USANA and its Grand Pyramid Scheme - The Untold Truth
Active Associates Are Required To Purchase Product Every Four Weeks

USANA claims that no inventory is required as a business associate with their company. This is not true however. In fact, USANA requires their associates to purchase at least 100 sales points worth of product every four weeks in order to participate and be eligible for commissions. This costs the associate a little over $100 every four weeks (thirteen times a year). This purchase does not count toward that associate's own commission, but does so for all associates upline. It becomes quite clear that a company with almost 200,000 active associates will spend over $260,000,000 each year in required inventory purchases alone! This doesn't even account for those associates who are on a 200 sales point requirement every four weeks. Therefore, the majority of USANA's net revenues comes from the active associates required inventory purchases.

Here is what USANA states in their SEC Filings regarding these required associate purchases:

"Each Associate is required to purchase a certain amount of product each month ("Qualifying Purchases"), which they must either resell to consumers or use personally in order to qualify to earn commissions or bonuses under USANA's Compensation Plan. Associates do not earn commisions on these Qualifying Purchases."

 

Here is what the FTC states on this matter (My Emphasis in Red):

"A multi-level compensation system funded primarily by such non-incidental revenues does not depend on continual recruitment of new participants, and therefore, does not guarantee financial failure for the majority of participants. In contrast, a multi-level compensation system funded primarily by payments made for the right to participate in the venture is an illegal pyramid scheme.

...

The Commission's recent cases, however, demonstrate that the sale of goods and service; alone does not necessarily render a multi-level system legitimate. Modem 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. While the sale of goods and services nominally generates all commissions in a system primarily funded by such purchases, in fact, those commissions are funded by purchases made to obtain the right to participate in the scheme. Each individual who profits, therefore, does so primarily from the payments of others who are themselves making payments in order to obtain their own profit. As discussed above, such a plan is little more than a transfer scheme, dooming the vast majority of participants to financial failure."

I believe that USANA falls directly in line with the FTC's statement regarding product based pyramid scheme. Just because federal regulators have not acted yet does not mean the scheme is legitimate. Look at how long it took for Bernard Madoff's $50 billion Ponzi Scheme to get shut down even after the SEC was constantly notified about the scheme. If USANA distributors tell you that USANA's business opportunity is legitimate because the feds have not shut them down, just point out how long it took to shut down Madoff's scheme.

Contact Author: USANAWatchDog@gmail.com
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