As many of you probably heard, there was a huge industry shakeup this week when the FTC decided to sue Vemma. This is a dramatic action against a long-standing company within the network marketing industry, and potentially the industry as a whole. MLM attorney Kevin Thompson has posted an excellent opinion/status video here if you'd like his take on the matter .... what are your thoughts?
The FTC claims that Vemma "promised college students riches if they sold its nutritional drinks, but most ended up losing money." I know most MLM companies do not make, and are not allowed to make, unrealistic earnings promises. However, I've heard a lot of networkers making outrageous income claims, and/or boasting about how much money they are making. I know a lot of MLM companies promote the "business model" rather than promoting their products. They use a flashy video, a charming successful network marketer, and a compelling comp plan to "hype-up" their next "new" distributors. They typically talk about the business model and how much money can be made by building a large organization (of distributors), and very rarely talk about the company's products. Granted most information is coming from the FTC, but from what I've read, I would have to believe that's what got Vemma in trouble. So, was it because of the practices of Vemma's corporate office, or just some "greedy" networkers trying to build their business? We may have to wait until the court hearing starts, which is scheduled for September 3rd, to learn the truth. In the meantime, my heart goes out to those Vemma distributors (the ones abiding by the law) that poured their hearts and souls into their business, as they await a judges decision. The Federal Government may be after the Network Marketing companies in general. The Vemma situation, along with the struggles of Herbalife, could be the first steps towards looking into ALL network marketing companies, with an agenda to shut them down. I guess only time will tell. About the Network Marketing Industry: Our group has been discussing this news, along with what we believe to be a legitimate Network Marketing business for quite some time. We've also been promoting that "customers" rather than "distributors" will build a larger organization, and one that will sustain in the long run. Network Marketing companies that lead with their products rather than lead with the "business model", will be around a lot longer, and may even stay off the FTC radar. After all, for any business to survive, they need customers. Distributors come and go, but customers, when they like the products and/or services, they tend to continue to be a customer for a longer period of time. In the days ahead, we will see if the FTC attack on Vemma Nutrition is an attack on the MLM industry as a whole, or just an isolated incident.
