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If it's bogus, does that mean illegal?

IANAL

Not necessarily. I believe that the rule of thumb for this sort of thing is that the company must produce something like 70% of its profits from actual product sales. I want to say that this is based on a ruling in favor of Amway.

Regardless, the only real options I can think of are to contact your DA's office or your local news' consumer complaint division (assuming you have one).
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Bitt Faulk