For years students could spot bright orange “Vemma" bottles in the hands of students around campus, but as of Sept. 18, the orange drinks are going to fade into the background.
Federal Judge John Tuchi barred the Tempe-based Vemma Nutrition Company from resuming normal operations. Tuchi wrote in his ruling that the self-proclaimed network marketing operation was, in fact, a pyramid scheme. He also detailed that the company made unsubstantial claims about the product.
A major part of the platform involved recruiting college students to pitch the product through a group they call the Young People Revolution.
The Federal Trade Commission wrote in a report said the company “lures college students and other young adults with the prospect of getting rich without having a traditional 9-5 job.”
To its credit, founder and CEO of the company B.K. Boreyko said in speeches that affiliates could own their own BMW within just a few months of working with Vemma.
In 2013, publicly available data showed that more than 87 percent of affiliates earned less than $3,673 and less than 0.62 percent earned more than $92,000.
However, Jake Petrykowski, brand partner and leader of one of the top sales teams, said the FTC claims and court ruling are massively out of center and that a small percentage of the business ruined it for everyone.
“There’s very specific rules and regulations that every network marketing company has,” Petrykowski said. “Unfortunately when you have hundreds of thousands of reps in dozens of companies, there’s no way to police them all. It’s not legal to make health claims — ‘cure, treat, heal’ — about health products. But you can’t be everywhere.”
He said that the majority of these complaints about Vemma and what initiated the suit were college students who made misleading claims in recruiting and selling the product and a distributor, Anthony Powell. According to a New York Post article, 42 percent of the complaints were linked to Powell.
Petrykowski explained the brand's marketing tactics in terms of water. Marketers, in a general sense, cannot say “water cures dehydration.” It does, but to use the misleading terminology without actually being a medical professional isn’t legal.
He also said that many of the statistics provided by the FTC itself were inherently misleading because of the company’s model. Anyone recruited into Vemma can order the product online, but Petrykowski said that many of the people he worked with were simply customers interested in drinking the product, not actually selling it.
Because they were included in the percentages, the actual statistics may be less staggering.
ASU alumnus and former Vemma distributor William Boor agreed with Petrykowski, though he said he saw people lose money and earn money — it was a sort of a balancing act.
Although he heard complaints about the company being a pyramid scheme from colleagues on his team, he managed to earn some money while working with Vemma in college.
“I know I never had a problem with the company, I never had anything but good experiences with it, but I know that not everyone can say the same thing,” Boor said.
Related Links:
Vemma: scam or business opportunity?
Graduates defend health drink company
Reach the reporter at megan.janetsky@asu.edu or follow @meganjanetsky on Twitter.
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