BurnLounge, a site that lets users set up their own music/entertainment download service, is being accused of running a pyramid scheme by the Federal Trade Commission, which has sought a federal court order to close it down. According to the FTC, BurnLounge’s sales pitch promised users they would make a great deal of money if they first subscribed to “product packages,” ranging from $29.95 to $429.95 per year. Users were also promised compensation if they got others to sign up for BurnLounge product packages as well. The FTC calls the practice deceptive because the site didn’t disclose that most of its users lose money. A full hearing will take place June 19 in California U.S. District Court. Release

BurnLounge: The company says it’s still open for business. “Through our revolutionary business model, we will continue to afford our customers the opportunity to allow fans to benefit from doing what comes naturally: recommending their favorite music to family and friends.”