Plano-based multilevel marketing company AdvoCare International will pay a $150 million fine to settle with a regulatory agency that says it operated an illegal pyramid scheme that paid most of its sellers nothing.

AdvoCare, which promotes itself as a dietary supplement company, allegedly offered consumers the opportunity to "earn unlimited income, attain financial freedom, and quit their regular job," according to the Federal Trade Commission, which announced the penalty Wednesday.

In reality, the FTC claims, the company's top promoters pushed lower-level individuals to recruit new distributors who would buy large quantities of the supplement products and then repeat the process, instead of selling the products to customers.

AdvoCare is well-known for its celebrity endorsers, such as New Orleans Saints quarterback Drew Brees, and its sports sponsorships of NASCAR, college football games and the FC Dallas professional soccer team.

Andrew Smith, consumer protection bureau director for the Federal Trade Commission, gestured to a chart breaking down the FTC's settlement with Plano-based AdvoCare during a news conference Wednesday in Dallas. (Ben Torres / Special Contributor)

"Legitimate businesses make money selling products and services, not by recruiting," said FTC consumer protection bureau director Andrew Smith in a statement. "The drive to recruit, especially when coupled with deceptive and inflated income claims, is the hallmark of an illegal pyramid."

In a statement Wednesday, AdvoCare said it disagrees with the FTC's characterization of its multilevel marketing business model as a pyramid scheme.

"But we are committed to abiding by this agreement and moving forward," AdvoCare CEO Patrick Wright said. "The strength of AdvoCare is and always has been our highly valued health and wellness products, which remain in great demand by our hundreds of thousands of loyal customers. We will continue to stand behind our distributors, employees and customers and to uphold our values of integrity and transparency, as we have for over 25 years."

AdvoCare's products include health shakes and bodybuilding and dietary supplements sold under a variety of brand names, such as Trim, Fit, Performance Elite and Spark.

The FTC alleged AdvoCare's required recruits to pay a $59 charge to become a distributor. Once a distributor, they could earn even more income if they became "advisors" by spending $1,200 to $2,400 on AdvoCare products, according to the FTC. Advisors' incomes were then based on how many recruited individuals below them generated purchases of AdvoCare products.

In 2016, roughly 72% of distributors earned zero compensation and 18% earned less than $250 from AdvoCare, according to the FTC's complaint.

AdvoCare announced in May 2019 that it was revising its business model after "confidential talks" with the FTC. The company said it notified its more than 100,000 distributors that it would drop the multilevel marketing model and begin paying compensation based on actual sales.

Since the revision, the company said, it has seen strong sales and continues to invest in its products. AdvoCare's annual revenue was $472 million in 2017, according to Direct Selling News, a trade publication that reports on the industry. A class action lawsuit filed that same year estimated the company's revenue at $719 million.

The FTC has permanently banned AdvoCare from participating in multilevel marketing and required its top promoters to notify distributors that they will no longer earn compensation from purchases by distributors below them.

The commission also said it may return some lost money to AdvoCare distributors who saw significant losses as a result of the scheme.