The FTC consider any USA company with a network marketing compensation plan and retail sales below 51% as a Pyramid Scheme and regular attack smaller companies who are not compliant with the FTC Business Guidance For MLM.
In 2012 a Wall Street Journal reporter asked Doug DeVos and Steve Van Andel, in an interview:
What percentage of the products that Amway sells to the distributors, are resold to end-user customers who are not also distributors?
The Amway co-CEO’s told the Wall Street Journal that 50% of the sales that are made to distributors are resold to actual retail customers. The other half is not resold by the salespeople to anyone.
That seems to be not true, at least not for the USA…
Amway nowadays release the retail numbers at their achievers conference every year and have not gotten over 15% in the USA market.
Average is around 12-13% and Amway tries to improve those retail figures. International retail sales might be higher.
I am not after Amway, I am not trying to poke a bear, however as an international Direct Sales reporter in my opinion it’s a strange situation the FTC goes after smaller MLM companies and let a Network Marketing giant get away with minor retail sales for the past 25+ years.
Its measuring
Tag Archive for pyramid scheme
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Lyoness and Lyconet A Pyramid Scheme In Norway
by Ted Nuyten • • 0 Comments
The Lottery Authority in Norway is a government agency responsible for illegal marketing, illegal gaming and pyramids.
The next letter is send to Lyoness, and underlaying divisions: Lyconet and CashBack World (Google translation):
Notification of decision sent to Lyoness.
On 11 January 2018, the Lottery Authority has sent notice of a decision to terminate Lyoness’s operations in Norway.
Notification of decision sent to Lyoness Notification of decision is addressed to Lyoness Europe AG and Lyoness Norway AS, but will also include 150,000 Norwegian participants and 1,000 loyalty companies included in the Lyoness sales system in Norway.
Illegal pyramid-like sales system
Based on the number of received tips in 2016 and 2017 and the content of these foundations, the Lottery Authority has assessed whether Lyoness is an illegal pyramid-like sales system pursuant to section 16, second paragraph, of the Lottery Act.
In the assessment, we have assumed that revenues from Lyoness’s business in Norway are mainly from the acquisition of participants, and not from sales or consumption of goods, services or other benefits.
Lottery Authority’s conclusion
In the notice of decision, the Lottery Authority concludes that Lyoness’s business in Norway is an illegal pyramid-like sales system pursuant to section 16, second paragraph, of the Lottery Act.
We have paid particular attention
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LuLaRoe Hit By A Class Action Law Suit Accused To Be A Pyramid Scheme
by Ted Nuyten • • 0 Comments
According to an article in Business Insider:
Direct sales clothing brand LuLaRoe is no stranger to controversy. From torn leggings to salespeople who claim they were encouraged to incur massive debt, the company has struggled to maintain its emphasis on community and self-empowerment during a period of massive growth.
LuLaRoe is now facing a class-action lawsuit that alleges it misled its salespeople in what the plaintiffs are calling a “pyramid scheme.”
The suit, which has four plaintiffs from across the US, alleges that the company deceived salespeople — who are called “consultants” — by telling them they could return unsold inventory for a full refund if they decided to leave the company.
A sudden change to the policy in September lowered the promised refund from 100% to 90% of purchased inventory, with additional restrictions. According to Yahoo, many consultants said that they felt comfortable joining the company because of the buyback guarantee, thinking that they wouldn’t face financial stress if they weren’t able to sell as much clothing as they had hoped.
The plaintiffs allege that in changing the rule, the company misled consultants who thought they would still be able to sell clothing with the 100% buyback guarantee.
The suit was filed on October 13 in the US
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Tips From BBB To Identify Pyramid Schemes
by Ramya Chandrasekaran • • 0 Comments
Cookware, makeup, lotions and potions, supplements, candles, essential oils, jewelry and the list goes on. All are products sold by companies whose business models include sales via word of mouth and home-based parties.
If you attend the party, you’ll be invited to join the company and to join the thousands — maybe even millions! — of others who found financial freedom as a company consultant.
But you may be wondering how multi-level marketing companies, which are legal, are different from pyramid schemes, which are not. Here’s the answer: If the money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan. If the money you make is based on the number of people you recruit and your sales to them, it’s not. Instead, it’s a pyramid
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Where The FTC Went Right — And Where It Went Wrong
by Tina Williams • • 0 Comments
If Amway could make it out of the problems they had and come out the strongest network marketing company in the world, there’s a strong chance that Vemma can make it out of this as well — and probably better for it.
Whether you agree with the FTC or not about their reasons, it’s still an organization Americans need to understand and respect if they want to stay off the FTC radar.
The recent allegations against Vemma by the FTC are strong, to say the least. But what isn’t strong, is network marketing’s response to it. True to fashion, the response has been a retalliation against the allegations, disregarding the accusations. It is doubtful that most network marketers have read the details of the report.
In a nutshell, Vemma is in trouble because some time
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BK Boreyko – Vemma CEO Statement on FTC Pyramid Charges Case
by Ted Nuyten • • 0 Comments
BK Boreyko, Vemma CEO stated today on his Facebook:
“Hello Vemma faithful:
Just wanted to clear up a couple of phone calls I’ve received about moving to other companies. Although I know there’s panic out there, I want you to hear it from me…hang tight.
We have a hearing scheduled for September 3rd.
I think we’ll win. Until then, I know you want to do the best for your teams and that’s a sign of great leadership.
I will and have always complied with the court’s order in this matter. I’m the kind of guy that would never violate the terms of that order. If you hear anything different, tell them you talked to me and I said buckle up because there’s great things ahead for Vemma!
About Vemma
Founded in 2004 by BK Boreyko and
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FTC Charges Vemma To Be An $200 Million iIlegal Pyramid Scheme
by Ted Nuyten • • 0 Comments
The FTC lawsuit against Vemma has been published and this are the allegations: illigal pyramid scheme, Income claims, Failure to disclose, Means and instrumentalities, Relief defendent.
The FTC was granted a court order to freeze the company’s and CEO B.K. Boreyko’s assets as well as a temporary restraining order.
“Defendants are running a global pyramid scheme that has likely victimized hundreds of thousands or millions of consumers” the FTC said in court filings released to the public Tuesday.
It is a direct attack on the MLM – network marketing industry. If Vemma is closed down, a lot of network marketing companies with a simular model in the USA are in deep trouble.
The FTC names Vemma Nutrition Company, Vemma International Holdings, B. K. Boreyko, and Tom Alkazin as defendants.Tom Alkazin’s wife, Bethany Alkazin is named as a
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Zeek Rewards Scam Pays Out Yet Another $89 Million
by Tina Williams • • 0 Comments
The receiver for defunct ZeekRewards.com said Thursday he has made a third distribution to victims of the Ponzi scheme, this time for $89.2 million.
Kenneth Bell said 112,734 checks were mailed July 31. The distribution raises to $246.05 million the amount that Bell has released from the ZeekRewards estate since September.
Bell said he was not able to distribute an additional $46.24 million because about 35,400 potential recipients still have not completed their eligibility requirements, such as electronically signing the legal release and certification required by court orders.
Bell said most victims who are qualified for reimbursement would get a check.
Bell raised his projection of what the average recipient should get from 60 percent reimbursement to approaching 70 percent. The next distribution, if possible, is set for Oct. 31.
In August 2012, the U.S. Securities and Exchange Commission
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SEC shuts down Achieve Community for Pyramiding
by Ramya Chandrasekaran • • 0 Comments
The Securities and Exchange Commission has announced fraud charges and an emergency asset freeze against two operators of a Colorado-based pyramid and Ponzi scheme that promises investors extraordinary returns of 700 percent through a purported “triple algorithm” and “3-D matrix.”
In the complaint the SEC alleges that Kristine L. Johnson of Aurora, Colo., and Troy A. Barnes of Riverview, Mich., have raised more than $3.8 million since April 2014 from investors they enticed into buying positions in their company Work With Troy Barnes Inc., which is doing business as “The Achieve Community.” In Internet videos and other web promotions, investors were pitched “you and anyone you know can make as much money as you want” by purchasing positions that cost $50 each, and as they progress through the matrix they would receive a $400
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Class Action Lawsuit Filed Against Ambit Energy
by Tina Williams • • 0 Comments
Ambit Energy customers represented by national consumer-rights law firm, Hagens Berman, today filed a class-action lawsuit against Ambit alleging that the provider of electricity and natural gas services illegally operates a massive pyramid scheme, in which Ambit uses customers as consultants to market to friends and family, lures consumers to switch energy providers with the promise of lower rates, and causes the rates to increase, according to the complaint.
“Our investigation has shown that not only does Ambit use deceptive tactics to reel in its customers, but it then exploits them for its own gains – calling them ‘consultants’ and developing more pawns in its twisted scheme for higher profits.”
Attorneys representing the class of Ambit customers state that the energy company has defrauded its 13 million customers, growing its revenue from $1 million in 2006