WASHINGTON (Legal Newsline) — The Federal Trade Commission
(FTC) announced Dec. 15 that Arizona-based Vemma Nutrition Company will end
alleged pyramid scheme-inducing business practices.
Vemma allegedly targeted college students and other young
adults, promising them that becoming an affiliate was a good alternative to
traditional employment. The company purportedly failed to disclose that the
program’s structure ensured most affiliates would not earn
substantial income. Vemma also provided affiliates with false and misleading
materials for recruiting others, the FTC said.
“Unfortunately, extravagant income
claims and compensation plans that reward recruiting over sales continue to
plague the multi-level marketing [MLM] industry,” said Jessica Rich, director of
the FTC’s Bureau of Consumer Protection. “MLM
companies must ensure that their promotional materials aren’t
misleading, and that their compensation programs focus on selling goods or
services to customers who really want them, not on recruiting more
Vemma has been banned from compensating affiliates for
recruiting new participants, tying an affiliate’s compensation to that
affiliate’s purchases, or paying an affiliate compensation related
to sales in a pay period unless the majority of the revenue generated came from
sales to general consumers.
A $238 million judgment will be suspended upon payment of