Is Vemma a Pyramid Scheme or is it a legitimate business opportunity? While Vemma has some interesting products, a closer look reveals a troubling history with the company and with the industry. In this article, I expose what you need to know to make an informed decision about Vemma.
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Is Vemma a Pyramid Scheme?
Vemma is a privately-owned multi-level marketing company that promotes nutritional supplements, energy drinks and a business opportunity. The United States Federal Trade Commission sued Vemma in 2015 for predatory practices, including deceptive income and health claims and for operating a pyramid scheme.
Ultimately, the FTC lawsuit resulted in Vemma agreeing to a $238 million settlement and restrictions on the business practices of the CEO and top sales associates.
A substantial change Vemma made as a result of the FTC lawsuit is to boost their retail sales efforts. A telltale sign of a pyramid scheme is that affiliates are forced to buy product through auto-ship agreements and business packs to qualify for commissions.
Forcing affiliates buy product results in a closed loop where the affiliates become captured customers and no revenue is generated by sales to non-affiliates. When such a closed loop is created, people at the top of the organization profit at the expense of the people at the bottom of the organization.
Vemma is still in business, still recruiting and, apparently, still profitable. Even if Vemma has changed its ways, I still do not recommend it for several reasons.
Read Why Affiliate Marketing is Better Than MLM
A Leopard Never Changes Its Spots
There is a reason some personality types are drawn to pyramid schemes and MLM. It can be extremely profitable for people who lack empathy for others. If you did not have a conscience and did not care who got hurt, imagine how much you could achieve.
Because it’s easy to disguise a pyramid scheme as an MLM and because such a business is profitable to the founder at the expense of nearly everyone else, sociopaths are drawn to pyramid schemes and MLMs like bees to honey.
Look at the behavior of Vemma before the FTC ruling, and you will see its CEO, Benson K. Boreyko, is a man without empathy for others. Someone like that does not change. Someone like that learns from his mistakes and finds new ways to exploit people for personal gain.
Before the FTC ruling, many people warned that Vemma was a pyramid scheme. Texas State University warned that Vemma had invaded their campus and was causing students to focus on building a business and not on their studies. What kind of CEO would allow this to happen?
In an article by Austin Tomlinson, he states that Texas State University students were recruited with “grandiose promises…like six-figure incomes, financial freedom and free cars,” and sold bulk packages of Vemma’s Verve energy drink for $500 and $1000.
The practice of enticing affiliates to buy product in bulk is known as product loading and is a sign of a product-based pyramid scheme.
Before getting busted by the FTC, Benson K. Boreyko was content to run a pyramid scheme that enriched himself and a few others at the expense of everyone else in his organization. He was not restricted by a conscience. If he had not been busted by the FTC, he would have continued to exploit decent people who fell for his sales pitch.
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Expensive Products.
Vemma’s products are very expensive. For example, take Vemma’s flagship product, Verve. It’s an 8-ounce energy drink that contains 80mg of caffeine with Mangosteen, vitamins and minerals added.
The primary energizing ingredient in Verve is caffeine. Caffeine is a by-product of decaffeinating coffee and tea. It’s dirt cheap. You can buy a hundred and twenty 100mg caffeine tablets for about $10 on Amazon. When you buy Verve, you are paying $2.80 for 8 ounces of mostly water and getting 80 mg of caffeine.
What is Verve Worth?
If you compare the price of Verve to the price of the most popular energy drink, RedBull, you see a dramatic and troubling difference in price. Verve sells for $2.80 per 8 ounce can. Redbull sells for $1.50 per 8 ounce can.
Consider the $1.50 for Redbull the fair market value for an energy drink. Verve is nearly twice fair market value. Why is this? The most obvious reason is it costs money to pay the upline commissions. There is also a more sinister reason and the reason I suspect Vemma may still be a product-based pyramid scheme.
A Product-Based Pyramid Scheme?
Only a legal investigation can determine if Vemma is a pyramid scheme. However, if Vemma ultimately proves not to be a pyramid scheme, it doesn’t mean it’s a good business opportunity. It’s not. The reason I suspect Vemma may still be a pyramid scheme is because their products are substantially overpriced.
In a pure pyramid scheme money is earned by selling a business opportunity. There is no product. Money is charged to join the organization and once a person joins, they can then charge another person money to join. This recruiting pattern continues until there is no one else to recruit.
In a product-based pyramid, there is a product. It’s substantially overpriced, so although a product is sold, the flow of money from the bottom of the organization is essentially the same as the pure-pyramid scheme.
With regards to money flow, there is essentially no difference between charging someone $50 to join the organization for the business opportunity and charging someone $70 for $20 worth of energy drinks for a business opportunity.
A Hard Sell.
At best, selling expensive energy drinks will be a very difficult process when there are cheaper energy drinks in every soda machine in the western hemisphere.
Why MLM is a Lousy Business.
MLM in general, and Vemma in particular, promote a business opportunity. It’s really not a business opportunity. It’s just a chance to be a contractual commission sales person who may be rewarded for building a sales organization. Your relationship with Vemma can be terminated at any time without reason.
Nearly Impossible to Make Money.
Most people who try MLM spend more money than they make. According to the research conducted by Jon Taylor, less than 1% make money with MLM. There is no reason to think an affiliate with Vemma has a better chance to make money than the industry’s average. You can read Jon Taylor’s research on the FTC’s website.
I was not able to find information for how much the average Vemma affiliate earns. It’s troubling that this information is not available on the Vemma website and perhaps an indication that the average Vemma affiliate does not do well.
No Control.
While Vemma may want you to believe you are an entrepreneur when you’re an affiliate with them, you’re not. In practical terms, you’re an unpaid employee and perhaps a captured customer.
You have no control over the products you promote or the commissions you earn. You can only sell Vemma products. If Vemma goes out of business, so do you.
Vemma Can’t Help You.
If you came to this article because you are looking for a legitimate opportunity to make money, I do not think Vemma will help you.
Trying to convince people to buy over-priced energy drinks that do little more than a cup of coffee is a very difficult way to make money.
Be an Entrepreneur.
Before an entrepreneur tries to sell a product, they find a market. In other words, they start with the needs of the prospective customer. An entrepreneur first finds a group of people who have a problem and then they offer a product that solves that problem.
For example, if you found a group of hungry people, you could easily make money by selling them lunches.
If you want to make enough money to change your life, you need to think like an entrepreneur, find people with a problem and a product that solves that problem. It’s so much easier that way.
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A Better Option.
When you understand how marketing works and you combine that knowledge with the awesome power of the internet, you can make as much money as you want.
The fastest and easiest way to profit from the internet’s power is to become an affiliate marketer. If you’re starting from zero, you’ll have to learn the fundamentals first. That’s why I recommend the FREE Starter Level of the Online Entrepreneur Certification Course.
In the FREE training, you’ll learn how to make money online the right way and you’ll meet a community of marketers who are ready and willing to help you every step of the way.
To get started with the FREE Starter Level of the Online Entrepreneur Certification Course, Go Here.
Related Articles:
Why Affiliate Marketing is Better than MLM
How to Evaluate an MLM Company
If you found this article helpful, or if you have experience with Vemma, please leave a comment below. Thank you.
Thank you so much, Gary, for this interesting and informative article about Is Vemma a Pyramid Scheme.
Not only do you expose Vemma for what it is, but you clearly explain the pitfalls of MLM marketing.
Unfortunately, MLM appeals to the young and inexperienced. Which is undoubtedly why Vemma focused so much of its recruiting on university campuses. It must have sounded like an unmissable get rich quick opportunity to otherwise smart but naïve students looking to repay their student loans as soon as they graduate.
And, of course, the products look appealing enough so that they could imagine they would be an easy sell.
Vemma IS a get-rich-quick scheme. Unfortunately, it’s only those at the top who get rich.
Those at the bottom are left with product they can’t shift. They end up giving it away to friends and reflect on the fact that they’ve paid good money to learn one of life’s many little lessons.
You make a great point about those at the top being completely lacking in morals and empathy. It’s essential to succeed in an MLM business, pyramid or Ponzi scheme.
When I was younger and considering anything like this, I was always stopped by imagining myself pushing the product at family and friends. That’s was when I’d realize that it wasn’t for me.
Thanks for a great review about Vemma. Twice, when I was younger, I got sucked into some MLM schemes that required buying a lot of products in order to qualify for certain bonuses. One involved a cheap by-product marketed as a complete protein (whey) and the other water filtration systems for home install (more legit imo). In both cases, I failed to recognize that the goal of the business was not to market great products to the public, but to recruit down-line members who would also buy products in bulk.
Once I recognized the truth, my enthusiasm waned for the products and the efforts ended in failure and wasted money.
I don’t think all MLM’s are like this but based on your well-researched review, Vemma does not pass the smell test.
If indeed, only 1% of people actually ever make money at MLM, it’s just not a good business model overall.
Hello Gary, great review. I have never been a fan of pyramid sales and over time I have seen several health drinks and products that ended up sitting in peoples garage or basement. These individuals thought they could selll these products not realizing that it would be an uphill battle to sell the products that they had to purchase up front. Thank you for explaining how Vemma works and expoing the owners of the company.
Thank you for your informative article regarding Vemma,
Your articles clearly opens the eyes to the potential pit falls of joining Vemma’s Multi Level Pyramid Scheme as the questions you have to ask yourself before joining can you really trust a company with a chequered history, do you have faith in the MLM system and is the energy drink market already saturated with so many competitors.
I agree that affiliate marketing is a much safer and less riskier approach than MLM and anyone looking for a new business opportunity may find it more beneficial to explore this avenue.
Hi Gery,
Thank you very much for taking time to write this honest review. The best part I like is the “Pyramid Scheme”, yes this scheme doesn’t work. Last time I joined one of the MLM company whose paying system was based on this scheme and many of us lose our money.
You did a great job by providing a solution at the end of this article and I have recently signed up and completed that “Online Entrepreneur Certification Course” which is fantastic. And such a valuable course we are getting for FREE which is awesome. I really appreciated for that man. Stay blessed…!
Hi, Rajratna!
Vemma has an awful history and really has only changed in the United States. Overseas, it changed its name but continues with the same predatory practices.
Back in the day, I tried four different MLM companies. I really wanted to make it work. The last one I researched thoroughly. It was highly rated by the Direct Sellers Association and was featured in many MLM magazines. In the end, it was a nightmare trying to make their “business opportunity” work.
Since that time, I’ve learned a lot more about MLM. Specifically, the Direct Sellers Association was created by the MLM industry to make it appear legitimated and regulated. It’s not. The MLM magazines sell their space to the MLM companies, again to help make them appear legitimate. It’s a ugly industry with layer upon layer of dishonesty.
I’m glad you enjoyed the FREE training. It’s the best I’ve found online and where I got my start.
Thanks for stopping by,
Gary
Thank you for sharing with us this great review on Vemma.I am happy that I came across your website because I got new information about this company .
Actually,I have a friend of mine who talked about this said Vemma and convinced me that it is a good business opportunity to earn much money.
Fortunately I now know what to respond to him due to your review
Spending more than you can make is always a red flag, but of course, some people may be luckier than others, a with all things products and services. But what I do know i, they have a really nicely designed website, not that it matters, haha.
Good thing you’re doing reviews like this, I feel bad for anyone going into Vemma thinking they can make a fortune, only to lose their own money for overpriced products.
Amazing website, valid content and my favorite part was how you offered a solution as a better option-brilliant! I didn’t know anything about Vemma before I read your article, but I feel like you did a great job presenting the information and I wouldn’t feel inclined to doubt your sincerity as a potential consumer, great job!
Thank you for your kind words and for stopping by,
Gary