Well-known MLM attorney Jeffrey Babener has been in contact, with his views on the recent FTC illegal pyramid scheme lawsuit filed against Vemma.
Oz,
a more detailed article is coming for our website…in the mean time, here is a succinct and informed article on Vemma…
Feel free to share it….
This one is from someone who actually has tried cases and represented major companies…
best,
Jeff Babener
For those unfamiliar with the MLM legal landscape, Babener (right) is
the principal attorney in the law firm of Babener & Associates.
For more than 30 years, he has advised leading U.S. and foreign companies in the direct selling industry, including many members of the Direct Selling Association (including Avon, Herbalife, USANA and NuSkin).
Writes Babener;
On August 17, 2015, the FTC filed a complaint in U.S. District Court in Arizona, seeking a permanent injunction against Tempe-based Vemma International Holdings, Inc., a long-time direct selling marketer of health-related products.
The FTC was successful in obtaining a temporary restraining order, which shut the company and froze its assets.
Further proceedings for a hearing on a preliminary and permanent injunction and other relief were set to the future.
Such a scenario has been a common approach for the FTC. The most recent actions resulted in permanent injunctions against BurnLounge and Fortune Hi-Tech Marketing.
The primary accusation against Vemma is that its program focused on recruitment rather than sale of product to the ultimate user, thus rendering the program a pyramid scheme and a deceptive practice under FTC legislation.
In addition, the FTC has charged that Vemma is deceptive in its earnings representations.
FTC vs. Vemma Litigation Bullet Points:
1. (a) This case affirms the BurnLounge standard requiring emphasis on sales to ultimate users, which includes nonparticipant retail customers and personal use in reasonable amounts.
Primary motivation for distributor purchases should be destination to ultimate users and not to qualify in the plan for compensation.
(b) Contrary to some industry comment, autoship is not under attack, but rather the method of its promotion and implementation and amount, which suggests the primary motivation for purchasing is not for sales to retail customers/ultimate users or reasonable amounts for personal use, but rather to induce purchasing to qualify for commissions in the plan.
(c) A similar analysis is applicable to up-front fast-start packages.
2. The FTC alleges several accusations that Vemma is not complying with the BurnLounge standard, and, thus is a pyramid.
(a) Emphasis not on use or retail but purchasing to qualify.
(b) Distributors are told to give away product.
(c) Little evidence of retailing or emphasis on retailing or teaching or training to retail.
(d) Up-front emphasis on buying fast-start packs of $500-$600, plus sign up for $150 per month autoship to qualify for commissions, rather than service an actual need.
(e)
🤖 Quick Answer
Who is Jeffrey Babener and what is his expertise in the MLM industry?Jeffrey Babener is a principal attorney at Babener & Associates with over 30 years of experience advising leading U.S. and foreign companies in direct selling. He has represented major corporations including Avon, Herbalife, USANA, and NuSkin, and maintains significant expertise in MLM legal matters and regulatory compliance.
What is the context of Babener's recent commentary on Vemma?
Babener provided informed legal analysis regarding the FTC's lawsuit against Vemma, alleging illegal pyramid scheme operations. His commentary was shared by industry observers as a credible perspective from an attorney with substantial experience litigating direct selling cases and representing major industry players.
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