Vemma Autoship Shutdown Review By FTC
It's official: the sports nutrition and energy drink company Vemma (Vitamins, Essential Minerals, Mangosteen & Aloe) along with flagship core products verve and bodē has temporarily shut down operations after the Federal Trade Commission allegations were handed down mentioning they were running an illegal pyramid scheme and ordered to cease and desist all business operations until further notice.
All we have to say is wow, what a blow to Vemma distributors, customers, affiliates and members and the entire network marketing MLM industry. Let's try to make sense of and review Vemma getting shut down by the FTC.
Where Did Vemma Company Management Go Wrong – Allegedly?
Vemma, a company who reported earning over $200,000,000 million in both 2013 and 2014, allegedly committed a series of ‘criminal' offenses, according to claims from the FTC report released and delivered on August 26, 2015.
Defendants B. K. Boreyko, and Tom Alkazin were charged with the following MLM offenses as well as Vemma's entire company assets being seized and froze for the time being:
— Promising Recruits They Could Make Up To $50,000 Per Week
— Offering Little Help In Selling Its Products
— Requiring Autoship
— Rewarding Recruitment And Ignoring Product Sales
— Failing To Warn Recruits That Most Vemma Affiliates Will Not Earn Much Income
— Providing Deceptive Marketing Materials To Affiliates
— Having A Compensation Plant That's Confusing, With Many Convoluted Rules And Requirements, With Bonuses That Have Tight Limitations And Restrictions
Vemma has been pitched largely to college students, most of whom believed the wildly exaggerated income potential but wound up losing lots of money.
How they lost money is precisely part of the problem, according to the FTC. To sell Vemma, one must make an initial investment of $600. In addition to that, one must commit to $150 per month in Vemma product purchases. In the industry, that's called “Autoship”, and it's where the prime FTC charge originates.
Vemma's Young People Revolution #YPR
Vemma's marketing philosophy, according to the FTC report, has been to target young professionals or young people. That's why you'd find affiliates visiting college campuses and encouraging students to consider becoming a Vemma affiliate rather than opting for a traditional job.
Promotional materials show young affluent-looking young adults set against a backdrop of jets, fancy cars, and yachts. (You can't buy a yacht for less than a million dollars!). The FTC report claims these materials give the message that substantial wealth is possible with just a minimal amount of work and experience. The report quotes the following snippets from Vemma promotional materials:
“What's possible with a Vemma business? Unlimited possibilities! Achieve goals like financial freedom. If you can dream it, you can achieve it! So if our dream is to get out of debt, exchange the traditional 9 to 5 for our own schedule, Vemma's business opportunity can help you achieve it.
My nme is B.K. Boreyko and a big part of my job here at Vemma is to help people create a full-time income with part-time effort.”
-Vemma promotional materials
The report cites numerous instances of how Vemma gives advice on how to recruit, but virtually no resources on how to sell the product. In fact, it's cited that Vemma actually tells affiliates to give away the product as samples in order to recruit more people.
Here's a different perspective
In the world of multi-level marketing, a lot of things have changed in the past few years. For one, more companies are upping their game and offering legitimate products backed by a fair and rewarding compensation plan. There is now a self-governing association: the Direct Sellers Association, which serves as a measuring stick of sound MLM business practices. They recognize direct selling companies who adhere to their strict quality guidelines and are making great strides helping MLM gain acceptance by a wider marketplace as legitimate.
Vemma is a member of the Direct Selling Association.
Some would argue that many of these companies make much of their income off their Autoship programs. They have solid product lines and fair compensation plans and they do not resort to shady recruitment practices to grow their affiliate networks.
The Vemma case is seen by some to be a precursor to the FTC banning all Autoship programs, no matter the circumstances.
What happens next
For the time being, although the Vemma website is still up and running, their “join now” page has this message:
“Product orders and access to your Back Office are temporarily unavailable at this time. We appreciate your patience.”
Not good. But when the FTC freezes your assets, what choice do you have? The FTC wants Vemma shut down and also want restitution for injured parties, and return of funds, as well as a permanent injunction against defendants for any future violations. We'll all be keeping an eye on this case, as it affects everyone in the MLM industry.