The Vemma Final Order came out: https://www.truthinadvertising.org/vemma-pay-millions-settlement-ftc/ I like the work that TINA (Truth In Advertising) does, but this headline was very misleading, not very smart for an organization with their name. The Final Order is here: https://www.truthinadvertising.org/wp-content/uploads/2016/12/Vemma-final-order.pdf (or vemma-final-order). The $238 million kicks in ONLY if BK/Vemma don’t follow the requirements, which I doubt they’ll be able to do. However, they will NEVER be able to pay back anywhere near $238 million. Ever. So it may as well be $238 billion. Vemma/BK have to cough up, on the front end, ~$400k they have in cash, sell an extra $2 million house, a couple of $20k motorcycles, a golf cart and some other odds and ends, and that’s it. A couple/three million dollars won’t go very far in compensating the people who got scammed, even the $238 million probably wouldn’t fully compensate them, especially when overhead costs are figured in, not to mention the human carnage of people dropping out of college, going bankrupt, damaged family and friend relationships, divorces, suicides, etc. Unfortunately, the FTC still doesn’t address the tool scam directly, leaving it to theoretically be encompassed within the “no material omissions” part of the Final Order.
However, the Final Order isn’t entirely negative, as Vemma still has to, among other things:
- Pay bonuses ONLY if the affiliate (i.e., distributor) AND their downline have more than half of the profit coming from external, non-affiliate customers;
- As mentioned above, if Vemma screws up and doesn’t follow the agreement, the $238 million judgment comes alive;
- Lifestyle claims cannot be made, whether direct or implied;
- Vemma must pay an outside auditor for the next 20 years to be sure the rules are being followed;
- Any health claims must be fully back up with scientific, randomized, double-blind, placebo, etc., studies;
- Full disclosure must be made, no more material lies by omission are allowed;
- Describe overhead costs to participate;
- If Vemma is dragged back into court, the FTC accusations must be accepted as facts with no further proof required; and
- Top Vemma affiliate Tom Alkazin has a separate, similar Final Order.
After the FTC was embarassed by Herbalife regarding Herbalife’s claim they were not an illegal pyramid, and satirized by John Oliver here: https://www.youtube.com/watch?v=s6MwGeOm8iI (English version, viewed by nearly 7 million people at the time of publishing) and https://www.youtube.com/watch?v=Cy-O4myeUzg&feature=youtu.be (Spanish version, viewed by nearly 2 million people at the time of publishing), the FTC decided to not only use the term “unlawful pyramid” in the Vemma Final Order, but also made a point there is little difference between these two scams: https://www.ftc.gov/news-events/blogs/business-blog/2016/12/dismantling-pyramid-lessons-vemma-settlement (or dismantling-a-pyramid_-lessons-from-the)The promised generic MLM guidance is expected to look a like the the Vemma and Herbalife Agreements and the above document.
Herbalife stock was worth almost 40% more in late July, soon after the FTC agreement, than it is now (at the time of publishing, late December 2016), so investors are clearly worried about the long-term prospects, which is a good thing.
And now the stocking stuffers, this recording by a couple of long-time MLMers who agree most MLMs are illegal pyramid scams: http://kimklaverblogs.com/is-there-life-after-herbalife/
Here’s a private class action lawsuit against the MXI MLM (Xocai “magic” chololates) scam that includes a requirement for the MLM to have 51% retail sales, ramped up over a period of a few months, in order to pay the distributors a bonus. Minimum retail sales in order to pay a bonus is something I’ve never seen except in FTC settlements, and of course various MLM rules, such as Amway’s, which are never enforced. It starts on page 34 here: mxi-settlement
An older recording I tripped across: https://www.youtube.com/watch?v=6wxxQHCG2Jw&feature=youtu.be I saw Les several times while in Amway over the years, and note how he mentions giving similar talks to large, legitimate companies. This implies Amway is also legitimate, which is definitely not true. Also, the extremely emotional pleadings, rewarding of dishonest behavior, etc., is sure to be the favorite parts of the speeches to the upline scam artist scumbags. Brown’s wikipedia bio: https://en.wikipedia.org/wiki/Les_Brown_(speaker) indicates he was married for two years to Gladys Knight (yes, THAT Cladys Knight!) but has 9 children, all of them apparently out of wedlock. Not exactly an inspiring messenger.
And because so much additional focus has been brought to MLM scams this year, another bonus, this upcoming meeting early next year, which shows the MLM scams are hopefully feeling the wrath of the FTC: http://dslcsummit.org/