Pyramid Schemes/Product Sales

Has anyone ever asked you if USANA is a pyramid scheme or what a pyramid scheme is? How did you respond? It’s important you know the correct definition of what a pyramid scheme is so you can accurately and intelligently respond. This month’s Compliance Corner sets the record straight about what a pyramid scheme is and how product sales play a critical role in the success of your business.

A pyramid scheme is when someone enters into a contract and, as part of that contract, they pay consideration (something of value, such as money) for a chance to earn a commission based on recruiting others into the plan. The government has determined that pyramid schemes are illegal because there is no real transaction of any good or service, and once the pool of recruits has dried up, the pyramid collapses. Pyramid schemes also often include a required fee simply to participate that is in excess of a starter kit.

A legitimate network marketing company also offers a contract where someone pays consideration for a chance to earn money. However, commissions are based on product sales rather than recruiting people into the plan.

USANA’s compensation plan is based on product sales, not recruiting. The USANA Binary Compensation Plan has been reviewed by legal counsel numerous times, and it has been determined to be a legitimate multi-level marketing company. We comply with the laws set forth by all regulatory agencies and enforce them to protect you and your customers.

Product Sales

As mentioned above, USANA’s compensation plan is legitimate because commissions are based on the Associate’s own product sales and the product sales made by those in his or her organization. It’s important to remember that Associates must meet specific personal and downline sales requirements as well as other requirements to be eligible for bonuses, commissions, and advancement to higher levels of achievement. You can find information about the non-sales requirements in the Policies and Procedures manual.

Regarding product sales, Section 5.1 of USANA’s Policies and Procedures states:

The following sales requirements must be satisfied in order for Associates to be eligible for commissions:

* Associates must develop or service at least five customers every four-week rolling period. For Associates who elect to be Distributors, these customers can be either retail customers, Preferred Customers, or any combination of the two. For all other Associates, these customers must be Preferred Customers.

By electing to be a distributing Associate (Distributor) there are more ways in which you can fulfill your sales requirements. You can either make five sales to retail customers, Preferred Customers, or a combination of the two. As an Associate who elects to not be a Distributor, these five sales must come strictly from Preferred Customers. By completing five sales every four weeks, you are meeting the sales requirement portion of being qualified to earn commissions.

With this new understanding of the differences between a legitimate network marketing company and a pyramid scheme, you can stand confident in the face of negative questioning and feel a sense of security in knowing that USANA and its high-quality nutritional supplements will be around for the long haul.

Brent Neidig
Compliance Officer and Trainer