, pressured consumers to buy membership packages and required them to sell the same memberships to others, an April 5, 2022, press release said.
The FTC noted in the Tuesday release that more than 90% of the money refunded to consumers in 2022 came from cases resolved before a 2021 ruling by the Supreme Court that stripped the FTC of its ability to recover redress for consumers.
Refunds to consumers will likely decrease in the coming years as the FTC completes distributions from enforcement actions completed before the ruling in “AMG Capital Management, LLC v. FTC,” according to the Tuesday release.
In one of its most recent actions, in April, the FTC issued notices to 670 companies warning that they could face civil penalties if they make claims in their ads that cannot be substantiated.
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