FTC v. BurnLounge Points and Authorities

FTC v. BurnLounge Points and Authorities

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The Federal Trade Commission ("FTC") is seeking a temporary restraining order ("TRO") against Defendants BurnLounge, Inc. ("BumLounge"), Juan Alexander Arnold, John Taylor, Rob DeBoer, and Scott Elliott. Since 2005, Defendants have marketed a pyramid scheme though out the country. Defendants recruit others into the scheme by selling product packages to them that include an Internet-based, virtual music store ("on-line store"). By joining BumLounge, participants obtain the right to earn rewards for recruiting others into the scheme as well as for selling digital music through the on-line stores. Participants, who pay an additional monthly fee, can earn monetary rewards from BurnLounge and are known as "Moguls. The BurnLounge compensation program is based primarily on providing payments for the recruitment of new participants not retail sales of music, and the rewards for recruitment are essentially unrelated to retail sales of music. Such schemes are inherently deceptive and violate Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45(a). Through its very structure, the BurnLounge pyramid scheme will result in the majority of Moguls losing money and millions of dollars of consumer injury. Defendants also violate Section 5 of the FTC Act by misrepresenting the income to be earned through BumLounge and failing to disclose that most Moguls will lose money. Plaintiff seeks a noticed ex parte TRO to stop Defendants' illegal conduct, freeze their assets, require an accounting and expedited discovery and order that Defendants show cause why a preliminary injunction should not issue.

Also available at: http://mlmlegal.com/burnloungepoints.html

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Published In: Consumer Protection Updates, MLM / Direct Sales Updates, MLM Consulting / Network Marketing Updates

Reference Info:Federal, Federal Circuit | United States

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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