Judge Rules Tempe-Based Vemma Nutrition Company Must Stop Much Of Its Normal Business Operations
A federal judge has ruled that Tempe-based Vemma Nutrition Company must stop much of its normal business operations. It’s the latest development in a lawsuit the Federal Trade Commission filed against the multi-level marketing firm last month.
The lawsuit accuses Vemma of being a pyramid scheme because it engaged what the FTC called “unfair” business practices that were more reliant on recruiting salespeople than selling to consumers.
The order allows the company to continue direct to consumer sales, but stops several of Vemma’s major activities like recruitment, and paying commissions. It also means a federal monitor will continue to keep an eye on the company.
The consumer protection agency said that Vemma told recruits that they could make as much as $50,000 per week selling its nutritional beverages. An initial investment of $600 was paid for products and business tools and additional Vemma products had to be purchased each month to receive bonuses.
According to court documents, Vemma officials have contended they've updated their marketing materials and procedures adding the FTC’s evidence against the company is not current.
Officials with Vemma were not immediately available for comment.