Litigation

Usana Health Sciences misrepresenting distributor earnings

By Tracy Coenen

written by: terminatedramp

USANA publishes a distributor average earnings chart to be used to recruit new distributors into their business opportunity. See the following USANA website that provides their earnings chart: http://www.usana.com/dotCom/opportunity/payplan/index.

Quoted from their website is the following:

The Average Earnings Chart is a great way to illustrate what a prospect can reasonably expect to earn in his or her USANA business.

Developed in collaboration with the Independent Distributor Council, the chart shows the most current figures available (usually from the previous calendar year) and includes all earnings from the compensation plan, Leadership Bonus, and contests and incentives. Check earners must have qualified at their respective level for at least 16 weeks (four months) in order to be considered in their rank?s earnings.

The Average Earnings Chart is a very misleading illustration that was developed in collaboration with a group of USANA’s distributors that have made millions of dollars recruiting new distributors into the opportunity. This special group of distributors are privy to insider company information that shareholders and other fellow distributors do not have access to. This in itself may be a SEC violation.

The Average Earnings Chart for 2008 misleads prospective entrepreneurs by only displaying Average Earnings calculated from the top 5% of those who received a commission check for the year. This is extremely misleading because roughly 94% of distributors that are represented in the chart are either Sharers or Believers (Bottom of the totem pole). However, the chart’s Average Weekly Earnings for Sharers and Believers represents only about 5% of them. Why is that? Because only about 5% of Sharers and Believers made at least 16 commission checks throughout the year. This is a significant number of distributors left out of the average earnings calculation!

Deduced from the chart, there are about 49,000 business associates represented through the ranks from Sharer to Star Director. About 46,000 of them are either Sharers or Believers. But the chart’s average earnings for Sharers and Believers represents only about 2400 of them. Why does the 2008 average earnings chart disregard the remaining 43,600 Sharers and Believers from the calculation? I’ll explain.

USANA’s 2005 and 2006 Average Earnings Charts once showed the number of associates in each rank and the total commission paid out within each rank. What resulted is the following:

2005 Average Earnings Chart,
Sharers earned $99.05 per year on average.
Believers earned $328.02 per year on average.

2006 Average Earnings Chart,
Sharers earned $98.43 per year on average.
Believers earned $314.41 per year on average.

Apparently those average earnings figures from 2005 and 2006 did not look very appealing. USANA with the collaboration of a few top distributors made some changes.

2007 Average Earnings Chart,
Sharers earned $2,303 per year on average.
Believers earned $5,283 per year on average.

2008 Average Earnings Chart,
Sharers earned $2,551 per year on average.
Believers earned $5,254 per year on average.

Their 2007 and 2008 average earnings charts grossly misrepresent what a distributor can ?reasonably expect to earn in his or her USANA business?.

What’s even worse is the fact that the total number of USANA business associates for the geographical location their 2008 Average Earnings Chart represents is 158,934. So roughly 70% of total associates never even made a single penny as a USANA distributor. Therefore, the 2008 Average Earnings Chart represents around 2% of the total USANA business associates.

If USANA made their average earnings chart representative of all their business associates in a clear and easy to understand illustration, then it would be clear to every prospective business seeker that less than 1% of USANA distributors make a profit.

I believe this information should be enough to at least warrant an FTC investigation into the matter. I’m sure you will draw the same conclusions as I and believe some sort of action should take place. USANA has used this misrepresented average earnings chart for over a year now. I believe the FTC and SEC should investigate USANA’s Independent Distributor Council in this matter as well since they collaborated with USANA in making this misleading representation of associate earnings as well as the possibility that they were privy to insider company information which was used to make the chart.

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Full post as published by The FRAUDfiles Blog on July 19, 2009 (boomark / email).