FTC Settles with BurnLounge

  • The Federal Trade Commission (FTC) has announced that one of the operators of BurnLounge, a digital music distribution service the agency had determined was actually a pyramid scheme, has settled charges and agreed to give up $20,000 in ill-gotten gains.

    The FTC charged BurnLounge in June 2007 with operating a pyramid scheme, where consumers were recruited to operate their own online digital music stores -- but instead of selling music, money was made mainly through signing up new store operators at $29.95 to $429.95 per year.

    A federal court ordered BurnLounge to halt its network marketing scheme, and froze the defendants' assets.