Vemma Nutrition Shut Down for Alleged Pyramid Scheme
A couple of hours ago the FTC moved to shut down Vemma for what they feel is a pyramid scheme. While the pyramid scheme can be debated, the fact that they charged a considerable amount upfront to be a representative may be the real underlying problem. I saw the article this morning and I wanted to touch on this subject for just a moment for those looking to build an MLM company.
I used to be heavily involved in MLM and decided to focus less time on building a company like this because of what may have just happened to Vemma. Jim Rohn had a quote that really resonated with me the more I learned about multi-level marketing companies and that is: “Focus full time on your career, and part-time on your fortune.”
The Problem with Most MLM Companies
What he is saying that you should keep your main thing the main thing and let a side business build up over time. The problem with most MLM companies is that you have no control over the products, the compensation changing anytime they feel like it, or anything to do with the operation of the company.
The main problem, however, is if an MLM company is charging a large upfront cost, it simply cannot sustain itself. It’s a constant recruiting cycle trying to recruit more representatives than actual customers. If the product can’t sustain itself on it’s own, it has no chance of lasting long term. The autoship with Vemma has come into question and if the representatives account for a large percentage of the products being ordered, this too is a problem with the FTC.
A huge problem with the MLM industry is that you give all your energy to a company for several years like I did, and the next thing you know you go from making $6000 a month income to $500 a month for the same customer base. This actually happened to me, and in the case of Vemma being shut down, these distributors could possibly lose all of their incomes.
I’ve seen it time and time again, sadly. Different companies, same story.
Can the MLM model work to build an income?
Yes, I believe it can IF the company has a tremendous amount of value in their products or initial offering or there is a low start up cost to become a distributor, and the autoships are weighted to where more customers than reps are consuming the product.
I think the FTC is actually wrong in the complaint that Vemma is an illegal pyramid, but this should be a wake up call to the industry that charging $500+ upfront to recruit representatives.
This is dying proposition, and it has been for years.
Only the die hard MLM community believes in this model and your friends on Facebook, believe me, are really tired of being pitched on these types of programs.
This is merely my opinion, but I’ve seen first hand how promoting an opportunity constantly to friends and family can turn them off if that’s all you ever talk about. I think a person is much better off learning the skills of online marketing to promote products or services through affiliate marketing, or find products or services to market on a local basis after hours from their normal career for extra income. However, there are MLM or affiliate type products that I think have good prices with low start up costs that aren’t centered completely around recruiting.
What are the Best MLM Companies in 2015 to Promote?
Having been around the industry for several years, and quite visible online, I get approached constantly about different opportunities or MLM companies to join. I’m not focused on building an MLM at the moment, but if I were, there are a few companies I would consider. I’m actually participants in a couple of them still, but mainly as a customer that enjoys the products & services, or they are services I can promote to my local business clients. Here’s my shortlist of MLM companies in 2015 that I think have the ability to do well in the future both financially and from a product usage standpoint to consumers. None of these companies are front end loaded in my opinion, which means it’s all about recruit, recruit, recruit. Some of them are just good to be a part of just for the association of some of the other representatives involved. You can see the list of the best home based businesses in 2015 here!
All the Best,