FTC Mailing $2.2M To Victims of Pyramid Scheme

The Federal Trade Commission (FTC) announced that it will be mailing more than $2.2 million in refund checks to consumers bamboozled by an alleged pyramid scheme perpetrated by a supposed nutrition company operating under the name Vemma.

The Vemma refund checks come after the company agreed to settle allegations of engaging in deceptive and unlawful acts.

The FTC says that it will send 28,224 checks of approximately $78.93 each to victims of the Vemma multi-level marketing scam.

According to the FTC complaint against the company, Vemma Nutrition Company induced “affiliates” to sell health drinks by claiming sellers could make a certain amount of income, up to $50,000 a month in once instance.

These income claims were false, however, and the FTC says that most of those who were induced into the multi-level marketing scam ended up losing money.

Vemma also resorted to using a pyramid scheme where the focus was gaining more participants to pay to sell the products, rather than selling the products themselves.

According to the agency, “Vemma operated as a pyramid scheme that compensated affiliates mainly for recruiting others rather than for retail sales based on legitimate consumer demand for the products.”

Vemma Nutrition Company used a marketing campaign called the “Young People’s Revolution” to induce young adults and college students to supposedly sell their line of health and wellness beverages. The company touted that affiliating with their program was a fast track to wealth, outside of the traditional 9 to 5 workday.

Jets, expensive cars, and high earnings were paraded as an outcome of buying into the scheme; however, according to the FTC complaint, participants usually lost more money than they earned after they were induced to purchase products for their own use and sign up recruits rather than sell Vemma health drinks to the general public.

“The raison d’être for any legitimate business is to sell products to people who aren’t affiliated with the company,” notes the FTC in a statement about the Vemma scam. “This isn’t just a theoretical point. [A multi-level marketing business’s] compensation plan should reward real sales to customers outside the network.”

Further, Vemma allegedly made false representations about its products, namely, that the beverages would provide unproven health benefits.

The agency lodged a complaint against Vemma and its operators, including its CEO B.K. Boreyko, Tom Alkazin, and Bethany Alkazin.

In addition to the $2.2 million in refund checks, the settlement imposed a nearly $240 million judgement against Vemma and its operators.

The settlement also prohibits the company and its CEO from offering compensation to participants for recruiting other affiliates, linking participants’ compensation to their own Vemma purchases, and limiting compensation to periods where revenue is generated mainly from sales to the general public.

“Using misleading earnings claims and convoluted compensation schemes to deceive consumers is illegal. Established truth-in-advertising principles apply in the [multi-level marketing] world, and the FTC remains committed to combating questionable practices,” states the agency in one of its statements about Vemma Nutrition Company.

Those who receive a Vemma refund check should cash it within 60 days. Questions can be directed to the JND Legal Administration at 1-833-759-2980.

Have you been scammed by a multi-level marketing scheme? Let us know about it in the comments!

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