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Vemma to Bring MLM Scams to an End?

December 4, 2015 by Lazy Man Leave a Comment

In August 2013, I asked Is Vemma a Scam? Two years later, in September 2015, the FTC seemed to answer me by halting Vemma as a pyramid scheme.

Dear FTC, please add to my cover letter that I have a history of recognizing scams two years before you do. (I’m joking.)

A little while ago, someone left a comment on my website saying that Vemma was back up and running. I was quite surprised. How can this be? The FTC shut them down, right?

Before I get to how they came back and the ramifications of that, allow me to give a very, very brief introduction into MLMs/pyramid schemes.

The first question people ask is, “What is the difference between the two?” Unfortunately, even the NY Times isn’t quite sure. They correctly point out that it is impossible for a consumer or potential entrepreneur to know because they don’t have access to the company’s bookkeeping to know the difference.

It is generally considered a sign of a legitimate business if they have more sales volume of products to people outside the business (the public) than to people in their recruited hierarchy/team/pyramid/downline (these are different terms representing the different connotations when referring to the exact same thing).

This comes from these FTC guidelines:

“Not all multilevel marketing plans are legitimate. If the money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan. If the money you make is based on the number of people you recruit and your sales to them, it’s not. It’s a pyramid scheme. Pyramid schemes are illegal, and the vast majority of participants lose money.”

In short, selling to customers is good… building a group beneath you is bad. I find it strange that the FTC seems to be okay with the bad as long as it is balanced with good. To me, it’s almost like saying, “Well he robbed a bank and that’s bad, but he gave the money to charity, so we are okay with it.”

The FTC guidelines are interesting in and of themselves as they put the burden on the consumer/entrepreneur in determining if a company is an illegal pyramid scheme. The next time you get a speeding ticket, try using that logic with the police officer and see how far it gets you. Here’s a helpful start:

“Officer, I saw the guidelines posted on the speed limits, but I made a judgment call that they might not be accurate and proceeded to drive at a speed that I found most beneficial to me.”

The point is, “When did it become an individual citizen’s call on whether an activity is legal or not.”

It is no wonder that NY Times is confused. I don’t think I’ve seen a similar situation in any other crime/industry.

How’d Vemma Come Back?

Vemma, the FTC, and the courts got together to try to work out a system that would allow Vemma to run a legitimate MLM rather than pyramid scheme.

Vemma and the FTC went back and forth quite a bit as noted in the conclusion of BehindMLM’s analysis. The FTC wanted sales volume from recruited volume paid only if a sales person made 51% of their money through sales to people who are not part of that recruitment hierarchy. In short, they appear to be enforcing their guidelines and making sure that sales people are selling product, not a pyramid scheme of selling a business opportunity.

Vemma tried to work around it, but the regulator and the court appear to have firm until Vemma agreed to what has now become known as the “51% rule.”

Specifically Vemma’s Compensation Plan states, “You will only be paid on the volume in your organization if your organization’s sales to Customers are at least 51% of the total sales for your entire organization.”

This this safeguard (and probably quite a few others) Vemma was allowed to resume business.

The “51% Rule” Changes the Game

This 51% Rule is a game changer for the MLM/pyramid scheme industry. There is a good Seeking Alpha article, Did The FTC Just Shape The Future Of Multi-Level Marketing?, that recognizes this.

The top people at every MLM that I’ve ever looked at make huge amounts of money, anywhere from 500K to multiple millions a year. I’ve always contended that these people are clearly running pyramid schemes according to the FTC guidelines, because some 99+% of their money comes from the recruitment hierarchy, not selling product to the general public.

As I understand it, these people can’t exist in Vemma anymore. Their income would be cut from hundreds of thousands of dollars to hundreds of dollars. These top earning people often switch MLMs to make more money. They aren’t going to stick around with 99+% of their income being taken away. They’ll move to Jeunesse, Nerium, or It Works and bring their pyramid/downlines with them.

As I covered in the article, Is Every MLM a Scam?, MLM companies fight for distributors. There are many lawsuits of a MLM company poaching distributors of another MLM company.

It looks to me that this rule is going to really hurt Vemma’s ability to compete with those MLMs. There was speculation in the Seeking Alpha article that they only agreed to this so that they can sell off their existing inventory. This makes sense, especially with Vemma’s “Thank You” Pricing and marketing campaign.

From what I’ve read in comments on some MLM sites, the industry is pretty up in arms about this. A pro-MLM author, Scott Smith, on MLM.com even proposes a workaround to subvert the FTC:

“If the ‘51% rule’ becomes an industry-wide practice like the 70% rule, companies may register each new member as a customer, and then transition them to distributors only when they begin to recruit. From an operational perspective, this isn’t difficult to implement. But it requires a mindset that may be difficult for many distributors to adopt. It adds another step in the recruiting process. It slows things down in the process of building an MLM business.

It is especially problematic to advocate this kind of policy now that MLM has become an e-commerce industry. Before the Internet, distribution happened face-to-face and the recruitment side of a distributor’s business occured naturally over time. Today’s distributors often allow prospects to self-register through an online shopping experience and perhaps never or rarely interact face-to-face with downline distributors. Technology has made recruiting a smooth, fast, streamlined process; adding the 51% hurdle could slow the momentum that technology has fueled.”

I suspect that if companies try to subvert the FTC by playing games it’s only going to lead to more lawsuits. I don’t imagine the courts will look favorably on such tactics. They would become low-lying fruit for the court to show that a company is using deceptive practices to subvert regulation. Also, the people at the top would have to have a lot of customers who want to remain customers to offset 500K or more of income in their downline/pyramid.

The second part of the quote shows how FUBAR the “industry” of MLM has become in recent years with the internet. Recruiting people is as easy as allowing a self-registering person to shop online? People never meeting with their direct downline? In the past, MLM got a pass partly because the people in the upline were supposed to train their downline to be good salespeople. This “streamlined process” eliminates that. A legitimate, non-pyramid scheme company, could do the same thing but put official training materials online and offer a straight commission program. That would be clearly better for everyone involved.

(Sorry, but I couldn’t resist that second part.)

The last point I want to emphasize here is that the 51% rule is really nothing new. It’s been in the FTC guidelines mentioned above for years and years. This strict enforcement of it specific to Vemma is new, but any legitimate MLM would appear to have needed to comply with it for years now (whether strictly enforced or not).

The End of MLM/Pyramid Schemes

Perhaps the best quote from Scott Smith of MLM.com was this:

“And who is going to be the first to implement a 51% rule? To illustrate the problem this creates, let’s say I am a company who trusts the FTC to mean what they say and I bravely comply with the 51% rule as if it were law. I will be destroyed by my competitors. Unless every company is doing the same thing no one will want to work for the one company that has implemented the 51% rule.”

Isn’t it an interesting choice of words, “a company who trusts the FTC to mean what they say”? It’s seems like he’s saying that companies have a reason to mistrust the FTC. If you are running a legit company, you should have no problems with the FTC. If you are running a shady pyramid scheme and looking to subvert their regulation, perhaps you develop a mistrust of the FTC.

This quote illustrates the pickle that MLM companies now find themselves in, which is why I think it will be the beginning of the end of MLM/pyramid scheme scams.

Any legitimate company would jump at the chance to show themselves legitimate and volunteer to implement the 51% rule. It’s free insurance that makes the FTC extremely unlike to bring a pyramid scheme suit against you. There’s no reason in the world why they wouldn’t take the opportunity and thank their lucky stars that they have it.

If a company doesn’t volunteer to comply with this 51% rule and strictly enforce it, one is left to conclude that they aren’t a legitimate company. If the police ask you to come out with hands up and you didn’t do anything wrong, you comply with the innocuous request. If you fight it, attempt to subvert it, or fail to comply, you are going to be assumed to be guilty.

MLM companies find themselves in an interesting pickle now. They can comply with the 51% rule to show their innocence and risk being destroyed by competitors. Or they can fight/ignore the 51% rule which leads to the obvious conclusion that they aren’t legitimate.

I have great confidence that MLM companies aren’t rushing to declare their legitimacy by strictly complying with the 51% rule. If they aren’t going to declare themselves legitimate, consumers/entrepreneurs should run away as fast as they can.

This also puts the Direct Selling Association (DSA) in a pickle. The DSA is an organization of MLM companies that lobbies congress and attempts to self-regulate the MLM space. If the DSA doesn’t require all its members to strictly comply with the 51% rule, it becomes clear that they are unfit for self-regulation.

It looks to me like MLM, as it exists today, is a house of cards, and the main support just got knocked out from underneath them.

Filed Under: MLM Tagged With: 51% Rule, Vemma

Everyone’s Voice Had Been Silenced! (Including Mine!)

September 20, 2017 by Lazy Man Leave a Comment

[This post was literally 6 months in the making. Thanks to recent events and the timely Blog Action Day‘s focus on Raising Your Voice, it was time to finish it and get it published. The dreams that I mention below 100% happened… they are not a literally device.]

It was a few days past the Ides of April (2015), which for me was day three of recovering from a stomach bug. I was feeling good and even eating almost regular meals. Everything was getting back to normal except for the dreams.

It started with:

I had a dream that @Beck to came to my house to jam a bit. In other (not-so) news, I have weird dreams when I'm sick.

— LazyManAndMoney (@LazyManAndMoney) April 14, 2015

Even in dreams Beck is really, really cool. Unfortunately, Twitter didn’t give me the space to mention how Beck windsurfed into my driveway on wheels.

Silenced
Silenced via deviantart

The next day I had a fantastic science fiction dream about how aliens created life on earth and only a select few knew about it. If I was a fiction writer, it could have been the next Frankenstein. Then I remembered listening to talk radio about Scientology earlier in the morning. Suddenly that dream made a lot more sense than the Beck one.

[Fast-forward to April 16th…]

I just woke up from the third dream and I’m typing as fast as I can remember it. I know it’s important. I’m going to chalk up the part of Gronk paddling me and some unidentifiable friend in a small boat to me wearing my Do You Job Patriots jersey that day. (This isn’t the important part.)

There is some sort of pizza celebration going on in the city. Everyone had reason to be excited. However, when they opened their mouths, they found they couldn’t speak.

The mayor’s voice… silenced. The pizza shop owner getting inducted to the Pizza Hall of Fame… silenced.

It was exactly the plot of the Emmy Award-nominated Hush episode of Buffy the Vampire Slayer but without the creepy Gentleman to give you nightmares for weeks.

People with important things to say should be heard. They should not have their voices silenced.

Instead of listening to these important things, we are focused on what Kim Kardashian had for lunch or whether a damn dress is blue. (It would be fair to question the importance of announcing a pizza celebration. Cut me a little slack, it was a dream that I had after a stomach bug where I couldn’t eat. “Importance” is relative.)

I’m typing like mad because I realize it this was just like the Scientology dream above. It was based in reality.

[Returning to October 16th…]

The reality is that I live in world where people are ROUTINELY silenced. It’s not China or North Korea, it’s the world of people who try to inform the public about pyramid schemes that call themselves multi-level marketing.

I first noticed MLM sites and articles disappearing around 2010. One of the popular websites that exposed MonaVie’s scheme was called Purple Horror. One day all the content was erased and it was suddenly a website supporting MonaVie. Of course, MonaVie also tried to silence me by claiming that I couldn’t use their trademark in my website’s metadata. It was even covered by the consumerist. Fortunately it was unsuccessful and MonaVie was foreclosed upon.

In another case, Vemma had silenced a website called YPR Pariah. All the useful content was erased and was instead replaced with a lawyer-speak statement of, “Any disputes or misunderstandings between the publishers or authors of this blog and Vemma Nutrition Company have been resolved to the satisfaction of all involved.”

Truth in Advertising covered the silencing of YPR Pariah here.

Fortunately, this story has a happy ending: The FTC shut down Vemma a few months ago.

Other schemes have silenced critics and still remain active. I’ve covered Nerium who seems to have silenced extensive work by Bare Faced Truth.

Finally, there’s my voice. I can still write about many MLM schemes. There is one that I can’t. So instead I’ll simply point you to my statement on LifeVantage.

Now where was that mayor? If I can’t use my mouth to speak my mind, I might as well use it to eat some pizza.

Filed Under: MLM Tagged With: MonaVie, Nerium, Rodan and Fields, Vemma

So the FTC Says Vemma is a Scam…

September 25, 2015 by Lazy Man 2 Comments

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.

Filed Under: MLM Tagged With: Vemma

MonaVie Mynt is Coming For Your Kids

April 13, 2014 by Lazy Man 74 Comments

As regular readers know, I find it interesting and amazing that multi-level marketing companies still exist to scam people in 2014. It’s been more than 25 years after Money Magazine called the scam a mess looking to take in the gullible. Regular readers also know that I learned about MLM from writing about MonaVie, when one of their distributors tried to get my wife to buy a $45 bottle of juice.

MonaVie Mynt is Coming For Your Kids!
MonaVie Mynt is Coming For Your Kids!

I’ve gone on to exposing quite a few of these companies and their fraud. A few years ago, I covered one called ViSalus that was getting press in that community for growing quickly (today the pyramid has imploded and they are a quarter of what they were). ViSalus was a little different than other MLMs I had written about. They got a lot of young people, around ages 23-27 and they seemed to be the top marketers. ViSalus put out a a bunch of misleading information about their pyramid aimed at that young market.

With ViSalus’ implosion, it seemed like many of the brainwashed young distributors didn’t learn and jumped to Vemma’s Young People Revolution. Vemma had taken the attack to get your kids to another level in trying to brainwash them into believe they were part of some kind of “revolution.” In fact, it looks a lot more like the Young People Revolution is conning them into a pyramid scheme. I don’t see how it is any different than the FTC and even the FBI and Department of Justice investigating a similar MLM, HerbaLife, for recruiting people into a pyramid scheme.

I’ve noticed that Vemma seems to have taken things a step further and going to the college campuses. Maybe ViSalus did the same, but it didn’t seem as obvious to me. Nothing like convincing college kids with no income that they should be spending it on a $40 bottle of juice and/or a $75 case of 24 energy drinks.

However, this article isn’t about this ViSalus or Vemma. It’s about how MonaVie has decided to copy them to create their MonaVie Mynt program as a way to market to these young adults.

What is MonaVie Mynt

For a couple of weeks, MonaVie had a great page explaining MonaVie Mynt. They’ve since taken it down, but others on the internet have captured most of the important information. A simple Google search of this phrase shows:

“mynt™ is completely backed by MonaVie. It’s not a new company or a separate entity of MonaVie. It’s simply the brand name of MonaVie’s movement to attract those in the Gen C crowd and to create the next chapter in direct selling. mynt is a community of like-minded individuals who want to have fun!”

MonaVie further defines Gen C as the connected generation, those “who are constantly connected to family, friends, businesses, and interests through the latest technology” and primarily between the ages of 18-34.

So as you can see there’s really nothing of substance to mynt, it is just a bunch of marketing hype to group some people (Gen C) and segregate others (older generations). Here’s some of MonaVie’s brain-dead marketing from their blog:

“mynt is kind of like a Harley Davidson gang… but without bikes… and on Facebook.” — Stephen Jones, MonaVie senior director of marketing, North America

“mynt is like throwing a pebble in the water; one simple act can create a #movemynt.” — Calli Mott, MonaVie director of North America

“mynt is completely innovative. It will change everything. Again.” — Katy Holt-Larsen, VP of North America

“mynt is not ‘the next big wave.’ Waves crash. We’ve created a movemynt!” — Mauricio Bellora, MonaVie president and CEO

These marketing quotes tell you nothing about mynt, often using undefined terms like “movemynt” to try to explain the undefined term “mynt.”

It’s hard to call mynt noteworthy when it keeps everything the same including the compensation structure. While on the topic of that compensation plan (PDF), there is an income disclosure statement from 2011. I guess it would be too much work for MonaVie to make 2013’s numbers available… and I guess the same about the 2012 numbers. I’d see if they’d hire me, but it seems like they filled their quota of lazy… putting me to shame.

I should mention that mynt does have some new products. In particular they have two new kits of products. One kit costs $1050 and earns 600 PV (personal volume). Another kit costs $550, but only earns 250 PV (personal volume). Earning money is largely dependent on the PV of the people you recruit meaning that they are likely to push recruits to buy the $1050 kit to earn the 600 PV. After all, if you can recruit two people to buy that kit (1200 PV points) it is near the same as recruiting FIVE people who buy the $550 kit (1250 PV points). In fact, they even “bold” that buying the more expensive kit “Keeps you Active for 2 months!” This is a good time to remind that the FTC says MLMs with Required Minimum Purchases to Earn Commissions are Pyramid Schemes. Pushing this purchase as a way to stay in the business clearly is a red flag.

My analysis of the compensation plan above is purposely very simplistic, the compensation plan is so complex it would require more than a dozen blog posts to explain it. This complexity is another red flag of an illegal pyramid scheme.

The mynt products that MonaVie introduced themselves are the basic lotions and potions that are known throughout the industry. They have their protein shake, just like HerbaLife, ViSalus, Shakelee, One 24, Reliv, and a dozen other MLM companies. There’s a “Burn” product based on green tea that can be purchased very cheaply (especially as the healthy drink itself) elsewhere. Then there is the “Cleanse” product… scientifically a load of bovine excrement. There’s a “Build” product of amino acids… which you can get in your whey protein replacing the need for the shake product – killing two birds with one stone. Then there’s a “Pro-bio” probiotic product, which claims to help your digestive system… if you have digestive problems that might be something, but living a healthy life means you don’t need to improve blood sugar control and those with lactose digestion problems have a solution called Lactaid that is proven. Finally there’s the energy drink… similar to the what Vemma’s Verve that’s been pushed to their Young People’s Revolution.

At the end of the day, there’s really nothing to see here… certainly nothing close to spending a $1050 on. I would do a more in-depth analysis of the value of the kits, but MonaVie hasn’t given enough information to go on. For instance the expensive kit contains two bags of shake mix. How many pounds are in a bag? They don’t say, right now.

At the end of the day, mynt appears to be a pile of empty marketing, with even more red flags of it being an illegal pyramid scheme than before, and some horribly priced “me too” products that don’t even contain the juice the company was founded on. If this was a fiction novel, no publisher would take it because it simply is too unrealistic.

MonaVie Mynt has one thing going for them. They are focusing on young adults, who presumably haven’t been burned by MLMs/pyramid schemes previously. Most likely their friends haven’t had the experience of getting burned yet either. More and more it looks like MLM companies have churned through too many people and everyone who is not brainwashed knows it is a scam. It seems like they are admitting that their best plan is to brainwash them young before they know any better.

The MonaVie Mynt program is launching tomorrow. My bet is that Generation C will be connected and intelligent enough to say, “MonaVie, go stuff yourselves! We are smarter than to fall for your artificial hype and marketing gimmicks.” Let’s pray I’m correct.

Filed Under: MLM, MonaVie Tagged With: MonaVie, Mynt, Vemma, ViSalus

Is Vemma a Scam?

October 7, 2018 by Lazy Man 65 Comments

When I wrote about the MonaVie Scam more than 5 years ago, I was amazed to get over 6,500 comments. Over time, the indisputable information from dozens of researchers lead me to make the easy conclusion, “MonaVie is a grossly overpriced product, with little nutritional value, wrapped in a poor business opportunity that appears to be illegal pyramid scheme, fraudulently supported by nonsensical ‘scientific’ studies, and illegal medical claims from its paid salesforce.”

To make a long story slightly shorter, these articles brought in MLM distributors to defend their industry. One challenged me to come up with something bad about ViSalus. It was pretty easy to show ViSalus was a scam as well with the terrible product, terrible marketing, and the founder running what the FTC guidelines quite clearly state is a pyramid scheme.

What does all this have to do with Vemma? In the past couple of months, I’ve been getting comments about Vemma being the next big MLM scam. In particular, commenter Jeff in that ViSalus article has been giving updates of his friend adventures in ViSalus, from when he got a BMW to when he lost his business because the people under him quit when they couldn’t recruit others. Jeff explains that his friend left ViSalus and joined Vemma and how MLM has managed to destroy just about everything important in his life. Jeff also tells of how his friend has been three other MLMs and lost $10,000 in them, but what caught my attention is that the latest, Vemma, is “specializ[ing] in recruiting college and high school students to sell their energy drink” and “train[ing] their distributors how to sign up high school students without their parents knowing.” I share his conclusion: “That’s a special level of MLM scumminess.”

It’s interesting MLMers are going back to Vemma. It’s essentially the same juice scam that MonaVie was, but with Mangosteen as its “special ingredient” instead of acai berries. It’s still an obscenely expensive product that is a dollar an ounce or more… . I’m sure Vemma distributors are going to hate this comparison. However, these posts have a way of getting very long and spending a lot of words on the topic isn’t worth it. Most importantly, it’s worth noting that juice, in general, is not healthy. There’s really no need to split hairs with Xango, Xowii, Nopalea, Jusuru, MonaVie, Zrii, and Vemma distributors about the merits of their particular juice scam. If you don’t believe me, Dr. Johnny Bowden debunked them all years ago. File this article away in your memory, because we’ll be coming back to it later.

Sorry for the lengthy introduction about why I am writing the article. MLM distributors always claim that I pick on companies to personally profit from them and it couldn’t be further from the truth. It doesn’t take a rocket scientist to figure out that spending nearly $40 on a small bottle of juice and getting tricked into a scheme that costs nearly everyone thousands of dollars is exactly the kind of topic that attracts consumer advocates like me. If you are a distributor and don’t want your company picked on, grab your pitch fork and run to Vemma’s headquarters for fueling the fire.

Vemma’s Product and Marketing Scam

Remember that article from Dr. Johnny Bowden that I mentioned above? If you haven’t read it, give it a read now, I’ll wait. Done? Good. Now you are prepared to understand why Vemma’s marketing of ORAC scores is complete bunk. Vemma brags about 4800 units of ORAC per 2 ounce serving, but a small amount of cinnamon, oregano, or cloves can do the same job. They brag that “Vemma boasts superior antioxidant protection…”, but fail to mention that research is showing that antioxidants are simply not helpful as science has hoped. However, it’s a big industry, and companies like Vemma need to sell their $37 bottle of juice.

It gets worse as Vemma uses what I call the Total cereal advertising scam. Remember those funny commercials in the 80’s that it would take X bowls of Brand X cereal to equal the nutrition in one bowl in Total? If not here’s one example starting George Jefferson (okay it was the actor who played George). The logic is that brand X may only have 25% of the RDA of Riboflavin, so you’d have to eat 4 bowls to get the 100% in Total. Lost in the marketing is that you might end up getting 20 times the vitamin C, 5 times the fiber, 3 times the protein and a bunch of other good things in those 4 bowls of another brand. Raisin Bran could have pulled the same marketing trick on Total saying that you need to eat 3 bowls of Total to equal the fiber in a bowl of Raisin Bran.

Now that we’ve established the ridiculousness and deceptiveness of this type of advertising here are some examples from Vemma’s marketing page:

  1. “55 eggs to equal the amount of Vitamin D”
  2. “62 oz of cheddar cheese to equal the amount of Vitamin B-12”
  3. “61 cups of tomatoes to equal the amount of Folate”

That sounds impressive, right? Let’s take the first one, the 55 eggs for the vitamin D in Vemma. If you look up Vemma’s Supplement Facts (note that they aren’t Nutritional Facts, because it’s marketed as a supplement, not a food or juice), you’ll find that Vemma has 1,000 IU of Vitamin D per 2 ounce serving (16,000 IUs per 32 ounce bottle). Sounds incredible until you realize that this Liquid Vitamin D has 2,000 IU per drop and is $20 for 900 servings. That’s 2.2 cents per serving for double of what’s in Vemma. Vemma is effectively putting 8 drops, or less than 18 cents worth of Vitamin D supplement in every bottle. You can bet that Vemma is getting better bulk pricing than we are on Amazon.

Vemma has 15 mcg of Vitamin B-12, per 2 ounce serving (that’s the 62 ounces of cheddar cheese). Amazon has 100 lozenges, with each having 2,000 mcg of B-12 for $8. One lozenge alone would be enough to supplement 133 servings (8 and a third bottles) of Vemma.

I shouldn’t need to go further into these examples. The bottom line is that a good multivitamin could supply all this for a fraction of the cost. Notonly that, but you shouldn’t be buying vitamins and supplements anyway.

One final product thought , in all the food mentioned there, there’s a lot of calcium (cheese, spinach, etc.) and I couldn’t find any on the Vemma label (though Vemma does list that there’s calcium in their FAQ). Score one for the food.

Vemma’s “Paid at Home” Scam

One (or more) Vemma distributor(s) has copied the Income at Home Scam that was covered by PT Money (and of course the previous link in extensive detail). These people created a 85% for example (PDF).)

Here I’ll take a break an address a big problem with this disclosure. It uses the words “generate a profit”, when it should say, “earns an income.” The numbers used are clearly from Vemma’s Income Disclosure Statement (PDF). No MLM even attempts to track distributor profit, because they don’t care about these expenses… they vary from distributor to distributor. So those people earning an income between $667 and $1326 will likely end up spending more than that in juice, conferences (fees for the conference, hotel, flight, food, etc.), training materials for themselves and their downline, samples, and other associated costs. That’s not a profit, but a loss.

So to put this in perspective, let’s imagine 100,000 people in at a football stadium and they all decide to become Vemma distributors. If we apply the MonaVie’s 85% inactive number, since Vemma doesn’t seem to give their own, only 15,000 would make the income disclosure statement at all. From there some 75% would earn an income between $667 and $1326, which likely isn’t profitable after expenses. Of the original 100,000 you are now left with 3750 people or 3.75% that might be actually generating a profit for their time spent. I would classify the other 96.25% as people who are wasting their time not generating a profit – a minimum wage employee at McDonalds would be more profitable.

And if you are looking to replace your own income, your odds are much, much lower – obviously depending on your income. The Paid at Home site mentions that this “require[s] hard work, desire, diligence, leadership and talent.” So why anyone would want to take such an incredibly risky gamble to hopefully get to where they already are while still working hard is beyond me.

Finally don’t get me started on how the website displays a “Positive SSL Secure” logo on its website without actually using SSL. Can you say positive fraud? I thought so.

Vemma’s Business Opportunity

I went into this in more detail than I originally intended in the Paid at Home section above. That example should give you a good idea of what to expect. However, I suggest you read this article on the business of MLM to truly understand how bad of a business opportunity Vemma, an MLM, is.

Vemma’s Young People Revolution Scam

As mentioned in the beginning, Vemma is now purposely targeting high school and college kids. The idea is that these minds are easy to mold and they likely haven’t been subjected to MLM scams before. As MLMs churn through millions of people each year, the older generations have already been burnt, they need fresh blood and the next generation or expanding to a new country is the only place to get it.

The aforementioned ViSalus really went after the youth market with it’s The Pyramid Thing video essentially flaunting their scheme. However, in the past year (as I write this in August 2013), ViSalus has lost half it’s distributors from a year ago and haven’t been able to replace the churned people.

You don’t have to do any real research to figure out that Vemma’s Young People Revolution is an illegal pyramid scheme. The first 30 seconds of this video makes it quite clear:

“The person who invited you today… is not trying to sell you two cases of anything. I can guarantee you that. They are just trying to present you with an opportunity to get you out whatever financial situation you are in into the one you want.”

Why does that make it clear it is an illegal pyramid scheme? Here’s the FTC words:

“Not all multilevel marketing plans are legitimate. If the money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan. If the money you make is based on the number of people you recruit and your sales to them, it’s not. It’s a pyramid scheme. Pyramid schemes are illegal, and the vast majority of participants lose money.”

So yeah, the Young People Revolution isn’t going to bother you by being legal and selling a product. Instead they are going to focus on recruiting you into an “opportunity” where the money you make is based on the number of people you recruit and your sales to them. Boom illegal pyramid scheme.

You’d think that the FTC would shut down Vemma, but they simply don’t have the federal funding to fight these companies as the New York Post points out. The FTC can’t even fight Free Credit Report due to financial constraints.

Because of this, there’s a big chicken vs. egg problem that allows these schemes to continue. The FTC only acts when a number of people complain they’ve been defrauded by these schemes. People believe that if the schemes were fraudulent they would have been shut down by the FTC long ago and don’t waste their time complaining about it.

Pyramid Scheme?

A Vemma distributor in the comments wanted to make the point that the products are a good value. Specifically Doug Boyd wrote:

“Its easy to toss the word pyramid around and I can tell you the real reason why all these companies are NOT pyramid schemes; they have a real product and in the case of Vemma’s Verve there is a demand for it.”

MLMers tell themselves that a company with a product can’t be a pyramid scheme. They are wrong and simply lying to themselves. The FTC has an educational page about MLMs and pyramid schemes, which says:

“Not all multilevel marketing plans are legitimate. If the money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan. If the money you make is based on the number of people you recruit and your sales to them, it’s not. It’s a pyramid scheme. Pyramid schemes are illegal, and the vast majority of participants lose money.”

Note that there is no mention about whether the product is real. The question of demand is important though. Are the people making money from recruiting people who sell to those recruits (i.e. making money from the downline) or are they selling the product to the average person not involved in Vemma? It’s not likely you’ll get that data from Vemma. If you see them tout someone making a million dollars, they must really be hustling to do those sales outside of Vemma or it would seem to be a pyramid scheme according to the FTC.

Vemma’s Excessive Product Prices

To understand why pricing is important it helps to read: The $100 Pen Pyramid Scheme. I’ll wait. Back? Good.

So now that we understand why overpriced products can lead to pyramid schemes, it’s worth looking at Vemma’s pricing of the Verve product. I did a little math using the publicly available and well-known Amazon.com website (pricing as of 2/3/2014):

  • Red Bull Energy Drink, 8.4-Ounce Cans (Pack of 24) – $38
  • 24- 8.3 Oz Cans Vemma Verve Bold Energy Drinks – $65

The price for Vemma is almost twice as much as the most expensive energy drink I typically can find in the store. If you read my article Save Money on Energy Drinks (and Caffeine), you’ll know how you can energy drinks, such as the popular brand Amp, with twice the serving size for only a dollar. That’s ~6 cents a ounce vs. ~33 cents an ounce for Verve. One can certainly see why the FTC suggests, “Many companies that market their products through distributors sell quality items at competitive prices. But some offer goods that are overpriced… Find out what will you be selling. Are similar products on the market? Is the product priced competitively?”

Is the Vemma Verve, like the $100 Pen Pyramid Scheme? Let’s put it to a challenge and see if Verve sells in stores at 33 cents an ounce. Let’s see if there is natural demand for the product when purchasing product isn’t a de facto requirement for entry into a “business opportunity.”

Some History on the Vemma’s Founder, BK Boreyko

This isn’t the first time that BK Boreyko has scammed people. The FTC has caught him defrauding people in the past. That time it was New Vision International (sounds like Young People’s Revolution, right?) and the product was God’s Recipe. In that case Boreyko was caught pitching the product as treating ADD and ADHD without the necessarily scientific evidence.

Given all the above, is this really the kind of person you think will make you rich, legally?

Vemma Declared a Pyramid Scheme in Italy

Consumer website, Truth In Advertising, has reported that Vemma Was Deemed Pyramid Scheme in Italy. They’ve also noted that Vemma Affiliates’ Health Claims Violate FTC Order.

It is a great article and a must read for anyone considering it in any country. Here are some interesting statistics from the article:

  • Only 27% of associates were eligible for bonuses by regularly ordering products from Vemma.
  • Fewer than 100 individuals on average generated six-month sales commissions higher than €1,000 (about $1,300 in June 2013), while nearly all the other associates received quite low or even paltry compensation.
  • A significant portion of the orders consisted of purchases made by associates themselves, presumably for their own consumption, which in the network are known as “autoship” sales.
  • Approximately 20% of the total income generated from product sales was obtained from the sale of expensive Vemma packages called “Builder Packs” that cost €599 or €999 (about $700 to $1,300 in June 2013), and over 60% was generated from autoship sales.
  • Only about 16% of the income was generated from the sale of products to third parties.
  • Only 24% of associates had a VAT number, which would enable them to sell products to third parties.

Remember that FTC quote above? With only 16% of sales coming from third parties it is clear that the money people make is not based on such sales. Instead it seems to come from the 80% of “Builder Packs” and monthly autoship to distributors. Using those guidelines, it is easy to why Italy would declare it a pyramid scheme.

Truth in Advertising further reports that the watchdog organization found, “A synergistic role in enhancing the effectiveness of Vemma’s pyramid scheme is generally the misleading representation of the supplements, so as to make them more attractive by attributing to them properties they do not possess…”

These claims are so common in the world of MLM health products, that I wrote an article about it, No, Your MLM Health Product Doesn’t “Work”, which was republished by the doctors at AITSE.org.

Truth in Advertising also quotes the Vemma saying two contradictory statements:

“If your goal is to become a household brand, it only makes sense to make a few more necessary operational and compensation plan changes to complete the move. To be more like Amazon.com and less like Amway.”

followed by:

“Vemma’s Compensation Plan won’t change; we’ll just describe it differently in updated terms to better explain how we do business.”

Truth in Advertising’s final conclusion was:

“Truth be told, as a practical matter Vemma’s new compensation plan still suffers from many of the multiple faults that Italy’s AGCM found with the old pyramid plan.”

Final Thoughts on Vemma

Typically when I write about MLM, I’ll get a distributor who tries to find one area where the article isn’t 100% accurate, points it out, and then suggests that I shouldn’t write about things that I don’t know about or haven’t researched. Typically, the article is accurate and the distributor is the one mistaken about his/her own business. Secondly if one minor piece of information is incorrect, it doesn’t mean the article as a whole is incorrect. Third Vemma, like all MLMs seems to purposely make its compensation difficult to understand with its own terminology not used in other businesses. Finally, this space is intended as a place where we can all learn more about Vemma. As you can tell, I’ve put a ton of research into Vemma. I shouldn’t even have to write this, but I’ve found that people who get tricked into being MLM distributors often lack the critical thinking skills to understand this.

I could go on and on, but anyone with an IQ over 80 should have known more than a thousand words ago that this is a huge scam and to stay away from it. I took the expression beating a dead horse to the ultimate level with this one.

Update: There’s a great article on Vemma on Cincinnati.com.

Update: Now NBC News is writing about Vemma: Controversial energy drink company targets students as sellers. Interestingly the person the news team interviewed told a typical story of recruitment and got immediately suspended by the company. That’s what happens if your claims are high profile to an undercover news team. If it had been to you or me, Vemma would never have known or suspended him.

Filed Under: MLM, scams Tagged With: Vemma, Vemma Scam

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