
Vemma Reaches $238 Million Settlement with FTC
Company agrees to a ban on pyramid scheme practices to settle charges.
Beware; none of these statements the company makes are relevant.
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In the law, there are two types of facts: facts that are relevant to determining the truth of the matter at issue, and facts that are irrelevant — and therefore inadmissible — in determining the ultimate factual issue.
Arizona-based Vemma Nutrition Company is a privately held multi-level marketing company that sells energy drinks, nutritional beverages and weight management products. Vemma, which calls itself an affiliate marketing company, is based in Tempe, Arizona. It was founded in 2004 by Benson K. Boreyko and his sisters. Vemma is an acronym for vitamins, essential minerals, mangosteen and aloe. Nutrition Company and its supporters go to great lengths to discuss why it is not an illegal An inherently deceptive form of multi-level marketing where participants are told they’ll get paid for recruiting other participants, and not necessarily for selling products or services. Typically, participants must pay some sort of initial investment in order to join, and will then earn a commission for each participant they recruit. Unfortunately for the unsuspecting consumers, pyramid schemes are doomed to collapse because the number of potential participants is limited.. But the only relevant issue in determining whether a company is a pyramid scheme is how the company’s reward system works.
Pyramid schemes primarily compensate participants for the recruitment and enrollment of other participants, and not for retail sales to individuals who are wholly unconnected to the company. The following “facts” touted by Vemma don’t answer that key question and therefore should NOT be considered in making the determination.
So given all these irrelevant facts, what facts are relevant in determining whether an organization is a pyramid scheme? So glad you asked. Learn some of the differences between multi-level marketing companies and pyramid schemes.
This story was updated on 9/25/2013 with an additional fact point.
Company agrees to a ban on pyramid scheme practices to settle charges.
Company struggled under court-mandated customer-focused business structure.
Bringing an end to one of the most high-profile alleged pyramid scheme cases since Amway, Herbalife agreed to a $200 million settlement with the FTC that requires it to revamp…