A world-record skydive is an enticing way to sell an energy drink, but a free BMW is pretty sexy, too, especially if you're a college student strapped for cash. And that is exactly who the makers of the drink Verve are targeting. But is it the drink they're really selling?
Savannah consumer advocate Ross Howard attended one of the sales pitches for Verve and its parent company Vemma and decided it had all the makings of a multi-level marketing group.
"With multi-level marketing, you are selling a product, and that's what keeps it from being a pyramid scheme. But at the same time, the focus is on recruiting other people," he said.
That's more or less how Georgia Southern University student and Vemma salesman DJ Snyder sees it.
"We have an actual commodity," he said. "We have a product. That's why this isn't a pyramid scheme."
Students are forking over big bucks to become part of the company -- between $500 and $1,000. They're expecting huge returns on their investment. They're told they can make millions, even get a free BMW.
Our consumer advocate's take? Buyer beware.
"The promise of any big money with little effort just doesn't happen," Howard said. "Nothing replaces hard work. As you listen to what they have to say, you may want to do a little research before you sign on the dotted line and separate your wallet and its money."
With about half of new college grads unable to find work, you can hardly blame these students for looking for creative ways to make cash. But they aren't the only ones who like the idea. Angie Chu -- that's Chu as in Chu's convenience stores -- has been part of the company for four years. Chu's even sells it in their stores.
"I've got a third grandbaby on the way, and everybody's got to have a plan B," she said. "And they'd like to have a few trinkets, and I'd like to be able to offer that to them."
So bottom line -- yes Vemma can make you money. Yes, it's a big investment. Yes, it will take a lot of work. But is $500 or $1,000 a risk college kids, their parents, or anyone can really afford these days? Well, that's up to you.
Howard Ross' tips to avoid multi-level marketing scams:
Make sure you pick a company with a product you're really enthusiastic about.
Do your homework. Check with an outside auditor to make sure the profits the company claims are legitimate.
Check to see how much sales experience the person who recruited you has – and how much time they're likely to devote to training you.