Watch Out USANA, The FTC Settlement With Herbalife May Collapse The Entire Multilevel Marketing Industry.

After years of investigating, on July 15, 2016 the FTC announced a settlement with Herbalife. The FTC complaint charges that Herbalife participated in Unfair and Deceptive Acts or Practices in violation of Section 5 of the FTC Act, 15 U.S.C. § 45 by promoting a compensation structure that causes or is likely to cause harm to distributors, by making unsubstantiated claims about retail sales income earned by distributors, and by providing distributors the means to engage in fraud. Herbalife must pay $200 million in consumer redress and is ordered to restructure its business model as part of the settlement deal. While many in the media have claimed victory for Herbalife, it may be the critics that have claimed MLMs are pyramid schemes with no retail demand who actually have the last laugh.

Those MLMs with little retail demand for their products will collapse due to the new required rules for MLMs to abide by. MLMs must now be driven by retail sales, otherwise commissions will be reduced to lower levels. This means the top 1% of distributors who have large downlines will be taking a significant cut in their commission because the downline's personal purchases that don't get retailed to customers are not worth as much in commission anymore. This rule was made because distributors were primarily being rewarded for recruiting new distributors (whom end up being required to purchase product every month to participate) rather than for selling product to retail customers. I look forward to the eventual collapse of the MLM pyramid schemes and I thank the FTC for proving my arguments over the past decade to be correct.

Federal Trade Commission v. Herbalife International of America, Inc. - Stipulation To Entry of Order for Permanent Injunction and Monetary Judgement (Court Document)

Statement of the Federal Trade Commission - FTC v. Herbalife International of America, Inc. - July 15, 2016

Herbalife Will Restructure Its Multi-level Marketing Operations and Pay $200 Million For Consumer Redress to Settle FTC Charges
Company Must Tie Distributor Rewards to Verifiable Retail Product Sales And Stop Misleading Consumers about Potential Earnings

USANA Associate Trying To Sign You Up As A Distributor? Then You Need To Know What a Pyramid Scheme Is!

Anyone who has been approached by a USANA distributor trying to sign you up in a business opportunity needs to understand what they're about to get themselves into. The following video is probably the best video explaining what a pyramid scheme is. I believe USANA is a pyramid scheme where 99% of distributors lose money while funding the pyramid scheme that enriches less than 1% of distributors.



If you are a family member, friend, co-worker, or neighbor of someone you know who has been conned into one of these scams, I recommend sending them this video.

Former Herbalife Distributor Testimonials Represent The Bottom 99% of Distributors in All MLM Opportunities Including USANA

I strongly urge anyone considering to join USANA or any other multi-level marketing (MLM) company with intentions of making money watch the very compelling testimonials from Herbalife distributors who have lost thousands of dollars trying to achieve their dream. All MLM companies operate on the same principles and all have failure rates close to 99% of participants. The stories you will hear about in this video have been issues I have covered on this blog for many years.

FORMER HERBALIFE DISTRIBUTORS IN THEIR OWN WORDS (VIDEO)

I welcome your stories on this blog as well. If you feel you have been swindled, please explain why and how much money you have lost in the endeavor. Explain whether you returned product for a refund and if not, why. If you disagree with this testimonial or the notion that MLMs like USANA are pyramid schemes, explain why.

FBI and DOJ Are Investigating Herbalife - Watch Out USANA Because Your Business Model Stinks Even Worse!

Today the Financial Times revealed that the FBI and the DOJ have been investigating Herbalife (HLF), another multilevel marketing company similar to USANA (USNA) but much larger. This news comes a month after revelations that the FTC is also investigating Herbalife. This will be an industry wide ripple effect that can collapse every MLM product-based pyramid scheme like Amway, Nu Skin, Monavie, USANA, and hundreds of others that all have very high distributor failure rates.

These failure rates are fixed, predictable, and designed to fail the majority of participants. The general rule is this: Product is overly priced even at the distributor's cost. Product must be purchased periodically throughout the year in order to collect points and be able to receive a commission. The majority of funds used to pay out commission to the distributors is primarily generated by the required purchases made by the distributors rather than from actual sales to people outside the network. Worst of all, about 99% of participating distributors end up losing money and never make a profit.

There are not enough cells to hold all the criminals perpetrating these pyramid schemes. If you believe you have been duped by one of these pyramid schemes I strongly urge you to file a complaint with the FTC or your local government.

FTC Opens Formal Investigation Into Herbalife. Look out USANA - Your Pyramid Scheme Is In Jeopardy!

The FTC has opened a formal investigation into the pyramid scheme allegations of Herbalife. I look forward to its conclusions and believe every MLM including USANA will have a grime future if the FTC shuts Herbalife down. Those in USANA or have been involved with them in the past ought to file a complaint with the FTC as soon as they can.

The Number One Product USANA Distributors Sell is the Business Opportunity Membership. Is This Worse Than Herbalife and Amway?

USANA distributors' number one selling product is not a vitamin supplement or skin care product. It is actually the business opportunity membership. That's right, a $19.95 startup fee someone pays when they are recruited into USANA's business opportunity and placed in the distributor's downline. This might sound unbelievable but I believe it is true. USANA product cannot be retailed for a profit because 1) “preferred customers” get the product at the same cost as distributors and 2) the product is absurdly overpriced because of the percentage of “distributor incentives” paid out, so there is zero demand for the product above the distributor's cost. So the only thing reasonably priced is the actual membership fee to join as a USANA distributor. All the distributor has to do now is convince others that they too can become rich by signing up in USANA's business opportunity.

USANA claims distributors aren't paid commission from this signup fee and claims that doing so would make them an illegal pyramid scheme. USANA claims that if commissions are paid based on product sales, then it is not a pyramid. However, this $19.95 fee alone doesn't let the newly recruited distributor even start their USANA business. Their business venture does not begin until they “activate” a business center. To do this, the new distributor must “personally purchase” over $220 worth of product, which is 200 “personal sales volume” (PSV) as USANA calls it. Once activated, the new distributor can take part in USANA's compensation plan.

USANA considers this required personal purchase to activate the new distributor's status as a “sale”. Did the distributor who recruited this new member sell the product to the new distributor? Absolutely not. Did the new distributor purchase the product from the person who recruited them? Not at all. The only product that was sold by the distributor was a membership (recruitment). So USANA gives Group Sales Volume (GSV) points to every upstream member above the newly recruited distributor based on the $220 worth of product purchased. These GSV will travel all the way up to the very first USANA distributor if it needs to. Once enough GSV points are accumulated, they are converted into commission dollars.

After the newly recruited distributor has activated their business center, they must now personally purchase 100 points worth of product ($110) every 4 weeks to remain active. If the associate fails to make this personal purchase, that distributor is no longer considered active, is no longer able to make any commission, and loses all their accumulated GSV points (if they had 10,000 GSV, they now have 0).

Now imagine over 220,000 USANA active distributors all making their required personal purchases in order to stay active. Many are required to personally purchase 200 PSV since they have multiple business centers. That's a lot of product purchased from USANA but none actually sold by USANA distributors. Again, the primary product sold by USANA distributors is the membership. So why should any of these distributors make any commission whatsoever from these “required” product purchases made by every active distributor?

The only real customers are the USANA “preferred customers”. There are around 64,000 of them. In 2011, preferred customers only account for 10% of USANA's net revenue, which is virtually insignificant. 10% of $589 million is only $58.9 million. The amount of commission paid out is 45% of net revenue. So preferred customers only account for around $26 million in commission paid out. However, USANA paid a total of $265 million total. Where did the remaining $239 million in commission funds come from? USANA distributor's required personal purchases.

The FTC wrote a letter tothe Direct Selling Association back in 2004 the states the following: (my emphasis in bold)

QUOTE

...a multi-level compensation system funded primarily by payments made for the right to participate in the venture is an illegal pyramid scheme.

…

Modern pyramid schemes generally do not blatantly base commissions on the outright payment of fees, but instead try to disguise these payments to appear as if they are based on the sale of goods or services. The most common means employed to achieve this goal is to require a certain level of monthly purchases to qualify for commissions.

UNQUOTE

There is no question about it, USANA is operating as a pyramid scheme. Federal regulators have completely ignored complaints from thousands of MLM distributors and critics and have instead made it easier for these kinds of scams to exist (FTC's business opportunity rule exempts multilevel marketing business opportunities). Hopefully the recent attention Herbalife has been receiving from pyramid scheme allegations of their own draws enough attention to the MLM industry that federal regulators are forced to investigate frauds like USANA. Hundreds of thousands of USANA distributors are losing money and never even had a chance to make a profit. A 99% failure rate cannot and should not be ignored. And don't forget, USANA's #1 product sold by its distributors are memberships into the business opportunity.