Filed under: Business, News, Web services
FTC sets its sights on BurnLounge
For some time there's been skepticism surrounding the questionable business model of BurnLounge, the Web music retailer meets multi-level marketing scheme. Now it would appear the US Federal Trade Commission (FTC) has been keeping a close eye on the online retailer too. In court documents filed against BurnLounge last week the FTC has accused the Web retailer of running an illegal investment scheme naming, amongst others, BurnLounge CEO, Alex Arnold, and former American Football player Rob DeBoer, one of BurnLounge's most prominent retailers.
According to news reports, the FTC has asked to examine BurnLounge's books in order to determine if more money is made from recruiting new members than from actually selling music. We're betting the FTC won't have too many late nights sorting that mystery out.
For some time BurnLounge has been an outsider in the online music industry, despite high profile supporters such as Justin Timberlake, Shaquille O'Neill and Public Enemy's Professor Griff the underlying business model when it came to selling music didn't match up with its impressive celebrity endorsements. BurnLounge music stores priced songs at a similar level to iTunes, yet in the beginning those songs couldn't even be played on iPods.
BurnLounge's supporters were vocal on forums with their claims of a transformative business model, but most of the time came off sounding like they had been drinking too much digital music Kool Aid. Ultimately BurnLounge is most disappointing because it took a great idea like syndicating music sales to music fans and turned it into a cynical marketing scheme for the benefit of very few.
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Reader Comments (Page 1 of 1)
Ahd Child said 4:55PM on 6-11-2007
I wrote an article about burnlounge and their pyramid scheme:
http://ahdchild.blogspot.com/2007/06/burnlounge.html
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Kelly said 10:23AM on 6-13-2007
It's unfortunate that most people don't understand the concept of BurnLounge and then are forced to believe what is written on the world wide web. Any opinion can be posted without truth or anything to back it up. Let the FTC do their work. Trust me when I say that there will be nothing found on the company that will lead to its closure. When that happens, what will you say? Hopefully you'll jump on board as well and the negativity towards BurnLounge will fall to the side. You have to prune before you can grow.
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Allen Ray said 9:39PM on 6-13-2007
BURNLOUNGE, INC. RESPONSE TO COMPLAINT
BY FEDERAL TRADE COMMISSION
In response to inquiries, Sheldon H. Sloan, attorney for BurnLounge, Inc., today issued the following statement:
“BurnLounge is pleased with the United States District Court Central District of California’s decision refusing to grant the Federal Trade Commission’s request for a Temporary Restraining Order (TRO) and remains committed to compliance with all applicable laws and regulations. The Court’s denial of the FTC’s request is a significant victory, and furthers the Company’s belief that it has conducted its business lawfully. The Company’s business continues uninterrupted and it will defend itself vigorously in subsequent Court hearings.
“Through its unique and revolutionary business model, BurnLounge will continue to afford its customers the opportunity to enjoy sharing their tastes in music and films, while providing an avenue for them to express their entrepreneurial talents.”
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A_Str8 said 7:37PM on 6-14-2007
I wouldn't be surprised if there was nothing found that leads to Burnlounge's closure. It would not be the first time it was ruled that a pyramid scheme company was in compliance with the word of the law. Despite that, it's a dishonest business that takes advantage of the people it claims to benefit. Legal or not, everyone should steer clear of buying a Burnlounge store.
If you need truth and information to back what I am saying, read my blog. My argument is based on knowledge of pyramid schemes, Burnlounge's own written policies and responses, and common sense. I encourage evryone who is interested in Burnlounge to check out all the information themselves and come to their own conclusions. If someone reads all the available info, gives serious thought to BL, and still pays for a store, he probably would have been parted from his money anyway, so it's no real loss.
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Cameron M. said 9:47PM on 6-14-2007
I bet your broke. You should think about selling advertising on your blog site. Then again, if no one cares to read your blog, well, you'll still be broke.
Another business opportunity gone bad. And that's my blog.
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A_Str8 said 3:21PM on 6-15-2007
When I said "read my blog" I was referring to the one in the first post (Ahd Child)
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Burnt by BurnLounge said 9:41PM on 9-09-2007
I am one of those unfortunate people who was recruited into BurnLounge, a scheme whose "leaders" are as duplicitious as the insidious scheme itself. I paid $600 and was told by Bilbro, one of Rob DeBoer's followers, that my independently-produced music would gain exceptional promoting. Bilbro lied to me; my music did NOT get the promoting promised and I have no recourse to recover my $600. The folks I approached in order to recruit into the pyramid, were smarter than I, seeing BurnLounge for what it is---another way for scammers to make money. The presentations, the meetings, the pressure to recruit other unsuspecting suckers, are all classic characteritics of MLMs--Multi-Level-Marketing scams.
Does the U.S. Government, in this case the FTC, make a habit of suing people with no probable cause? Not likely. It will be a good day when BurnLounge is shut down--- then all those lying manipulators will have to go and get a real job.
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