It’s official, the FTC has shutdown Vemma, a health and wellness multi-level marketing company that lures people in with promises of wealth. It’s one of the most popular multi-level marketing companies in the health niche.
Like most multi-level marketing companies, Vemma pays members to recruit more members with false promises, an illegal marketing tactic.
Unfortunately, there are thousands of active companies just like Vemma that use unethical recruitment strategies. In this article, we will take a look at Vemma and analyze their business model and see if we can spot the red flags that lead to it’s downfall.
After reading this article, it will be easier for you to spot similar scams, and it will be more difficult for salesmen to recruit you to their little inner-scam circle. It will make it easier for you to find a system that truly works!
What is The Vemma Scam?
Vemma’s business model was much like every other multi-level marketing company, the members can earn affiliate commissions for recruiting new members and then they earn a residual amount for their recruit’s activities.
Each multi-level marketing system uses the same basic structure but rewords different aspects and introduces different terms to disguise the illegal aspect. In Vemma’s case, they use Points, Volume, and Cycles.
The idea is to make as many Cycles as possible, each Cycle is worth about $20 and it’s paid in U.S dollars. Vemma uses a team building system, there are two ladders; the right side and the left side.
In order to create a full cycle you will need to accumulate 360 points on one side and 180 points on the other side. Once you team reaches that limit, that’s one cycle, and then you have to keep earning more points to earn another cycle.
Take a look at the screenshot below to see how a cycle works.
The two blue circles represent new recruits, that’s a three person team, and you are the manager of the team.
You have to recruit two people, one on each side, and then collect enough points to earn a cycle. That’s the compensation plan in a nutshell.
So how do you earn points?
You earn points when you or one of your recruits completes a certain action. For instance, if one your recruits makes a sale or purchase a product from Vemma you are rewarded a few points.
So, the idea is to recruit new people and then make sure that those new people buy products from Vemma and then Vemma pays you a bit too. You also have to pay to join so Vemma makes some money from that too.
Basically, everything that you do within the system sends some money in Vemma’s direction, it’s only fair that they send a bit back to you (they can afford too, it’s a small amount compared to what they earn).
It’s clear that this is not a good business model and pretty unethical too. But I think the main reason Vemma was shutdown was because of all the false promises.
Vemma’s False Promises Were Finally Busted
Contrary to what you might think, it is illegal to tell people that they will earn thousands of dollars if they sign-up to your system. The reason there’s so much spam and hype online is because it’s just difficult to take legal action against websites.
You can create a website with a fake name and other details, so it’s impossible for people to take legal action, even if complaints are filed, the government will have a hard time shutting down your operations. That’s one of the reasons so many of these systems are still active!
The full FTC report summarizes what I have been saying about multi-level marketing in articles on this website. Vemma pays members to recruit new members but doesn’t encourage members to teach their recruits how to promote the products.
It’s all based on recruiting new members because every new members needs to pay a sign-up fee and that fee usually goes to the person who recruited them.
So the most lucrative option for Vemma members is to mass market their affiliate links and recruit new people. Even though there are a lot of Vemma products to promote, the focus is not on promoting those products, it’s on recruiting new members.
Even back in 2013 there were over 140 complaints filed to the FTC about this company!
In order to recruit new people, Vemma marketers resort to high-pressure sales tactics, like promises of Yachts, sports cars, and $50,000 a week.
Not to mention the vast majority of members earn very little money from this system, if they earn any at all.
The Risks of Investing in Multi-level Marketing Businesses
Some multi-level marketing businesses are not completely illegal, if they don’t resort to cheap marketing tricks.
However, multi-level marketing systems require a lot of work and a lot of cash. You will hear MLM enthusiasts claim that you won’t make any money unless you work hard, “You get what you put in!” they’ll say, the truth is that it’s just not a viable business.
What about all the people who invested in Vemma and built their business on selling Vemma products? Well, their entire business just went down the toilet. It’s sad. But that’s what happens when you invest your time and cash into a flimsy business foundation.
That’s one of the reasons I always recommend creating your own business. It could start of as a simple website, but in a few years it could be your main source of income. I’m sure most Vemma members didn’t think that the company would shutdown, but it did.
So, if you’re interested in creating a online business, then create YOUR OWN business, a website, a service, a software; anything – but it must be completely in your hands. You have to be in control.
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