Posts Tagged ‘usana’

Multi-Level Marketing Income Disclosures

Medifast Pyramid SchemeSome multi-level marketing (MLM) companies release income disclosures or earnings disclosures. These documents theoretically provide insight into how much distributors earn in commissions or overrides.

However, the disclosures are generally worthless. What is more important than the information in these documents? The information that is not disclosed in the documents.

Multilevel marketing companies purposely omit important information that would allow potential distributors or investors to have real insight into these plans.

Usana’s “Distributor Hall of Fame” Analyzed

Usana Watch Dog has been busy compiling more data about the Usana Health Sciences “business model” for distributors. He writes about what I already know from my years of research into multi-level marketing schemes: Nearly everyone loses money in these schemes, and those who do make  living are almost always those at the top of the pyramid. 99% of the people lose money so that a fraction of 1% at the top can make  the big money. That, my friends, is no legitimate business model.

Our friend Usana Watch Dog has compared the 2006 data compiled by Usana on their distributors to the data he was able to manually extract from what Usana currently publishes. You can see from the 2006 data that the vast majority of the distributors who are receiving commission checks are “sharers” or “believers,” and they were earning an average of about $200 per year. Incidentally, this $200 is not even enough to cover the minimum purchases the distributors are required to make in order to continue to be eligible to receive a commission check.

Acquisition by Usana Health Sciences Gets Them Into China (Legally, This Time)

A few years ago, I was involved in an investigation of multi-level marketing company (MLM) Usana Health Sciences (NASDAQ:USNA).  One of the allegations that came out during that investigation was that Usana was illegally conducting business in China. China has strict laws against multi-level marketing, making it impossible for the company to do business there under its current MLM model.

Usana had legitimate business operations set up in Hong Kong, which does not have laws prohibiting multi-level marketing activities. It was alleged that Usana was using the Hong Kong employees to get access to people from mainland China, and show them how to circumvent the laws to participate in MLM.

Usana Health Sciences Knows it Products are Being Sold Illegally in China

Almost three years ago, Barry Minkow and Fraud Discovery Institute released a report on Usana Health Sciences (NSDAQ:USNA), listing ten red flags of fraud he and his team (which included me) uncovered about the company. The report criticized the company’s business model, essentially calling it a pyramid scheme in which recruiting is the focus (rather than the actual sale of products) and pointing out how little money Usana distributors actually make.

For example, the company touts average income of $802.62 per North American distributor per month. But that’s very misleading. The income is very top-heaving, meaning a select handful at the top of the pyramid make a lot, and almost everyone else makes nothing. Further, this is gross income, not net. Associates have to pay all their business expenses out of this, leaving them with much less at the end.

Wondering Why Frauds at Public Companies Aren’t Being Pursued by the Feds?

Consumers are often left wondering why the Securities and Exchange Commission doesn’t heavily pursue allegations of fraud against public companies like Overstock.com (NASDAQ:OSTK), Usana Health Sciences (NASDAQ:USNA), Herbalife (NYSE:HLF), and the like. I’ve always said the answer is simple: There are not enough resources devoted to investigating and prosecuting fraud in public companies. Executives are free to use phony accounting measures and other false information to hype the company with little fear of action by the SEC.

Usana’s New REV3 Energy Drink

Back in April I told you that Usana Health Sciences (NASDAQ:USNA) would be rolling out a new “energy drink” at their annual convention:

The new product is an energy drink. Apparently, studies by Usana show that you could get a bigger kick from a cup of coffee, but they are counting on the cult mentality to sell the product. Usana-heads will believe management… If they say it gives you energy, then by golly, it gives you energy!

The details are set to be released to the sales force at the convention next week, but here they are…

Usana Health Sciences and recruiting distributors in churches

If you’ve ever been involved in a multi-level marketing (MLM) company of any kind, you know that one of the favorite recruiting grounds is churches. Especially with companies that supposedly promote “Christian” values (like Mary Kay), the church is the logical place to find recruits.

Sadly, many pastors have no idea how abusive the MLM business structure is, and the fact that 99% of participants in MLMs actually lose money. Oh sure, it sounds great to be self-employed and to help others be self-employed so they can find more time for their families… Fits right into a Christian lifestyle, doesn’t it?

Twin Pyramids: An Analysis of Distinctions and Points of Similarity between Usana Health Sciences and BurnLounge, Inc.

Introduction
Behind Different Masks, the Same Face

Two companies, BurnLounge Inc.(1) and Usana Health Sciences, are in the spotlight of federal regulators, investors, fraud investigators and business journalists. The fundamental legitimacy of each company is in question. Both are being called calculated and sophisticated frauds. Tens of thousands of consumers are wondering if they have been duped by these schemes.

  • Federal regulatory agencies have announced investigations or prosecutions of both companies. The United Securities & Exchange Commission (SEC) announced an informal investigation of Usana. Burnlounge is being prosecuted by the United States Federal Trade Commission (FTC) for unfair and deceptive trade practices.

Usana Contradictions

Are most Usana distributors with the company for the business opportunity or the vitamins?

  • June 20, 2005 Earnings Call Usana CFO Gil Fuller says business opportunity – “We now have 125,000 active associates who are pursuing a home-based business opportunity.”
  • Success From Home Magazine Usana CEO Myron Wentz says business opportunity – “I have no question that I made the right decision by launching Usana the way we did. Not only has it delivered true health to consumers, but it has also delivered true wealth to our associates.”

Where is Bradford Richardson?

I feel like I’m playing Where’s Waldo… Does anyone know where Bradford Richardson went? He is the former VP of Asia Pacific for Usana Health Sciences, and he recently resigned. Rumor has it that he “went to work for a competitor.” I’m just dying to know if my November 14th prediction that he was going to work for Shaklee was correct…

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