My Thoughts On The Vemma Shut Down
Recently one of the largest privately held network marketing companies in the world was shut down by the FTC. That company was Vemma. Back in 2013 I warned people about this company and how they were running a pyramid scheme.
Here are some of my thoughts on this situation:
Vemma was a member of the DSA Direct Selling Association. This means this association does not have high enough standards to keep pyramid schemes from being members. They are no protection for you participating in a scam. The experiment in industry self regulation has been a failure.
- Vemma Shut Down By The FTC
- Herbalife Under Investigation By The FTC
- Nu Skin Under Investigation By The SEC
Network marketing companies should no longer hide their retail information from people that are joining their business opportunities. They have to start tracking it and make sure their representatives are selling products to customers and not just other representatives.
The false income claims have got to stop. Saying you make tons of money, you are nothing special, anyone can do it. and then adding a disclaimer that says almost no one is making money is not OK.
The FTC has got to start applying the same rules to Network Marketing as any other type of business opportunity.
Here are some of those rules:
- Identifying Information. You have to list your company’s name, business address, and phone number; the sales person’s name; and the date you gave the document to the prospective buyer.
- Legal Actions. You have to disclose whether your company or certain key personnel have been the subject of civil or criminal actions involving misrepresentation, fraud, violation of the securities laws, or any unfair or deceptive practices – including violation of any FTC rule – within the past ten years. If the answer is yes, you have to attach a list of the actions to the Disclosure Document.
- Cancellation or Refund Policy. You have to check a box to say if you have a cancellation or refund policy. If you do, you have to attach to the Disclosure Document a statement describing your policy.
- Earnings. You have to check a box to say if you’ve stated – or implied – how much money a prospective buyer can earn. If you have, you must attach an Earnings Claim Statement to the Disclosure Document.
- References. On the Disclosure Document, you have to list contact information for at least 10 people who have bought a business opportunity from your company. If more than 10 people have bought a bizopp, you may list the 10 who live closest to the prospective buyer.
Don’t tell people you’re offering them a job if what you’re really doing is selling them a business opportunity. It is time for people to walk away from these shady business opportunities that are based on lies and deception to get people to join them.
It is time for the business opportunity world to start offering real opportunity and not scams.