Apr 6, 2016

Drew Brees-Endorsed AdvoCare Draws Pyramid Scheme Accusations

NPR
April 3, 2016

Heard on Weekend Edition Sunday

The company AdvoCare uses athletes to promote products, and looks a lot like a scam. NPR's Rachel Martin speaks with Mina Kimes, a reporter who investigated the organization for ESPN the magazine.

RACHEL MARTIN, HOST:

We're going to turn now to a story that caught our eye this past week. It's about an American company using American heroes to sell the American dream. But it's a dream that has fallen short for those who have bought in, often quite literally bought in.

The piece was written by Mina Kimes of ESPN The Magazine, and it's called "Drew Brees Has A Dream He'd Like To Sell You." Mina Kimes joins me now via Skype to talk about her reporting. Thanks for being with us, Mina.

MINA KIMES: Thanks for having me.

MARTIN: The company in question is called AdvoCare. So just describe who they are. What is this company? What do they do?

KIMES: Yeah, so AdvoCare is a health and wellness company that makes shakes, supplements, pills, and they're also a multi-level marketing company. What that means is the goods are sold person to person by distributors who buy in for a discount and then can earn money not only by selling the products on their own, but also by recruiting other distributors. They get commissions off of their sales and can rise in the company by building larger and larger teams below them.

MARTIN: So we've seen other iterations of this kind of business model, right? Like, Amway comes to mind.

KIMES: Yeah, so Amway's kind of the mother of these companies, but there have been a number of them that have sprung up over the years, most recently Herbalife, which is very similar to AdvoCare. It has an extremely similar business model.

MARTIN: All right, so what'd you find when you started digging into this company? What did the employees tell you?

KIMES: One thing that I think was really common across a lot of the stories that I heard was that people joined this company with intentions of really making a lot of money and achieving the American dream and were told that this was a possibility. Unfortunately, you know, very few people in this company or, you know, many companies like this do end up making what the company pitches as an above average income for the average American.

MARTIN: Can you break down the numbers for us? How many people do really, really well compared to those who are just kind of scraping by?

KIMES: So as of 2014, there were over 500,000 distributors and about 154,000 of them were active, which means they had received checks from the company for either recruiting others and receiving commissions or doing wholesales on their websites. So of that group, only 2,800 earned more than $10,000 over the course of an entire year. Finally, just over 300 earned more than $100,000.

MARTIN: Tell me about the culture because it is a particular kind of very tight-knit community, in some ways, with a religious basis.

KIMES: Definitely. I think they call it network marketing for a reason, which is these businesses tend to thrive in networks where people can recruit and sell to, you know, people they already see in their day-to-day, whether it's at schools or at colleges. A lot of the distributors I spoke to said they had been introduced to the company at church, and there was a strong religious undertone to the culture when they ended up joining.

MARTIN: Someone described the organization as being like a cult. That's a pretty inflammatory kind of term. Where does that come from?

KIMES: The story I heard a lot - not only from former distributors, but also family members of distributors - was this issue of not wanting to hear criticism and in fact sort of shunning critics. Several people told me they had been told by the people who recruited them or the people above them to no longer speak to people who were criticizing the business or raising questions.

And family members said, you know, I used to be able to talk to my sister about this, and she won't answer questions. So I think that raises a lot of questions about the culture of the company if they're - if people inside are enforcing this kind of self-segregation.

MARTIN: What's the reaction been like to your piece?

KIMES: You know, a lot of these people who fail at this blame themselves. And in fact, they're told, it's your fault, you didn't try hard enough. And so to just hear other people tell their stories and see these numbers I think presents some sort of comfort to people who have been told that they're failures.

MARTIN: Did you reach out, by chance, to Drew Brees? Because part of the story is that it has such high-profile endorsers like...

KIMES: Yeah.

MARTIN: ...The New Orleans Saints quarterback.

KIMES: Yeah. So we did reach out to him, and he wrote back and really defended the business - not only the products as one might expect, but also the business model. And Brees wrote that he had never in his, you know, more than a decade of working with AdvoCare heard a complaint from a distributor.

MARTIN: Mina Kimes is a reporter with ESPN The Magazine. We've been talking about her investigative story about the company AdvoCare. Thanks so much for talking with us and sharing your reporting, Mina.

KIMES: Thank you.

http://www.npr.org/2016/04/03/472859110/drew-brees-endorsed-advocare-draws-pyramid-scheme-accusations
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