Vemma

American multi-level marketing company

Vemma Nutrition Company logo

Vemma Nutrition Company was a privately held multi-level marketing company that specialized in the production and distribution of energy drinks, nutritional beverages, and dietary supplements. The company was founded in 2004 by Benson K. Boreyko and was headquartered in Tempe, Arizona.

History

Vemma was established with the aim of providing health and wellness products through a network of independent distributors. The company's flagship product was the Vemma nutritional supplement, which was marketed as a liquid vitamin and mineral supplement. Over the years, Vemma expanded its product line to include energy drinks and weight management products.

In 2015, Vemma faced significant legal challenges when the Federal Trade Commission (FTC) filed a lawsuit against the company, alleging that it operated as an illegal pyramid scheme. The FTC's complaint focused on the company's recruitment practices and the emphasis on distributor recruitment over product sales to consumers. As a result, Vemma was temporarily shut down and later agreed to restructure its business model.

Products

Vemma's product line included a variety of health and wellness products, primarily marketed through its network of distributors. The main products included:

• Vemma – A liquid dietary supplement containing vitamins, minerals, and antioxidants.
• Verve! – An energy drink that combined the Vemma formula with caffeine and other energy-boosting ingredients.
• Bod•ē – A line of weight management products, including meal replacement shakes and supplements.

Business Model

Vemma operated as a multi-level marketing (MLM) company, which involved recruiting independent distributors to sell its products and recruit additional distributors. Distributors earned commissions based on their sales and the sales of their recruits. This business model was central to the FTC's allegations against Vemma, as the focus on recruitment over product sales was deemed characteristic of a pyramid scheme.

Legal Issues

In August 2015, the FTC filed a lawsuit against Vemma, accusing the company of operating a pyramid scheme. The FTC alleged that Vemma's business model was based more on recruiting new distributors than on selling products to consumers. The court issued a temporary restraining order, freezing Vemma's assets and halting its operations.

In December 2016, Vemma reached a settlement with the FTC, agreeing to pay a $238 million judgment, which was partially suspended due to the company's inability to pay. Vemma also agreed to change its business practices, including prohibiting misleading income claims and requiring that at least 51% of sales come from non-distributors.

Closure

Following the legal challenges and restructuring, Vemma struggled to regain its market position. The company eventually ceased operations, and its website was taken offline. The case against Vemma highlighted the risks associated with MLM business models and the importance of regulatory compliance.

Related pages

• Multi-level marketing
• Pyramid scheme
• Federal Trade Commission