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VEMMA -vs- FTC

Postby Peter Arnold on Fri Sep 18, 2015 6:09 pm

Hello Partners:

It has been a long time since I posted here (used to visit a lot).

But having been in this industry for 25+ years, and having had the
priviledge of serving on the Board Of Directors of our professional
association for 4 years, representing my country of Canada (ANMP.com -
the Association of Network Marketing Professionals - a global, non-profit
organization serving to educate, protect and inspire "field associates" only) -
I wanted to share this information, for those who might not have seen it.

Today, the court has ruled more in favor of the FTC than Vemma. The
preliminary injunction has been granted by the judge (although the receiver
has not been retained, and the assets are no longer frozen, which is good!).

After listening to a (Periscope) video the other day, from Kevin Thompson,
one of the lead M.L.M. attorneys for Vemma - it looked (to me) like VEMMA
would be the winner here - yet he did say "anything" could happen.

Here's one of the judge's own opinions, where he said - - -

-------------------- "The evidence before the Court leaves little doubt that the
FTC will ultimately succeed on the merits in demonstrating that Vemma is
operating a pyramid scheme." ----------------------

Personally, I see this (FTC win) as a serious WAKE UP call for the entire M.L.M. /
Network Marketing industry ((and especially, the "nutritional wellness" sector of it)).

Companies, and their Associates, need to examine - their standards - their culture -
their actions. Reckless compliance behavior (emphasising "recruiting" (-vs- "customer
acquisition") - and income claims - and medical testimonials - and costly start-up packs -
and required autoships [for bonus qualification]) - these will ALL be under intense
scrutiny now - and WE can all play our part in "safeguarding" our great industry (and
companies).

Perhaps there will be an appeal - but even so, history has shown poor results after
(M.L.M.) injunctions - particularly where the company's "hands are tied" on what
they can, and cannot, do.

Here is an early report, in case you didn't see it (and there are others out there) ...

-- http://BehindMLM.com/mlm/regulation/vem ... more-25475

There will be "lots" of brainstorming and commentary out there in the months ahead
within this industry - for sure - but our strong support will be with Vemma, and all the
associates & families whose lives will be affected.

Sincerely / Peter A.

Peter Arnold, CLU, CFC / Founder
Academy Group Online / Canada
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Re: VEMMA -vs- FTC

Postby willie robertson on Sat Sep 19, 2015 10:31 am

Hi Peter,

I think the MLM industry will survive, we've had many companies take hits, yet the true legitimate business seem to keep on keeping on.

I remember last year getting email promos on the company Wake Up Now, and NOW, where are they? Gone, although I've heard they are opening under a new company name, Disrupt or something.

Best thing for distributors is to not over hype things, if it's good it will stand.
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Re: VEMMA -vs- FTC

Postby Melvin Goodrum on Sat Sep 19, 2015 7:59 pm

Vemma had a long time given to them to clean up their act and they failed. Dumping excessive products on distributors was just wrong and requiring them to spend 150 bucks a month to be eligible for bonuses was the cake.


They made a lot of money but now its over with.
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Re: VEMMA -vs- FTC

Postby Peter Arnold on Sat Sep 19, 2015 8:06 pm

Hi Willie and Melvin:

Thanks for chiming in on this issue.

One thing we know for sure is - this industry has weathered "many" storms, and it will survive this too.

I do feel Network Marketing companies (and associates) need to "rethink" their business actions though - especially in terms of SO much emphasis being placed on RECRUITING, and higher cost Entry Packs (-vs- acquiring Retail and Preferred CUSTOMERS).

Most companies (and upline leaders) put far more stress on - "recruit - recruit - recruit" -- via their compensation plans -- in their Conference Calls -- in their seminars -- conventions - road trips, etc -- than on simply encouraging the "bringing in of more and more customers". In fact, there are very few companies in this industry that have their products "priced" to encourage Retail Sales by their associates (which is what the "regulators" truly want to see). Consequently, what we see in this industry is a "lop-sided" business health ratio, where there are more ASSOCIATES than CUSTOMERS. A "healthy" ratio should be about 75%-to-25% (customers-to-associates) - not the other way around.

We would never expect to see the phone, or cable, or insurance companies out recruiting more "sales reps" than "customers" - no. What makes them so "profitable" is their expanding, repeat-user, loyal customer base. Period.

Why should it be any different with companies in "our" industry? It should not be - but it is, because of the way our business is (and always has been) "promoted".

Granted, "our" business model differs somewhat from a "traditional" business model (and I believe it happens to be the finest one on the planet) -- but the "regulators" do not fully understand it (never have) in my opinion. However, the onus is squarely on US to "comply" with the RULES they (FTC / FDA / SEC / Industry Canada, etc) put in place - whether we like it or not - IF we want to stay in business.

Yes, building "networks" of ASSOCIATES is vital in our industry too - and we need to do that in a low key (NON-hypey!), professional way - as entrepreneurs, with high integrity -- BUT, we need to be placing our "major, major emphasis" on ATTRACTING CUSTOMERS - first. The hand-writing is on the wall - It's not rocket science.

I am disappointed that neither the DSA, or the MLMIA, or the ANMP, have not yet come out in "support" our industry on this.

Here's wishing you both continuing success in future.

Sincerely / Peter A.
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Re: VEMMA -vs- FTC

Postby Peter Arnold on Sun Sep 20, 2015 11:51 am

Here's another update on this ...

Leaders who love this great industry will embrace this whole VEMMA--FTC issue with high INTEGRITY, and deep SUPPORT for Vemma's CEO, and all of its ASSOCIATES (my wish).

Here's another leader's comments on this - from industry consultant, Troy Dooly.

He and I served together on the Board Of Directors of our professional association - ANMP .com - a few years ago..

-- https://www.youtube-nocookie.com/embed/ ... bxmM?rel=0

I know we will ALL be "stronger" in this industry as a result of this (ugly) case.

Sincerely / Peter A.
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Re: VEMMA -vs- FTC

Postby Melvin Goodrum on Mon Sep 21, 2015 5:42 pm

With all due respect, I really don't see any point in this mushy [email protected]#[email protected] about leadership, integrity, or supporting the industry. I've been in the network marketing industry for over 20 years but I certainly don't love it or need to support it. I do this to make money....pure and simple. I make money doing direct and affiliate sales as well, and make money by investing. The object is to make money and I only help my associates make money because it makes me more money but I don't defraud or give phony hopes to people

That being said, Vemma basically ran an organization that shoved their products down distributors throats and had no concern whether they made any money or not. They only cared about themselves. Now the products are being sold and even given away for pennies on the dollar. I'll buy a few cases and resell them for profit but its really sad to see this play out. These distributors were lied, scammed, and robbed of their money and their dignity.

What Vemma ran was not network marketing...it was a pyramid scheme.
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Re: VEMMA -vs- FTC

Postby Peter Arnold on Tue Sep 22, 2015 1:42 pm

Hi Melvin:

Point well taken. Sorry if I offended you.

I have always, always coached on two principles I feel strongly about, regarding Network Marketing, and where it fits into the equation ...

1)- As intelligent safeguards - never "fall in love with" ANY Network Marketing company. It's Ok to "love" your company (if that turns you on) - but, hold yourself "at arm's length" from your company (because things can, and DO, go wrong, resulting in you being vulnerable) -- and brand YOURSELF (never your company, or its products - don't become a "Mr. Amway" or a "Mrs. Avon") -- and don't make your MLM Biz your "only" business (DIVERSIFY your income streams);

2)- Never look at your MLM as an "end in itself" -- consider it strictly as a "means" to an end (a TOOL only), to help you develop a large cash flow + a strong net worth - which in turn, can help you build real wealth, safely, over time - through wise investments - by becoming your 'own' banker, etc, etc - to do whatever (travel / fund worthy causes / help your loved ones / etc).

As for your own opinion on VEMMA - that is something you are entitled to, obviously.

I happen not to hold that view.

Again, thanks for chiming in.

Sincerely / Peter A.
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Re: VEMMA -vs- FTC

Postby Jeffrey Sloe on Wed Sep 23, 2015 5:39 am

academy33 wrote:Companies, and their Associates, need to examine - their standards - their culture -
their actions. Reckless compliance behavior (emphasising "recruiting" (-vs- "customer
acquisition") - and income claims - and medical testimonials - and costly start-up packs -
and required autoships [for bonus qualification]) - these will ALL be under intense
scrutiny now - and WE can all play our part in "safeguarding" our great industry (and
companies).


As posted in another thread, our group has "been promoting the idea of 'customers' rather than 'distributors (associates)' to build a large organization, one that will sustain in the long run. Network Marketing companies that lead with their products, to attract customers, 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, not just distributors who signed up on the monthly 'auto-ship' plan. Distributors come and go, but customers, when satisfied with the products and/or services, tend to continue to be a customer for a longer period of time."

I feel the same way today! If your company's products are very good, and most MLM companies are, lead with the product. Selling products and getting your customers, not distributors, on auto-ship will help you to increase your monthly income.
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Re: VEMMA -vs- FTC

Postby willie robertson on Wed Sep 23, 2015 10:18 am

Sometimes MLM companies do seem to charge extravagant prices for their products... Back in 2012 I enrolled in a new company, mainly because I was impressed with the training and some of the key leaders in the company.

Shitte, that only lasted a few months, me staying in the company.

It cost me over $700.00 to join and I was told to get in a a certain level for more products and better $$$ benefits... Cool, I bought into it.

Then my monthly autoship was $123.00 month... WTF?

And as if that wasn't bad enough the damn auto ship payment date kept floating, one day it was on the last day of month and then it seemed to keep moving closer in to the middle of the month... I finally said, this is bull shit, plus I really didn't like the product anyway.

Lastly the damn comp plan was kinda wacky too. WTF, you need a damn degree to explain these comp plans, IF you can even do it.

The company I buy my supplements from now, quite to my surprise, has some very reasonable products and compare quite well to what I was spending at Walmart and the health food store, but a higher quality product than Walmart and the retail outlets. Plus I get a check each month.

Maybe the FTC can help these companies better police themselves and the distributors... Like I said these MLM companies/products can be quite expensive sometimes.
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Re: VEMMA -vs- FTC

Postby Peter Arnold on Wed Sep 23, 2015 8:37 pm

Hello Partners:

My thanks to those who have contributed their own thoughts to this thread.

It is no secret that, in your country (and perhaps in Canada too), the MLM industry is in the crosshairs of state Attorneys General and the Federal Trade Commission (FTC) and Industry Canada right now. The scrutiny is not personal - its business.

VEMMA is not the first, and will not be the last, company to undergo investigation, litigation - and perhaps liquidation. There will be more to come. These regulators are sworn to uphold the public interest. When consumers are harmed by business practices bordering on unfairness and exploitation, these agencies will move in swiftly.

Example #1 - The Fall of Fortune Hi-Tech Marketing (FHTM) in 2013 -- http://BusinessForHome.org/2013/02/the- ... marketing/

Example #2 - The Fall of BurnLounge, Inc (Google it, to see the full account of that one).

In their recent attack on VEMMA + "many" others - they list a number of "requirements" they want MLMs to meet.

For your information, below, is a recap of (16) of those requirements - with some "personal comments" on each one :>) - - -

---------------------------------------------

1) Remove qualifying requirements. In order to get promoted, you should not be required to be on an autoship.

-- If the product you are selling is that good, you and your team will most likely be on autoship anyway

2) Remove large package purchases upon sign-up.

-- Socialist crap! This idea is anti-free enterprise, anti-American, anti-Freedom, and anti freedom of contract law. Only a socialist country would allow this. Is the United States a socialist government now? Did Americans never really fight to protect the natural freedoms and UNalienable Rights their Founding Fathers actually intended to be protected?

3) Provide incentives for CUSTOMER sales - not TEAM building.

-- Half truth. Yes, provide incentives for customer sales. That's only smart. To do otherwise, is somebody not thinking. But no incentives for team building? More socialist nonsense by the FTC.

4) Provide more training around PRODUCT sales - instead of TEAM building.

-- Instead of what? Yes, there should be more training around "product" sales, for sure - something sorely lacking in most MLM companies. But this training. INSTEAD OF training on team building? Again, more anti-free enterprise crap from a socialist agency.

5) Remove all income-claims. Affiliates should be excited about selling the product. Results will speak for themselves. Only allow income claims under strict supervision from corporate if need be.

-- Of course nobody should make an income claim. This is just common horse sense. Everybody determines their own income by how much they know, and APPLY (do).

6) Focus more on PRODUCT. There are many network marketing companies that are product centric such as Jamberry, Scentsy, Chloe + Isabel, etc.

-- Agreed. However, most may not emphasize SELLING them to the "end user". THAT could potentially get many companies in trouble.

7) Require certification to purchase larger packs of product. A certification similar to the type of training a wholesaler would need to go to and train at events and/or present. If someone wants to host an event, they won't be at risk of making a lot of the claims the FTC sees as a red flag.

-- More socialist and ANTI free enterprise hogwash.

8)
Under promise and over deliver. Instead of hyping what less than 1% of a distributorship is accomplishing (new cars, houses, lifestyle, etc) focus on what the company should be focused on – the product.

-- Agreed. It's the ethical path. But it shouldn't be FORCED by law.

9) Have points equal the dollar amount. If an affiliate spends $100 in product, they should have 100 product points. There are several companies that have you spend upwards of $200-$300 to gain 100 points.

-- Dumb. either the FTC is stupid, or playing stupid. The Network Marketing industry needs adjustable PV/BV, for currency fluctuations, etc.

10) Have a separate website just for CUSTOMERS - that has NO mention of a business opportunity.

-- EXCELLENT idea. This is simply smart marketing.

11) Have Customers sign up completely separate from signing up as a business.

-- Yes, agreed. This is just common sense.

12) In order to be an AFFILIATE -they must be a CUSTOMER first - and have tried the product.

-- Plain STUPID idea. So, to be a retail clerk at a retail store, do you have to be a customer of all the products first? This goes to show how stupid government can be. Of course, one will naturally be more effective at selling by "being a product of the product" - but to REQUIRE IT? Just more socialist government attempts to control free people.

13) Don't recruit from "college campuses, jobs", etc

-- More stupidity. Just because some idiots abused this by over-promising, one BANS doing this, in an 'ethical' way? More big government idiotic think. It's just a lame excuse for the government to control people more, and lessen freedom, and perhaps create another government revenue source from fines for trespassing.
.
14) If an Affiliate has a Team that does not fall comfortably in the 70/30 rule - apply disciplinary action. (Warning letter, training, etc)

-- The government thinks you're a bunch of babies, who need a spanking if you don't consume or sell 70% of your monthly purchases before you re-order again? You're not supposed to have FREEDOM - you're supposed to live under the arbitrary rules the Executive Branch makes up as they go (who shouldn't be making up any rules in the first place - as that's your Congresse's responsibility, according to my understanding, as a Canadian. The executive branch EXECUTES Congresses wishes ( of which Congress allegedly "represents the people") That's IT.

15) Give rewards/bonuses for personal PRODUCT sales.

-- Well, of course! Does the government have to "tell" smart business people what makes common sense? Why wouldn't a company reward retail sales with rewards and bonuses! :>)

16) Do not accept, or offer, financial contracts for top sales individuals to move to companies. (This is fraudulent)

-- No it's NOT 'fraudulent', in itself. If someone gets paid a huge signing bonus, or special monthly bonus not normally given, and then he represents himself as "becoming successful the same way everybody else has had to" - then THAT is fraudulent. Getting paid off like this is "unethical" ... but not "unlawful".

-----------------------------------------------

These are 'personal' comments only, on each of the above.

Sincerely / Peter A.
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