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I wanted to post an alert. I saw that USANA Health Sciences listed under the earnings announcements and I almost fell out of my seat. I know they are not a recommended gem, but I hope they never will be. This company is a total pyramid scheme. I've been to one of the "new sales" meetings and I was floored by the deception involved. You only make money if people below you make money, so you have to recruit more people to try to make a buck. Plus, you have to buy a "business program" from them to start. Mathematically, you WILL fail. Only the people at the top make money. Plus, this company is based in Utah, the mecca of pyramid scheme companies secondary to the lax laws concerning their operations and the strong lobby an political support they enjoy. You can readily get information about their setup and scheme from their website. They spend the majority of their recruitment activities telling people how they will enjoy financial independence and be able to "do what you want to do, when you want to do it". Yet, as a disclaimer, they do say that the average seller only recieves about $750 per year in comissions, hardly financial freedom.
In conclusion, this company is a fraud, do not buy it!


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Only the people at the top make money.

rodspee - do you mean the owners? stockholders? Do they make money?
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Hey Rodspeed,

I definitely appreciate your desire to protect fellow Fools from fraud, but if you're going to fire off this kind of fierce attack, I would appreciate it if you would post more information, calucations and links, for example, to back up your assertions.

If no one is making money at the lower levels, where is all of their cash coming from? Are you suggesting the make up product they sell, Sense - that is apparently the first to ban the preservative parabens is a fake?

I have been robbed and lost a great deal of money by a lowlife from Utah, so believe me, I think you make great points, but I think you need to post some more compelling facts to back up your assertions.

So far, I'm up 50% on my investment and have cashed out a nice profit allready. I see nothing to support your assertions, but if you have better info than they are based in Utah and the start-up is expensive, I'd appreciate it. The $750 per employee number you site is troubling, but I wonder if the bulk of money is made by "power-sellers" or the like, distoring the average. I'm sure lots of folks try this and quit.



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Hi all,

Above is the link to the online presentation from usana about their business model.

*The average income for all Associates in 2003 was $748.24. The earnings portrayed in this literature are not necessarily representative of the income, if any, that a USANA Associate can or will earn through his or her participation in the USANA Compensation Plan. These figures should not be considered as guarantees or projections of your actual earnings or profits. Any representation or guarantee of earnings would be misleading. Success with USANA results only from successful sales efforts, which require hard work, diligence, and leadership. Your success will depend on how effectively you exercise these qualities.

Above is cut directly from:

The link where info was found about "Multi Level Marketing companies" (MLM)'s fradulent practices, and their comfy home in Utah was found at:

"Chain or pyramid marketing program" is a sales device whereby a person, under a condition that he or she make a payment, is granted a license or right to recruit for consideration one or more additional persons who are also granted a license or right upon condition of making a payment, and may further perpetuate the chain or pyramid of persons who are granted a license or right upon such condition. A limitation as to the number of persons who may participate, or the presence of additional conditions affecting eligibility for the above license or right to recruit or the receipt of profits therefrom, does not change the identity of the program as a chain or pyramid marketing program.

This is from a FTC judgement against a pyramid scheme company. I gleaned it from the Do a search on "multi-level marketing"/

Below is again from the website about companies that appear to be legit, but are very cocerning to say the least.

"It seems that you get nothing for your money except the right to recruit other people and make money off of them when they put their money in," the man recently told the Federal Trade Commission. "And if you do not recruit anyone, you get nothing for your money."

Unfortunately, many other consumers don't see through pyramid schemes until they've invested their money and time. Enticed by promises of quick or easy profits, they eventually lose their entire investment, and some even go into debt.

Many people join pyramids in the belief that they're actually joining a multilevel marketing plan. Legitimate multilevel marketing plans offer a product or service that's sold to the public through a tiered network of distributors.

However, many multilevel marketing plans are actually pyramids. If they offer a product or service, it's only to make the program look legitimate. And if any sales are made, they're generally only to new distributors - not to the public-at-large.

"In pyramids, the emphasis is on recruitment," says FTC attorney James Kohm, "and most, if not all, of the sales are to distributors."

Participants in pyramid schemes often end up paying far more than their initial investment. A Milford, Conn., man, for example, found himself $75,000 in the hole after paying to attend sales meetings, buying more than $10,000 in products, setting up an office and running advertisements to recruit prospects. "

the full link is:

USANA, in essence, does not pass the sniff test. It reaks of a pyramid scheme diguised as something else. What is concerning is that usana has their independent distributors buy USANA products at wholesale, that they then may resell to others. There is a requirement to regularly purchase products from USANA and "These products may be for personal use and for retail sale, and may be ordered in a single order or accumulated over time." Sounds remarkably like a pyramid scheme the FTC warns about.

I always seek to invest in companies that I trust, that respects their employees, the public, is ethical and is as transparent as possible. I do not feel USANA is one of those companies. I ask those who are invested in USANA to review them more carefully for a long term investment decision. Do your due diligence, review the Multi Level Marketing regulations in your state and decide if you still like USANA.

I hope these links will help provide more info to help you all in your research on this company.



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rodspeed - great post. Good points.

I still don't see how this company does not offer great owner returns.

I assume your research would include NUS, yes?

Would you care to answer the above?
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Since it is not easy to discern the difference between legit and non-legit in this context, I looked over to find any analogies on this topic. (I think this topic has come up here before, no? I searched but found nothing.)

I could not find an info on average income and Amway is private so there is no way I no to compute an average. But the parent sports revenue of over $6 Billion with 3 million "sales" people. That is a little over 2 grand in revenue per sales person (not income).

You can piece this together on the amway web site or just go here:

Also below, I post from the amway web site a discussion of why Amway says it is not a pyramid scheme. Notice they mention low buy-in price which is refundable and no minimum requirements for purchasing inventory. Sounds safer than the requirements for USANA that were described by rodspeed.

I am long on USANA but have no loyalty here. For now I suggest we all think carefully about this as even the most apparently upstanding companies can surprise you with problems.



Business Opportunity or Pyramid Scheme?

The Facts

Some people confuse the Amway business opportunity with disreputable pyramid schemes. However, there are major differences, which have been officially recognized by the US Federal Trade Commission.

Multilevel or "network" marketing is a lawful and legitimate business method that uses a network of independent business owners to sell consumer products supplied by an established company. Business owners merchandise products to consumers, not in fixed retail stores, but through person-to-person relationships between business owner and customer. Business owners can also build and manage their own sales-force by recruiting, motivating, supplying and training others to sell those products. Compensation then includes a percentage of the sales of the business owner's entire sales group as well as earnings from their own sales to retail customers.

Pyramid schemes are illegal scams in which participants invest a large amount of money in exchange for the promise of receiving profits by recruiting additional participants to make a similar investment. Pyramid promoters sometimes try to make their schemes resemble multilevel marketing methods by introducing a product line. However, little or no effort is made to actually market the products to consumers. Instead, compensation is paid for recruiting.

The Amway Sales and Marketing Plan is based on retail sales to consumers, not empty "get rich quick" promises demanding that you hand over large sums of money. In fact, only a small fee is required to become an Amway business owner and that cost is refundable should you decide to leave the business for any reason. In 1979, the US Federal Trade Commission ruled that Amway is a legitimate business opportunity.

Amway does not require its Business Owners to buy inventories of stock, and does not impose a minimum order value. While business owners can earn bonuses from sales made by people they recruit into the business, Amway does not pay bonuses for the mere act of sponsoring another person.

The Amway Plan has been recognized and cited by federal and state courts as the example that multilevel marketing plans should follow.
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Yikes! Quite a bit of posts lately that appear to be a tempest in a teapot.

I am a mostly inactive USANA distributor who still buys the product. After my own due diligence several years ago I can assure you that USANA is a legitimate multi-level or network marketing company. The entire reason for USANA's existence is to manufacture and distribute high quality nutritional supplements and personal care products. It does this through a network of independent distributors (also called Associates). You can read any recent 10K or 10Q reports to see the numbers of associates and preferred customers that are actually buying products from the company and not just a place in a pyramid scheme. The entry fees for the business are minimal and sales supplies make up a miniscule amount of total revenue. It sounds like the original author of this thread may have encountered an overzealous sales team, but that happens in many industries.

The reported numbers on average distributor income are correct. The vast majority of distributors rarely earn more than $1,000 in commissions a year. My best year was about $3,000, and currently I make only about $600 a year in residual commissions. There are only a few hundred distributors who make a full time or better income at USANA. This is typical for all network marketing companies (Amway and NuSkin included).

Bottom line, the products are real, people who use them really like them and buy more. USANA makes good money doing this and the shareholders benefit.

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Thanks Chris (cle1321),

I haven't used the products because I've never encountered a rep selling them. I was however curious about the company after the previous posts.

I had previously purchased shares of Imergent (IIG) only to discover they were a nest of rascals. They too were headquartered out of Utah. And they were/are ripping off their "customers".

So long as USANA is manufacturing and selling a legitimate and useful product for a reasonable price, then I'm not to concerned what their distribution method is.

Direct marketing means lower overhead and there are lots of people who don't mind doing something part time to earn an extra buck. This way, there are no brick & morter costs or labor costs for sales people who are not productive.

I only have a small number of shares, but have been happy with the companies performance over the last year or so.

Thanks again,

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This is a speech that I found from the general counsel of the federal trade commission when she spoke to the International Monetary Fund in '98. Some very interesting stuff.

I will have to answer your question at a later time LivefromHopkins. I am not too familar with NUS.

I also want to say that I like the discussion here from the thread. I know that many of us here at HG seek outstanding companies to invest our money in and from the research on USANA, I have to say I am concerned. Regardless of the profits you have made, consider carefully for yourself whether USANA fits your profile and meets all your criteria for long term growth, integrity, etc. I do like that we had a poster who was/is a sales rep/independent distributor for them. I like to have insight and perspectives from all angles.



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I partially agree with your sentiment and am not a huge fan of the MLM model, but with Usana there is more to the story.

I can attest that Usana does indeed manufacture and sell a product through a network of distributors like any other and that like all MLM's the earlier you get in, the bigger your "downline" and the better chances for success (though Usana requires that this be balanced so success is not guaranteed by position alone).

They are based in UT, also home to companies like NuSkin (NUS) which have similar businesses and can make a great stock to own.

I believe that a large portion of the revenue comes from people who are hooked on their outstanding products like myself whom does not run a business but directly orders their product through a relative's Usana hosted website. They have terrific customer loyalty and were just added to the S&P 500. If you disagree with the direct selling business model, their are many other opportunities available.

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I also take these products. They are great. I've had some very unexpected results with my dental health.
I'm signed up as a distributor, but am not particularly active due to other career aims.
I can't agree that they are a pyramid scheme any more that any other company works that with a pyramid structure (and that's all of them!). Usana is one of the few MLM companies that was not founded by a network marketer, but rather a reputable scientist, and has more customers than distributors. I check them out on a regular basis and have yet to come across any credible reports of bad behaviour by the company or its distributors.
If you are concerned about MLM companies beind pyramid schemes (and many of them are), there are a number of MLM watch dog sites, but beware, many of these are maintained by disgrunteled distributors some of whom are rather dubious themselves. Network marketing can be a strange business and many go into it with false expectations.
Nonetheless, many do well with it and there are legitamate companies makeing useful products. I can't say that I'm a great distributor, but Usana seems a great company to me.
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I posted this message on Yahoo! Finance after I saw a rash of USANA bashing and phrases like "pyramid scheme" and "scam" being thrown around in a cavalier fashion:

"USANA is not a scam or pyramid scheme. Consider doing your research before issueing a blanket condemnation of this great company.

Unlike pyramid schemes which rely on collecting membership revenues from new "members," USANA sells real, tangible quality health products. Corporate revenues are derrived from sales of the products, NOT enrollment of new sales associates.

USANA utilizes an award winning network marketing compensation plan for its sales associates which should not be confused with a scam. For those who label USANA as such MISREAD the compensation plan. Network marketing is a legitimate alternative to traditional advertising and is sanctioned and closely monitored by the SEC. I recently listened to an NPR special on advirtising which concluded that most money spent on advertising fails. USANA recognizes this and uses the money which they would normally spend on advirtising their products and uses the money to compensate their sales associates.

But that's OK, go ahead and talk trash and drive the stock price down. Doing this gives me more buying opportunities. For those interested in uncovering what USANA is really about, visit their webpage and don't listen to the haters on yahoo finance."

That being said, does anyone have any comments on the conferance call today?


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Re CC today, I think all is well. I noticed the payables (and cash) up quite a bit, so I emailed a question about it cuz no one asked on the cc.

Interesting that they are really laying back on China and waiting to see how NUS and Avon do before they hard charge there (if ever).

I thought it funny that they were chortling about the stock price hit (down $4) saying they were rubbing their hands in anticipation of buying back more stock tomorrow morning - we'll see.

The Malaysia market (starting 07) is forecast to be like Mexico, HK and Singapore (each with 4M in 3Q rev).

So, I don't see a big change in story although it looks like growth is slowing just a bit - as would be expected as they approach 100M per qtr.

I'm not quite as enthusiastic about the magazine promotion to gain more associates - we'll see. It looks like they are taking a chance with this, but hey, no pain, no gain.

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Is anyone still here??

Looks like the SEC is investigating:

1poorguy (no stake in this company, only learned of it because we were approached to join it)
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The accuser was a short selling fraudster. I recently interviewed VP of R&D Tim Wood whom Barry Minkow accused of credential fraud.
He actually did have a PHD along the lines of Geo-Microbiology. The department supervising was Forestry which is what Minkow and the Media used for the attack.

Minkow and similar media typically might call the accused and if no immediate reply they go public. Nice!!! Not exactly Kosher from someone who claims to be a part-time pastor.

USNA is prefered among medical practitioners, MDs and Top Athletes to avoid failing doping-tests and more. Half USNA's competition fails lab tests, all but two are weak according to Nutrisearch.

The recent 70 brand diet-pill ban by the FDA should give them a boost in business.

Regards, CG long USNA at $20.5
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