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Monday, January 05, 2009

Is USANA and other MLM schemes legitemate businesses or Scams?

I have been issuing warnings now and then about the dangers of becoming involved in multi level marketing scemes (MLM), also known as "Pyramid Schemes". One of the real hot schemes right now is USANA which has the endorsement of various sporting associations and many top sports people.

Here's a quick illustration of how a MLM scheme works:

Be warned: 80-90% of the people who get involved in these MLM business schemes lose their money. If you want to make money out of MLM, then you need to be one of the first - At the top of the pyramid. If you come in nearer the bottom, then you are in for a financial hiding.

Just to add some balance: Here's a Fox report that raves about USANA.  Oh my! - How the borderlines between news and advertising are so blurred:

I am not opposed to supplements, just the way they are being sold via MLM schemes - and who wants to take a whole lot of synthetic stuff?  Give me the natural versions any day.  Supplements should never be used as a substite for a lousy diet.  People need know nothing about health and nutrition while being a distributor of USANA, dishing out health advice along with a handful of synthetics.

So, who is Barry Minkow of the Fraud Dsicovery Insitute?

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Richard Bacon said...

I appreciate that you don't like MLM as a business model, but to spend time and effort slating it seems petty and churlish.
Usana has a great many distributors who not only understand nutrition, but are fully qualified and practicing MDs, right here in New Zealand.
A business model will stand or fall by its own merits and if it or the products are flawed then the company will not be around for long. Two very successful MLM companies you may also have heard of, Avon and Tupperware.
Pyramid schemes are ones in which no product or service is provided and members receive commission solely for signing up new members. These were epitomized by early franchise companies. Usana does not pay commission for signing up new customers or distributors, only for sales.
It seems a shame to lower yourself to these levels.
Richard Bacon

Gary Moller said...

There is not really much time or effort needed to slate these schemes - its easy.

I write about it because I am approached almost weekly by people touting all manner of MLM schemes, promising wealth and happiness. I of course refuse to have any involvement.

But I see the damage being done to the nutrition industry by over priced goods with outrageous health claims being touted by an army of get rich quick pundits who have no nutrition knowledge at all. The reinvention of the Snake Oil Salesman.

And I have a problem with MDs and other health professionals who sell MLM (pyramid) based nutrition products. Patients are in a vulnerable situation and should never be subject to persuasion from the health professional under their care to purchase product that is priced such that they are guided into becoming pyramid scheme distributors for the financial benefit of the health professional who is sitting nearer the top than them. How on Earth can the patient be assured of impartial advice?

Before you challenge my impartiality: When I sell a product to a fee paying client (the majority) I give it away at near cost and sell with a small profit margin to internet customers. There is no double-dipping when a person pays for my time. I also have no allegiance to a single brand or supplier, seeking instead to locate the best products at the best prices for a client.

MLM products are generally very, very over-priced for what they are and there are plenty or similar products of equal or superior quality at far better prices. So why would a health professional with a skerrit of ethics ever want to sell these MLM products to a patient?

Anonymous said...

The MLM companies are sound for long and now they are busting again.

kuesoken said...

While I agree it's a difficult business model to be successful with, the company's products are excellent. I work with one of the largest Universities here in the southwest of the U.S.A., and the only reason they don't purchase the products for their athletes is a budget issue. The LARGEST university in my region does purchase the supplements for their athletes and has spoken directly with our trainers on many occasions regarding the Usana supplements.

thanks for your time,
P.S. And what dickie said in his post. ;-)

Gary Moller said...
This comment has been removed by the author.
Gary Moller said...

I have an open mind about the quality of USANA; but I do note that one of the "authoritative" guides used by many USANA reps that has USANA as one of the best supplement ranges on the market is highly suspect of undisclosed author bias. I have had no answer to date of my inquiries to confirm or otherwise any links between the author and the products listed that get the big thumbs up.

Synthetic supplements are dirt cheap to manufacture and of undoubted purity; but purity does not necessarily equate to effectiveness. I prefer a natural sourced supplement. While a natural one usually costs much more to produce these usually come with many nutritional cofactors one naturally finds with a nutrient in nature. Give me natural vitamin E, A or C any day!

My main concern is not to do with the quality of the USANA product; it is the business model that reminds me more of a religious cult than anything else. For each individual success there are many, many failures.

That a large university purchases USANA is neither here nor there as an argument: It is a variation on the "mine is bigger than yours" line of reasoning. I would be most interested in seeing a full disclosure of all those in the USANA supply line to, and within, the university. Who is getting the commissions from the sales to the athletes? Are parties within the decision making processes getting the dosh?