Where The FTC Went Right — And Where It Went Wrong

Edith Ramirez,FTC,Chairwoman


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 ago, their young reps targeted college students and inspired them to the point of these students dropping out of school. It created a chain reaction that caused parents to get up in arms and several years later, they're in trouble. 

“College doesn’t guarantee anything but students loans,” 23-year-old Alex Morton, one of two salesmen who launched the college drive about five years ago, told a Las Vegas recruiting session in the Spring of 2012.

In 2013, an article was posted in the Arizona State University paper warning their students about this movement and several major publications posted about this movement. Since then, Vemma ramped up their regulations and the movement ended. However, it takes some time for the government to catch up and even though Vemma has corrected their mistake, the FTC believes they still need to pay for it. 

Whether college is the most lucrative or even the best way to receive an education that will provide a better future is subjective. We all have our own paths and network marketing tends to attract those that don't follow the path most traveled. Indeed, it's an opportunity for many people that may not have an opportunity otherwise. 

However, where network marketing goes wrong – often times – is telling people that the path they're on is the wrong one. 

Regardless of Vemma and the obstacles they're facing now, there are many things in network marketing that need to change and instead of distributors — from all companies, not just Vemma — jumping in and saying how wrong everyone is, it's time that the distributors of network marketing do something all successful entrepreneurs do; learn from the mistakes. 

The executives of Vemma are some of the most competent ones in the industry and they've hired experts to help them through this. In the meantime, what can you do? Yes, Vemma has asked for testimonials. But, besides that, what can you – the network marketer who is reading this do? 

– Whatever path a person is on, whether they're working minimum wage at a fast-food joint or earning six figures already, compliment and support their path. If said person is happy and doing what they love and they express that, don't try to recruit them. Support them as you would expect to be supported. The three foot rule needs to go away. It's sleezy sales and sleezy sales attracts negative attention.

Currently, in real estate, it's the first time in many years that buyers and sellers are in a good position to buy and sell. Interest rates are low, the inventory is at a great place, and people are getting loans again. However, agents aren't allowed to convince anyone to sell their home, regardless of how much money they make. So, how are agents making money? By representing the millions of people who are wanting to buy or sell. It needs to be the same for network marketers. Leave the people alone who give no indication of needing you and help those that are interested. 

– Do not go on someone elses territory and recruit out from their 'home'. It doesn't matter if you're going to a college campus or a corporate building – don't go where you're not invited. Even though the military has recruiting stations on college campuses, they're doing it with the permission with the college and offer tuition payments to college as well. Even with the invitation and the assistance in payment, there is still controvery whether even this should be allowed. 

– Focus on your product instead of recruiting. The best builders are those that love the product. How does one love a product they haven't had a chance to fall in love with? If your company isn't falling under the 80/20 rule (80% customers, 20% builders) then you're in jeapordy of being pegged a pyramid scheme. Thus, if your team doesn't fall under the 80/20 rule, you are also falling under this threat. 

– Under promise and over deliver. If your company is constantly selling a dream of new cars, yachts, and 6/7 figure incomes when only a small percentage of the distributorship is earning that, you're missing an opportunity to sell something that most distributors can obtain — a love of a new products, and the chance to supplement their lifestyle. If your company has problems helping a new person earn $400-$500 a month without spending at least that much or more, consider it a red flag. 

– And lastly, if you disagree with any of these points, then you're missing the bigger picture of what's happening with the FTC and an opportunity to improve the industry.

It's unclear where these allegations will go. While most companies are parallel in structure to Vemma, a battle the FTC probably can't fight, not all companies are being accused of college campus recruiting. 


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