Vemma

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Vemma Nutrition Company
legal form
founding 2004
Seat Scottsdale , Arizona , United States
management Benson K. Boreyko ( CEO )
Number of employees approx. 100 (2015)
sales $ 221 million (2013)
$ 200+ million (2014)
Branch Food supplements, beverages
Website vemma.com

The Vemma Nutrition Company ( Vemma for short ) is a US- American multi-level marketing company that was founded in 2004. The company's products include energy drinks and nutritional supplements . Vemma came under fire because the company is accused of operating an illegal pyramid scheme.

Company history

Vemma was founded in 2004 by Benson K. Boreyko and his sisters Karen Boreyko and Lauren Boreyko. Its name is an acronym of v itamins, e ssential m , inerals m angosteen, a loe (to German vitamins , essential minerals , mangosteen and aloe ). The company believes that the mangosteen fruit has a particularly beneficial effect on health. However, this is controversial.

In 2011 Vemma was merged with New Vision . New Vision was a nutritional supplement manufacturer founded in 1994 by Benson K. Boreyko.

In the years 2013 and 2014 respectively, the company generated sales of over 200 million US dollars . By 2015, the company was represented in over 50 countries worldwide, including Europe, where the company was represented by Vemma Europe Ltd , based in Ireland .

In August 2015, sales of the company were initially shut down by the Federal Trade Commission (FTC) on suspicion of an illegal pyramid system and later reopened under strict conditions. For example, the company was temporarily not allowed to recruit new sales partners. Vemma then presented a business plan compatible with the law under the supervision of the court. As a result of the dispute and the associated requirements, the company's sales plummeted. The company then also limited its business activities to the United States and Canada . Branches in other countries were closed. In a final ruling in 2016, Vemma was also sentenced to pay $ 238 million and banned from recruiting-oriented business practices.

Business model

Vemma sells its products exclusively through its own website. In particular, the sale of the energy drink Verve! however, it is usually brokered through independent sales partners who are referred to by the company as affiliates . The sales partners receive bonuses for brokering sales and can themselves recruit further sales partners from whose sales brokerage they can also earn money. In order to be entitled to bonuses and commissions for the mediated sales, a certain minimum monthly turnover must be generated through own orders or through the orders of recruited customers or sales partners. In addition, as a result of a new regulation drawn up in 2015/2016, a sales partner must sell at least half of the products to customers who are pure consumers and do not act as sales partners themselves in order to be entitled to the rewards.

Vemma calls its business model multi-level marketing or affiliate marketing. The number of sales partners worldwide was around 400,000 in September 2015, but has fallen sharply due to the legal dispute with the FTC.

The marketing concept is aimed primarily at young adults who are recruited both as customers and as sales partners. Vemma uses the slogan "YPR - Young People Revolution" for this.

Products

There are currently the following product lines:

  • Vemma (dietary supplement)
  • Verve! (Energy drinks containing caffeine)
  • bod • ē (protein-containing food supplement)
  • Thirst ( sports drink )

Controversy

Illegal pyramid scheme

In March 2014, Vemma was sentenced by the Italian competition authority to pay 100,000 euros because the competition authority saw the sales model as an illegal pyramid scheme. This was preceded by numerous complaints from consumers.

The Vorarlberg Chamber of Labor in Austria issued a warning against Vemma in August 2014 and described the business model as a pyramid system, as the high initial investments are difficult to recoup and, above all, younger people are lured with unrealistic profit promises. Vemma then admitted misconduct by individual partners who had advertised with “completely false promises”. However, the Vorarlberg Chamber of Labor sees a systematic problem that is not only due to the misconduct of individual partners.

In Germany, too, in April 2015 consumer advocates and lawyers charged the allegation that the sales model was an illegal snowball or pyramid system. The management of Vemma denies this and instead speaks of legal network marketing . An opinion of a lawyer obtained by Vemma comes to the conclusion that the distribution system does not have any characteristics of a pyramid scheme.

In August 2015 it became known that investigations were being carried out in Switzerland based on unfair business methods. The State Secretariat for Economic Affairs filed a criminal complaint at the end of October 2014 on suspicion of an unauthorized pyramid scheme.

The FTC, which temporarily shut down the company in August 2015, accused Vemma of operating an illegal pyramid scheme and argued that Vemma had focused more on attracting primarily younger sales partners than on selling its own products. For the majority of the sales partners, however, this was ultimately a loss.

Overdose of vitamin supplements

The consumer advice centers also warn that some Vemma products contain high doses of vitamin supplements. Excessive amounts of these are harmful to health (see hypervitaminosis ) .

False advertising claims

The company New Vision , which was later merged with Vemma, claimed its products could ADHD heal. This resulted in a complaint from the Federal Trade Commission in 1999.

In October 2014, a lawsuit was filed against Vemma in New York State for false advertising claims. According to the plaintiffs, Vemma would award its products a medical effect proven by clinical studies. In fact, there would be no studies showing such an effect.

Web links

Individual evidence

  1. ↑ a b Vemma executives fight FTC to reopen their Tempe energy-drink company. azcentral.com ( The Arizona Republic ), September 16, 2016, accessed January 6, 2016 .
  2. ↑ a b Vemma announces 2014 sales of over $ 200 million. MLM Worldwide, February 8, 2015, accessed April 26, 2015 .
  3. ↑ a b c Commission promise: Dubious deals with energy drinks. HNA.de, April 17, 2015, accessed April 26, 2015 .
  4. ↑ a b Behind Boreyko's Millions. October 14, 2014, accessed May 5, 2015 .
  5. ↑ a b c d Vemma Reaches Settlement Agreement in FTC Pyramid Case | Truth in Advertising. September 6, 2016, Retrieved September 18, 2016 (American English).
  6. ↑ a b FTC Acts to Halt Vemma as Alleged Pyramid Scheme. Federal Trade Commission , August 26, 2015, accessed October 12, 2015 .
  7. ^ Judge bars Vemma Nutrition from resuming full business operations. September 18, 2015, accessed October 12, 2015 .
  8. ↑ Vemma Reaches $ 238 Million Settlement with FTC. December 15, 2016. Retrieved August 29, 2020 (American English).
  9. ↑ Energy drink Verve: How Vemma lures young people with its distribution system. (No longer available online.) Stern.de, April 29, 2015, archived from the original on May 1, 2015 ; Retrieved April 30, 2015 . Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. @1@ 2Template: Webachiv / IABot / www.stern.de
  10. ↑ Basics of the Vemma Compensation Plan ( Memento from May 19, 2015 in the Internet Archive )
  11. ↑ Vemma relies on affiliate marketing. Netcoo, June 2, 2014, accessed April 28, 2015 .
  12. ↑ The Deceptive Promise of the Quick Million. (No longer available online.) Stern.de, April 15, 2015, archived from the original on April 16, 2015 ; Retrieved April 28, 2015 . Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. @1@ 2Template: Webachiv / IABot / www.stern.de
  13. ↑ Vemma Deemed Pyramid Scheme in Italy. Truth in Advertising, April 24, 2014, accessed April 26, 2015 .
  14. ↑ AK Vorarlberg warns of energy drink sales “Vemma”. (No longer available online.) AK Vorarlberg, August 20, 2014, archived from the original on June 23, 2015 ; Retrieved April 27, 2015 . Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. @1@ 2Template: Webachiv / IABot / vbg.arbeiterkammer.at
  15. ^ Matthias Rauch: Vemma case for Chamber of Labor not off the table despite admission of guilt. Vorarlberg Online , August 27, 2014, accessed on April 28, 2015 .
  16. ↑ a b Marcel Bohnensteffen: Energy drinks from Vemma: Consumer advocates, lawyers - and desperate retailers warn against these drinks. The Huffington Post , April 22, 2015, accessed October 12, 2015 .
  17. ↑ Legal statement confirms: "Vemma business model is a permissible multi-level marketing system". (No longer available online.) Network Careers, February 22, 2015, archived from the original on March 17, 2015 ; accessed on May 6, 2015 . Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. @1@ 2Template: Webachiv / IABot / www.network-karriere.com
  18. ↑ Seco files criminal charges against energy drink company. Der Landbote , August 13, 2015, accessed on October 12, 2015 .
  19. ^ Vemma hit with false ad putative class action, negative media coverage. Lexology, November 6, 2014, accessed April 28, 2015 .

Coordinates: 33 ° 38 '37.6 "  N , 111 ° 53' 56.9"  W.