New Vemma Compensation Plan Rejected
Even after being shutdown and allowed to reopen, Vemma continues to try and run their business as a scam. The United States District Court of Arizona has denied approval of Vemma’s updated compensation plan. It would seem that running a legitimate business is a challenge for Vemma.
Here is what is wrong with Vemma’s new compensation plan:
Vemma has proposed a new compensation plan for its Affiliates. Under the plan, an Affiliate is defined as a participant who “intends to participate and earn rewards under Vemma’s Marketing Plan,” and a Customer is a participant who “is interested in purchasing and using” Vemma products. The plan makes some adjustments to the number of Personal Volume (PV) points required for an Affiliate to qualify for bonuses, and an Affiliate’s own purchases of Vemma products do not earn the Affiliate qualifying PV points. Under the “51% Rule,” full bonuses are paid to an Affiliate if 51% of the sales of the Affiliate’s organization are to Customers. When less than 51% of sales are to Customers, an Affiliate is still paid a bonus, but the portion of the bonus resulting from sales to Affiliates may not exceed the bonus resulting from sales to Customers.
Vemma’s new compensation plan still incentivizes recruitment of Affiliates over retail sales. The 51% Rule still provides an Affiliate significant compensation even if most of the Affiliate’s sales are to downstream Affiliates, not Customers. The 51% Rule does not provide any real disincentive for the majority of an Affiliate’s sales to be to downstream Affiliates.
Here is an example of the problem:
If 60% of the sales of an Affiliate’s organization are to downstream Affiliates and not Customers, the Affiliate is still fully compensated for the 40% of sales made to Customers—even though they did not constitute most of the Affiliate’s sales, the Affiliate is also compensated almost 40% more for the sales made to other Affiliates—even though those sales may in fact be inventory loading. The Affiliate thus earns nearly 80% of the compensation available even though most sales were made to Affiliates.
Aside from the 51% Rule, the proposed compensation plan contains neither additional anti-inventory loading safeguards nor incentives to sell to Customers rather than Affiliates.