Thursday, April 24, 2014

Why Italy Said Vemma's a Pyramid Scheme; Analysis by TINA

My Vemma Haul!
My Vemma Haul! (Photo credit: BenSpark)
But who's actually getting (keel)hauled? 
Truth in Advertising, i.e. TINA, has published a full analysis and translation of why Vemma was deemed a pyramid scheme in Italy back in March 2014.  From TINA article:
The investigation by Italy’s Competition and Markets Authority (AGCM), which sanctioned Vemma €100,000 (roughly $140,000), began in June 2013 after two consumers complained about the Arizona-based company’s marketing and sales practices. During the investigation, Vemma proposed changes to its Italian compensation structure. It also announced changes in its U.S. structure. But a analysis has found that the changes to the U.S. compensation plan do not make the plan significantly different from the one Italian regulators found to be a pyramid scheme.
Here are some interesting facts about Vemma's membership in Italy, released by AGCM, where Vemma was given months to cooperate with the investigation, and even presented a defense.

  • Only 27% of associates were eligible for bonuses by regularly ordering products from Vemma.
  • Fewer than 100 individuals on average generated six-month sales commissions higher than €1,000 (about $1,300 in June 2013), while nearly all the other associates received quite low or even paltry compensation.
  • A significant portion of the orders consisted of purchases made by associates themselves, presumably for their own consumption, which in the network are known as “autoship” sales.
  • Approximately 20% of the total income generated from product sales was obtained from the sale of expensive Vemma packages called “Builder Packs” that cost €599 or €999 (about $700 to $1,300 in June 2013), and over 60% was generated from autoship sales.
  • Only about 16% of the income was generated from the sale of products to third parties.
  • Only 24% of associates had a VAT number (European version of "resale license"), which would enable them to sell products to third parties. 
BK Boreyko, when contacted by TINA for comment, stated that he intends to appeal the decision, as well as implemented several changes. However, as TINA stated, the changes are minor and mostly cosmetic, and the core comp plan did not change much, if at all. 

There's a LONG list of qualifications to to fully qualify for the commission, including personal recruitment of people, autoship, and much more. Here's a full list, as per Vemma / TINA:
  • Obtain about $150 worth of product every single month.
  • Purchase a $500 “Affiliate Pack,” which replaced the silver and gold “builder packs.”
  • Have an auto-delivery order on file.
  • Personally enroll at least six individuals who have to acquire about $150 worth of product every single month. To maximize bonus possibilities with your six enrollees, you’d have to
    • Enroll three individuals who buy a minimum of $150 worth of product in the same week; and
    • Enroll three individuals who buy a $500 special Vemma pack and enroll with auto-delivery to buy a minimum of $150 worth of product in the same week.
  • And if you want to earn about $30,000 a year, you’re going to need at least 100 people under you who are also willing to do all of the above. As for making top dollar (as in more than $2 million),’s best estimate is that you’d need more than 100,000 people below you.

You can read the full TINA article, including a full translation of the Italian decision, at:

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