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.
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.
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.
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 $7. 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.
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.
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.
If you found this article helpful, or if you have experience with Vemma, please leave a comment below. Thank you.