VEMMA FTC Lawsuit And Shutdown:
My Thoughts, Suggestions, and Advice
The buzz about the VEMMA FTC Lawsuit And Shutdown is filling the air, almost overpowering everything else in the network marketing community right now.
DISCLAIMER: I am not an affiliate or customer of VEMMA and am not being paid to put this out.
After reading through the lawsuit a couple times, I decided to record this video to educate company owners, executives, and leaders on what you can do to avoid having the FTC come after YOUR company.
While VEMMA did make some mistakes, I do believe the FTC made a mistake on this one. VEMMA has very good and fairly priced products with a 12 year history, as well as a reputation as one of the most solid companies in network marketing.
It’s sad to see VEMMA being shut down when there are SO many obvious pyramid schemes that run rampant. Over the last few years the FTC has done a good job of shutting down companies like Zeek Rewards that were blatant pyramids, so the fact that they completely shut down VEMMA, without any notice, I believe, should be a crime itself.
While I think the FTC went a bit overboard with the VEMMA shutdown, I do believe this is an opportunity for us to come together as a community to clean up some of the factors that are giving our profession a bad name. As I outline in the video, we need to do a much better job of under-promising and over-delivering.
This includes cutting out certain words from our “MLM Vocabulary” like “easy” and “investment”.
What’s Wrong With “EASY”?
The #1 reason why people quit network marketing is because of false expectations… they think it’s going to be easy and when it’s not, they quit. And YES, I know it’s tempting to tell people it’s easy because you want them in your company, but all it does is have you end up recruiting the people you don’t want.
It also sets your company up for FTC, Attorney General and BBB complaints which may have been a big factor in the FTC taking action against VEMMA.
Personally, I prefer letting people know that it’s a LOT of work if you want to make a lot of money.
#1, I don’t recruit the type of people who want to do nothing and make a lot of money.
#2, it doesn’t run off the people who are smarter than the hype and know they’re being lied to. (people can handle the truth)
#3, I want to create a culture in my organization of people who are ready and willing to work HARD in order to achieve significant earnings.
What’s Wrong With “Investment”?
Network marketing is an opportunity but is certainly NOT an investment. You are not investing money, you are buying products and/or “spending” money on a representative fee. An investment implies that you can put in money, do nothing, and make money.
For the same reason as point #1 and #3 above, you don’t want to be using that word at all.
By using the word investment, you may also be setting yourself up to violate certain securities laws. I’m not an attorney but you definitely want to steer clear of those types of regulatory violations.
Matt’s Prediction…
The VEMMA FTC Lawsuit And Shutdown Will Cause Companies to Re-Think Personal Volume Requirements
The network marketing industry is about to see some bug changes and you can mark my words, this is the starting point to a lot of those changes taking place.
The FTC cited: “Affiliates do not primarily earn bonuses for actual sales of Vemma Products. Instead, Vemma rewards affiliates for personally purchasing Vemma Products to maintain bonus eligibility, and for recruiting others who likewise purchase Vemma Products to maintain bonus eligibility.”
Yes, Vemma Affiliates can make retail sales to qualify, but very few qualified that way. Almost every company in network marketing has this same rule. You can retail your way to meet your personal volume requirements.
Since we know that most people just buy their way to the qualification level, how do we avoid this allegation?
Simple, get rid of personal volume requirements!
If there is NO requirement to have personal volume requirements, the FTC cannot say that people are buying product only in order to maintain qualification.
You could also require retail sales to non-participants in the compensation plan in order to qualify for commissions. But I don’t think that is necessary at this point since there is a strong argument that the FTC is okay with personal consumption. In fact, the FTC has not firmly established a ratio of non-participating customers.
My company, a few year ago got rid of all personal volume requirements making it okay for someone to hit the top rank in our company without ever purchasing our product. The fear for many mlm companies in doing that is that if people aren’t required to purchase the product, they won’t.
If that is your fear, your bigger fear should be having the FTC shut you down!
We implemented that rule with the belief that people would still buy our product, even though they didn’t have to in order to qualify for commissions.
Guess what happened? People STILL bought our product. We saw no significant decrease in the number of people buying our product!
Company Owners & Executives, if you have a good product, people will still buy it! Because I have tried the VEMMA products and have so many other friends who have, I believe VEMMA would have been just fine without having their personal volume requirements.
I think VEMMA’s attorneys will be able to make a strong case to justify that.
Mark my words, if you are running loose, as VEMMA was in this regard, and you don’t make changes, you are putting yourself and your entire field force at risk.
Watch the video I recorded from a live Periscope I did about the VEMMA FTC Lawsuit And Shutdown and you’ll see several other points that impact each and every one of us.
Let’s seize this opportunity to protect the welfare of the network marketing community.
Watch the video!
