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Why Vemma got screwed by the FTC

Vemma sells healthy energy drinks, like Verve.

And as of August 26, 2015, they’re shut down.

My opinion? FTC is more shady than Vemma. Their reasoning for shutting them down was pretty vague, citing “targeting college kids” as part of the reason.

Are you serious??

Still, I think peddling drinks to your fam and friends is played out, and this video explains why I left months before the FTC did anything:

Overview

So, was it all a scam?

Absolutely not. They had a real product, so let’s play fair. It was the way they presented the company that got them in trouble. Again, I don’t agree with the outcome, I think it’s messed up, I am just going what the FTC said:

“Rather than focusing on selling products, Vemma uses false promises of high income potential to convince consumers to pay money to join their organization,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said.

“We are also alleging that Vemma is an illegal pyramid scheme.”

So where do you draw the line? What about all the other thousands of MLMs that do the exact same thing? Peoples’ lives at stake. Why doesn’t the government crack down on China instead? Morons.

What could have they done differently? Why did the FTC make an example out of Vemma??

David Steadson offered his take:

“For me it may depend on how they’re operating in practice. According to the complaint Vemma has a monthly personal volume requirement to qualify for bonuses, and while this can be acquired from customers, it’s heavily promoted via autoshipping.

Required personal volume (as opposed to required customer volume) can clearly create false consumer demand – people are purchasing for the right to earn bonuses, not for the product itself. That’s clearly pyramiding territory and something I’ve spoken against often.

The defence is that the distributors like and want the products and would buy them anyway, but if this is true then the rule is unnecessary.”

To which, Kevin Thompson, the notorious MLM attorney, said, “Bingo. I could not have put it better myself.”

And, by the way, Kevin Thompson also feels like the FTC got it wrong, per his Facebook page:

“Reaction to the FTC / Vemma lawsuit. It’s my opinion that the FTC got this one wrong. Vemma, with a long history of product value and a A+ rating with the BBB (a near impossible feat), does not fit the “pyramid scheme” mold. This is an important case.”

Thompson also thinks a reason why Vemma was targeted was because of the whole YPR (Young People Revolution), which was scrutinized in Rolling Stone last November. The movement targeted college campuses, started by Alex Morton, who ironically, has moved onto a different MLM company.

And others are just flat-out outraged.

On a scale of 1 to 10, 10 being the most outraged, I’d give this a 10.

This is from someone who identifies himself as Mars of the Launchmen:

“This is why I say that it’s not just our RIGHT to be entrepreneurs…it’s our DUTY to be entrepreneurs.

We have the GOVERNMENT INSTITUTIONS, on ONE side, coercing everyone into being cogs in the big giant machine and the CORPORATE INSTITUTIONS, on the OTHER side, doing the same.

WE ARE NOT COGS DAMN IT!

We are adult HUMAN BEINGS and we have the right to buy whatever we want to, as long as it’s honestly disclosed.

Vemma DOES disclose.

What an obvious P.R. ploy on the part of the…

F = f###in
T = total
C = communists

Stop trying to legislate or regulate intelligence uncle sam.

Let people be STUPID if they want to. The United States is based on people deciding for themselves whether or not they want to pursue an opportunity and RISK losing...”

Woah. Funny thing is, I believe this dude is saying the right things.

Now, some background information on the company for those of you who don’t know…

Vemma stayed hot after being in the game 10+ years. They did $221 M in 2013.

Drawing from traditional Chinese medicine and Western science, each drink product is clinically designed for optimal health and infused with things like plant-sourced minerals and organic aloe vera.

Vemma offers a pleasing array of drinks, so everyone is sure to find one that fits their lifestyle and health goals. Sure, there is a lot of other network marketing companies doing healthy drinks, but Vemma seems to cover the ‘energy drink’ angle the best.

Benson K. Boreyko, founder and CEO, has battled some reputation stuff in the past.

But dude is a killer leader and has a cult following. Also, a stand-up guy (my mentor, Dan Klein knows him personally and can vouch for this).

BBB Rating

I’m told they’re A+. There are complaints, totaling 48 in three years. Hardly an overwhelming amount. They range from delivery issues to problems with the products and billing.

Of the 48 complaints, one third were concerning billing and one third were concerning the products/service. The last third was a combination of other issues.

Vemma officials were called in for a sit-down with the BBB because of concerns raised over their marketing of the distributor program to high school and college students. They have since altered their approach and toed the line with the BBB on that issue.

Opportunity

Buy-in consists of two things:

  1. choose and purchase a starter pack (starting at $499.95)
  2. put yourself on autoship ($74 per month)

Affiliate Packs are:

  • Vemma Affiliate Starter Pack ($499.95). Worth 500 QV. Contains over $548 worth of product.
  • Verve Affiliate Starter Pack. $499.95. Worth 500 QV. Contains over $562 worth of product.
  • Super Charged Affiliate Pack. $579.95. Worth 500 QV. Contains over $640 worth of product .

The purchase of any affiliate pack comes with Premier Club Qualification.

The Vemma Success Kit is included with the Vemma and Verve packs but not the Super Charged. The kit will run you $57.50 if you decide to purchase it separately. There’s a long list of goodies in the kit, which essentially boil down to:

  • lots of print/media materials for sharing, including Dr. Oz report
  • inspirational DVD for you
  • videos on USB presumably to use on your website

Staying Active & Qualifying for Bonuses:

Remaining active requires you to be on Autoship for a 1-Pack of Vemma, or 60 QV. Qualifying for bonuses requires you to up that Autoship to a 2-Pack, or 120 QV. The cost of a 1-Pack is $74 and the 2-Pack is $148.

If you want to get yourself off autoship, you can fulfill these requirements with sales (that’s the “QV” you see above). That would be 50% of your customers’ orders. So, either purchase $148 per month or sell $296 per month, roughly.

Now here’s something simple to focus on: 50% commission. Mind you, that’s 50% commission on Commissionable Volume. In “Vemma Speak”, CV is points…

  • for a Vemma 1-Pack ($74), CV is 60 QV
  • for a Vemma 2-Pack ($148), CV is 120 QV

Earn income by completing cycles. To simply qualify to build a cycle (which is worth roughly $20), you must:

  • get 120 PV
  • sign up one person for each of your 2 legs, and they each need to have 60PV

Then, once you’ve done that, you must also:

  • get 360 points on one leg
  • get 180 points on the other leg

Then you get your $20. Complete as many cycles as you can each week- you’re paid weekly and stray points not used in a cycle can carry over to the next week.

Pros:

  • products are claimed to provide attractive benefits like enhanced immunity
  • products made of high quality raw ingredients
  • energy drinks are big sellers
  • liquid antioxidants are hot
  • Vemma is associated with Dr. Oz, who is marketing magic, even if he’s not exactly endorsing the products

Cons:

  • steep buy-in price
  • tough qualification standars ($$$ autoship)
  • must have strong teams in place to earn money, feels pyramidy

Recap

They say that negative PR is better than no PR at all, but in Vemma’s case there’s just too much of it.

That might be why they ultimately lost the battle with the FTC.

Again, I side with Vemma here. This is a free enterprise society, dammit, why is the government involved in this kind of stuff?

(that’s just my libertarian side of me coming out…)

But either way, I still think there is a better way than MLM. That’s the whole purpose of this blog…to show people a more sustainable way to build a business…

…a business where you don’t have to worry about the FTC crawling down your neck all the time.

If you love their products and drinks, that’s great. I mean it would be great, if they were still around.

There’s a better way. A way that involves no recruiting, spamming your Facebook and Instagram or hitting up family and friends.

Our team is 900+ deep. Hundreds of case studies. I am rocking 5-figure months, using the same coaching.

Wreck your money-chasing MLM habits and feel good about what you do. You can apply for mentorship here.

All love,

-Jeremy

16 comments… add one
  • Seb Brantigan

    Such a shame to see Vemma get beaten down like this – I think the FTC are way over egging the pudding. yes, YPR were full of hype but that was a group of people rather than the company’s fault and most of them have left Vemma long ago anyway. this investigation spells bad news for the MLM industry anyhow. just sucks for everyone involved

    • Jeremy Page

      Agree, Seb. Although I never thought MLM was a spectacular look, we got the most incompetent business in the USA (the government) policing other businesses?

      Like you said, sucks for everyone.

  • Gary Chappelle

    I’m not that familiar with Vemma or their compensation plan. Do they require that you purchase the product in order to earn commissions? If so, that could be an issue. A lot of MLMs have gotten away from that and allow affiliates to qualify for commissions (usually by passing up a certain number of commissions first), without ever having to actually purchase a product.

    • Jeremy Page

      Could be part of the problem, but you said it…many MLMs do this, why does Vemma get screwed?

      Could it have been avoided? Sure, as someone put it:

      “Required personal volume (as opposed to required customer volume) can clearly create false consumer demand – people are purchasing for the right to earn bonuses, not for the product itself. That’s clearly pyramiding territory and something I’ve spoken against often.”

  • Kate Kowalczyk

    Actually, I don’t agree with your statements. Most people are not successful in network marketing, because most people are not willing to work and invest in their personal growth to grow and succeed. I used to own a small business shop for 7 years, barely stayed above water, and was forced to close, without ANY return on my initial $120,000 investment. I became a professional network marketer 3 years ago, build a network of 4000 people, and no one is fighting for scraps. Everyone can do this when ready to actually work.

    • Jeremy Page

      Sorry your shop didn’t work out, and glad your new path has found success. I’ve also had success with MLM, and, as someone who isn’t a stranger to work, still feel like there is a better way.

  • Woody

    I think this is a industry problem not a Vemma problem. I think they need to use real income disclosures from last year statistics. No fluff and don’t show off big checks across stage or fancy lifestyles. So you can’t get your company in trouble. Cause you can go to any company out there and find promoters selling lifestyles and cars and big checks. Even some flat out lying about income.

    And some stating the company promoting it. Well its kids promoting it they love energy drinks. So kids will were showing it to kids and I am sure things can be promoted bigger then it should have if that makes sense.

    I was a product user and loved the Vemma product. And like BK so very sad this has happened. I hope they can prevail cause if its considered a pyramid… What about all the other companies that use the binary comp plans??? Are they all pyramids too?

    I think Vemma is a legit company that just got caught taking eye of ball for a bit. Not taking care of income disclosures and then snowballed bigger. But like I said all companies have promoters that go over board but you have to keep your eye on it. Got to keep promoters in check.

    Not sure I said all this how I wanted it to come across but this is actually a big deal.

    • Jeremy Page

      Woody, I liked your post. Agree with most of it. I also think they were singled out because of the excessive publicity they were getting for frat-boy-esque promotion on college campuses.

      Which is absurd.

      • Woody

        I know Vemma is legit but if found pyramid scheme hmm I do not know what is legal anymore!

        I agree I think they got targeted. And you reason makes sense. Think they picked wrong company. I think they are one of the good ones. Are they perfect? Hmm who is.

        But you think they could have warned company and they could have fixed that. If this promoter was so bad or out of line.

        Do you think they are testing this to see if they can prove binaries pyramids? Like they tried with Amway years and years ago. Maybe I am way off base but came to mind.

        I really do believe Vemma is legit. I to like BK and actually got to be lucky enough to have lunch with him. I think he is a great guy and father. I hope it works out.

        Fantastic products too why would their autoship % be so high? Hmm maybe cause people liked the products. I did ;)

        Sorry for rambling on. I really feel this an important case could change the Mlm industry.

        And feel for the Vemma family.

        • Jeremy Page

          Yep, I feel for them, too.

          I still think the industry is flawed, and that’s partially why I’ve tapped out on gone in a different direction.

  • viaj

    Lol its not messed up, it was a pyramid scheme you brainwashed idiots

    • Jeremy Page

      Your content is a lil aggressive lately, what’s irking you?

  • Rob

    I think the deeper plan from the FTC is to eventually go after ALL Nutritional companies so they along with the FDA can take complete control. Destroy capitalism and bring in CHANGE, oh, I mean socialism.

    • Jeremy Page

      More shocking things have happened.

  • Tony.

    I am not opposed to MLM, but I would like to see a single MLM system that can stand on it’s own 2 feet by a person just selling product and not be forced into recruiting. If the products are that good a mperson should be able to climb the ranks on product volume alone and not depend on recruiting. Veema was heavy into recruiting.

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