Illegal Pyramid Scheme Exposed by truthinadvertising.org

May 15th, 2013

Work from home, get rich, and vacation in luxurious resorts. That’s the promise offered by Washington-based Resorts360 Vacation Club. All you need to do is buy an expensive membership and get others to join. But what Resorts360 is really selling, according to the advertising watchdog group truthinadvertising.org (TINA.org), is an illegal pyramid scheme. TINA.org, a nonprofit based in Madison, Conn., has exposed the deceptive scheme, is demanding that the owner shut down the business, and has filed complaints with both federal and state regulators, as well as the BBB.

The Hook
Resorts360 tells prospective participants that by purchasing one of its four membership plans (ranging in price from $795 to $9,995), they can receive travel discounts and, more importantly, an opportunity to earn a substantial income. Advertising that membership “offers unlimited opportunities” and that participants can “earn a five-figure monthly income,” Resorts360 presents itself as a lucrative business opportunity for the ambitious self-starter. The compensation claims, however, are misleading.

The Problem
“The company’s compensation program is based exclusively on providing payments to members for the recruitment and enrollment of new participants, and not on the retail sale of any product or service,” says Bonnie Patten, Executive Director of TINA.org. “Resorts360 is the quintessential pyramid scheme.”

ResortsPyramid

The inherent issue with all pyramid schemes is that while the structure may make money for those at the top, the scheme ends up disappointing those at the bottom who cannot find recruits. As C. Steven Baker, Director of the FTC’s Midwest Region, has said, “[p]yramid schemes are … like icebergs. At any point most people must and will be underwater financially.”

What the Laws Say
According to the FTC, pyramid schemes are inherently misleading and deceptive and thus in violation of the FTC Act. And while the method of regulation varies, all 50 states have laws that prohibit pyramid schemes. In Washington, where Resorts360 is based, the Attorney General’s office has noted that “[p]yramid schemes are among the most persistent and troublesome rip-offs facing consumers today.”

TINA.org Takes Action
Truthinadvertising.org has sent a letter to Rodger Rutter, founder and CEO of Resorts360, demanding that the company immediately cease its illegal operation. TINA.org has also sent complaint letters to Charles Harwood, acting director at the Federal Trade Commission, and to Bob Ferguson, Washington Attorney General. In addition, TINA.org has contacted the Better Business Bureau, urging that it reevaluate its positive rating of the company. All of this correspondence and other background materials are posted at: http://www.truthinadvertising.org/resorts360.

About truthinadvertising.org
Truthinadvertising.org (TINA.org) is a nonprofit organization based in Madison, CT, whose mission is to be the go-to online resource dedicated to empowering consumers to protect themselves and one another against false advertising and deceptive marketing. We aim to achieve our mission through investigative journalism, education, advocacy, and the promotion of truth in advertising. We are independently funded and do not accept any advertising dollars to support our work.

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