Vemma
| I, the crown prince of Nigeria, offer you Scams |
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| Hook, line, and sinker |
| Totally sounds legit! |
Vemma is an American multi-level marketing company founded in 2004 by Benson K. Boreyko. The main product, Verve, is an energy drink.
The main focus in Vemma is not selling products to retail customers, but recruiting new distributors who are told to earn money by recruiting more distributors. This creates the pyramid effect which is the reason why the vast majority of the participants never see a return of their investment in the business opportunity.
Vemma releases statistics[1] about how much their distributors earn, but these numbers are manipulated to give the reader a false impression of the situation. They claim that 70% of the registered buyers are customers, and only 30% distributors, but they then only consider distributors to be distributors that have been active every month throughout 2013, which means that they must buy products for $90 each month to remain active. If a person signed up in January paying $499 for a business kit, then by November he realizes that he can't afford to buy the expensive products anymore (plus he hasn't recruited one single new member), he will have bought products for about $1,500 through the year in his attempt to build a viable Vemma business. However, in the statistics, he will be considered a customer as he wasn't active in December.
The total number of distributors in 2013 is presented as 105,251 and customers as 246,388. According to a press release,[2] Vemma recruited 30,000 new customers and distributors in July 2013. The monthly sales reached 20 million and the yearly total was 221 million, which makes July an average month for 2013. If 30% of the recruited people bought the silver pack (which is recommended for people planning to build a Vemma business), this would alone generate 4.5 million. If 9,000 new people are recruited every month and the total number of distributors is 105,251 at the end of the year, it also means that the average distributor quits within a year. Actually just a tiny fraction of the people that entered 2013 as distributors were still distributors in the end of the year. If the distributors that Vemma defines as customers are also considered, the situation is even worse.
Even when excluding the failing distributors the statistics[3] show that a small group of people get away with most of the money, and the majority will not earn enough to cover the expenses related to their business.
In Italy the authorities have fined Vemma for being a pyramid scheme based on recruitment in an endless chain.[4]