Summary of Action
Vemma Nutrition Company, which was formed in 2004 by Benson K. Boreyko and his two sisters, has been operating an illegal pyramid scheme while calling itself an affiliate marketing company. In addition to its fraudulent compensation program, the Arizona-based company, which targets high school and college students, has made countless unsupported health claims about the various liquid supplements, energy drinks, and weight management products that it sells, all of which violate a prior FTC consent order filed against Boreyko, the company’s CEO.
The company has been the subject of an on-going investigation by TINA.org after receiving complaints by both students and parents about the business’s marketing practices.
In March 2014, TINA.org learned that Italy’s Competition and Markets Authority (AGCM) declared that Vemma operated an illegal pyramid scheme and had sanctioned the company €100,000 (roughly $140,000). Vemma, which is appealing the Italian decision, uses a similar compensation plan in the U.S. In response, TINA.org sent a letter to the FTC in April 2014 alerting the agency of the AGCM’s decision. TINA.org also notified the Advertising Standards Authority in the UK (who referred the matter to its counterparts in Ireland) and the Competition Bureau in Canada in August 2014 because Vemma conducts business in those countries as well.
In June 2014, TINA.org’s investigation demonstrated that numerous Vemma affiliates had been using unsubstantiated health and treatment claims about Vemma products to market the Vemma business and its product lines in violation of the prior FTC consent order and notified the agency.
In August 2015, the FTC filed a lawsuit against Vemma for, among other things, operating an illegal pyramid scheme. One month later, in September 2015, the FTC obtained a preliminary injunction that severely limited Vemma business operations while the FTC’s lawsuit was pending. Finally, in December 2016, the FTC and Vemma reached a $238 million settlement agreement that bans recruitment-focused business practices, as well as the use of any deceptive income claims and unsubstantiated health claims. The agreement was approved and entered as a final order.