In August 2015, the Federal Trade Commission filed a complaint against Vemma Nutrition Company for its alleged pyramid scheme that targeted college students and young adults, leading to the suspension of operations at the company.
More than a year later, the FTC has settled with the health and wellness beverage company that will bar it from operating any pyramid, Ponzi, or chain marketing scheme, according to Consumer Affairs.
“[Multi-level marketing] MLM companies must ensure that their promotional materials aren’t misleading, and that their compensation programs focus on selling goods or services to customers who really want them, not on recruiting more distributors,” Jessica Rich, director of Bureau of Consumer Protection at the FTC, said in a statement.
Under the stipulated order, Vemma is banned from compensating employees for recruiting new participants. The order also imposes a $238 million judgment that will be partially suspended upon payment of $470,136 and surrender of certain real estate and business assets, according to the FTC website.
In light of the settlement, BK Boreyko, CEO of Vemma, said in a statement that the company “paid a huge price to prove the value of our products and the ongoing validity of our business” and is excited about the company’s future.