The energy drink company Vemma was temporarily shut down by the Federal Trade Commission, which accused the Arizona-based energy drink and nutrition company of targeting young people and students with an impractical pyramid scheme that promised hefty incomes.
MSN Money on August 28 spoke of the strange publicity messages advertised by the company on social media. “The posts referenced a jumble of concepts: Perseverance, success, and something called the Young People Revolution,” the site reports. “One added the hashtag #MillionDollarDreams.” One student said “it appeared to be a ‘cult-like organization’ nominally geared toward distributing energy drinks that looked, to him, like a massive scam.”
The company allegedly promised college-aged kids – dubbed “affiliates” – big bucks, but most ended up losing money attempting to sell the company’s energy drinks. The multi-level marketing company – which reported annual revenue of over $200 million in 2014 – said individuals could pull in up to $50,000 per week if they agree to purchase a $600 “start up marketing package” that explains how to sell the beverage Vemma, the energy drink Verge or the protein shake Bod-e. They would also be required to buy approximately $150 to $200 of products each month.
Adds The Associated Press: “The FTC said Vemma provided little help on how to sell its products and instead rewarded them for recruiting more people. A federal court in Arizona temporarily seized the company’s assets. Products on Vemma’s website could not be bought Wednesday. The website said that products were ‘temporarily unavailable at this time.’”
According to the FTC complaint, Vemma employees would set up manned kiosks in college campuses and bait students with promises of big bucks – luring them with brochures showing young people sunning themselves on luxury yachts, driving expensive vehicles and inside of private jets. The company used Chris and Heidi Powell, who appeared on ABC’s reality show “Extreme Weight Loss,” to appear in video testimonials.
Nineteen-year-old Harrison Jordan said he learned of the company after getting Facebook messages from individuals promoting its products. “They were very cryptic statuses that were half motivational and half hard sell,” Jordan said. “What made it so insidious to me when I first saw it was that [Vemma] was targeting people my age.”
According to the FTC suit, a 2013 income disclosure report shows the reality of the company’s payment tiers – nearly 90 percent of “affiliates” made under $3,700 annually, despite the fact Vemma urged its members to view the opportunity as a full-time investment. The FTC alleged in the suit that Vemma said those who earned so little simply “weren’t tying hard enough.”
“Rather than focusing on selling products, Vemma uses false promises of high income potential to convince consumers to pay money to join their organization,” remarked Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “We are also alleging that Vemma is an illegal pyramid scheme.”
Vemma’s website has an all-caps message embedded into the site’s homepage, telling viewers that the FTC has “temporarily suspended the activities and operations of the Vemma company until a scheduled preliminary injunction hearing is concluded.”
The FTC’s suit can be read here in its entirety.
Reports the Phoenix Business Journal: “Defendants in the FTC complaint are Vemma Nutrition Co., Vemma International Holdings Inc., Tom Alkazin, and Vemma CEO Benson Boreyko, who is under a 1999 court order after settling with the FTC for his involvement with a multilevel marketing company, New Vision International Inc., which sold nutritional supplements.”