About a month ago, the Federal Trade Commission dropped a bomb. I’m not sure if it made a lot of news, but I had some friends who saw it and they emailed me.
The FTC halted Vemma alleging it is a pyramid scheme. They cite that the scheme made $200 million in 2013 and 2014.
Remember the Ice Bucket Challenge? Well that made $100 million dollars. So if the FTC had acted a couple of years earlier, consumers would have been able to donate four times as much money!
That’s a terrifyingly sobering fact.
What’s worse? There are around 1400 companies using the same template to bilk consumers of $30 billion hard-earned dollars a year.
We can get Kim Kardashian and Bill Gates involved in dumping ice over their heads for a good cause… but, we can’t get the FTC to shut down a scheme operating in the public eye costing consumers much more money in a timely manner?
I’m all for ice bucket challenges (when done safely). It’s fun and raises some awareness. However, it seems to me like it is buying paint for a house that’s about ready to collapse. Maybe we should fix the structural problems first?
How Could You Have Known if Vemma was a Scam
Well two years ago, I wrote about the Vemma scam. I’ll toot my own horn for 45 seconds… but only so I can embed one of my favorite videos.
Here’s the immortal Dennis Green:
“They are what we thought they were!”
You didn’t have to take my word for it though, because I pointed out that the FTC punished Vemma’s CEO BK Boreyko in the past.
It sounds like the Saturday Night Live Weekend Update skit called “Really?”
- Really, FTC. You really didn’t think that someone you cited in the past might be worth keeping tabs on in the future? Really?
- Really, FTC. You publish guidance that MLMs can be pyramid schemes and you didn’t think that maybe something might be up, given the CEO’s history? Really?
- Really, FTC. I’ve been writing about these juice MLM scams since 2007. Vemma was around back then. So you decide to do something in 2015 after consumers lose $200 million per year? Really?
I should add that it wasn’t just the FTC that alleged Vemma was a pyramid scheme. A judge ruled they can’t run as an MLM. I found this quote in particular interesting: “Some Vemma material also contains representations the Court would characterize as ridiculous — bordering on absurd — such that a listener could not reasonably be expected to believe them.”
I suppose that Vemma can sell it’s products in stores. I really hope they try. I wonder how many people are going to reach for nearly $3 energy drink vs. the buck for all the other brands out there.
Much like the FTC, I’m a little lost. Should I be optimistic that another domino has fallen? Should I be pessimistic that there’s still 1400 more left to go?
Taking the first step seems to only remind me how long the journey is. Now if you’ll excuse me, I’ve got some ice to dump on my head.