This was written by TerminatedRamp, of Usana (NASDAQ:USNA) stock message board infamy:
Understanding USANA’s Pyramid Scheme is Key To Financial Freedom
If you want financial freedom, then understanding how USANA is a pyramid scheme can help you avoid losing thousands of dollars.
All MLM companies admit that in a pyramid scheme, distributors are paid commission for signing new distributors up. The commission would come from the $20-$40 fee that new distributor pays to become a distributor. USANA avoids this and claims they are a legitimate business opportunity and not a pyramid scheme. Ok, so that must mean USANA is not a pyramid, right? Wrong.
What USANA and many MLM companies do to get around this is pay commission to distributors on SALES VOLUME POINTS. Great! So distributors sell product and everyone benefits. Sounds legitimate, except for the following fact. USANA FORCES its distributors who want to be eligible to collect those commissions to purchase $107-$242 worth of product every 28 days! This forced purchase to participate “IS A FEE” to participate in the venture.
When you have 150,000 Commission Qualified distributors purchasing product because they have to, then those at or near the bottom make nothing while those distributors near the top (those who have hundreds of distributors underneath them) make over 70% of all the commissions paid out. This is how and why 99% of distributors lose money. It is a mathematical fact and a very disappointing outcome for those 99% of distributors.
This 28 day REQUIRED FEE goes toward paying all the distributors above you. So instead of getting paid a commission for signing someone up (which is admittedly illegal), USANA Substitutes this by paying out commissions every 28 days BASED ON THE FEES TO PARTICIPATE paid by the downline distributors. THIS is illegal and the FTC already wrote a letter stating so to the Direct Selling Association in 2004. Here is the letter and you can read it for yourself: http://www.marketwaveinc.com/FTC_Letter….
If you are a USANA distributor, you should really consider what is written here and discuss it with your lawyer or accountant if you do not wish to take my word for it. Only then can you achieve true financial freedom by avoiding this pyramid scheme.