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Is Usana A Pyramid Scheme Or A Scam? [2020 Review]

Welcome to my USANA review! If you are wondering is USANA a scam or a pyramid scheme, I'm here to help you find out!

First of all congratulations on taking the second to do your research. It's the only way to avoid all the scams out there and to actually find business opportunities that work.

The changes are that someone has approached you either selling the products of USANA or offering a business opportunity to join.

Or maybe someone you know is posting their Facebook feed full of product recommendations from the company. Whatever the reason is you are doing research, you had suspicions. Could this be a pyramid scheme?

It's important to recognize that network marketing, MLM and pyramid scheme are not the same thing, even though FTC has recently been tightening it's guidelines on what constitutes a pyramid scheme.

So we will start by looking at what exactly is a pyramid scheme and then look for any evidence pointing to USANA being a pyramid scheme or any other kinds of scam, like a Ponzi scheme.

Before we continue, I want you to know that I'm not affiliated with USANA in any way and I'm not writing this to try to get you to join the program.

My site is about helping people start home-based businesses that allow them to work on their own terms. So I check out business opportunities and see

I review online business opportunities, PTC sites, MLM businesses, etc. offer my honest opinion and recommend the services I've personally found useful.

When I recommend a product, it usually includes an affiliate link, which means I will earn a commission with no extra cost to you if you buy. That is partly how I monetize my site and I have no reason to hide this fact.

I fully believe in the products I recommend and offer you my full support and advice if you buy through my links.

Usana Summary

Company: Usana ealth Sciences

Type:  MLM in the supplement and skincare niche

Price to join: $29.95 

Summary: Usana is a legit MLM that has been around since 1992. It produces high quality supplements in the US. 

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It has a couple of investigations and lawsuits in it's past, but all have concluded that the company is not running a pyramid scheme.


But it is definitely an MLM with the common problems of MLM businesses. Usana is exceptionally open about the fact that most of their associates/sales reps don't end up making any income.


In my opinion Usana doesn't present a good income potential so I can't really recommend Usana as a business opportunity but if you are dead set in becoming an MLM rep, Usana is one of the better ones. 


I recommend creating your own online business instead. It will allows you to earn real passive income on the long run and to work from when and where you want. You can check out my number one recommendation for learning these skills through the link below. 

The Difference Between An MLM and A Pyramid Scheme

Before we can look at if Usana is a pyramid scheme, we need to understand what a pyramid scheme is and what's the difference with a pyramid scheme and MLM or network marketing.

Pyramid Scheme:

A pyramid scheme is a scheme with a multi-level model of recruitment that recruits new members by promising income for enrolling others into the system.

Since the recruitment multiplies in an exponential fashion as every recruit can recruit additional people into the system, the system will eventually collapse as there won't be enough people to recruits.

In reality pyramid schemes are often so short-lived that they never reach a recruitment saturation point. They will be closed down by authorities or the owners disappear with the money before this happens.

In a pure pyramid scheme there won't be products or services to sell to consumers and the only revenue comes from the recruitment fess of the new recruits. I.e. you have to pay to get in.

The scheme offers a multi-level income structure. Meaning that you will earn a share of the revenue from several levels of recruitment below you. This effectively shuttles money from the bottom of the pyramid to the top.

The bottom of the pyramid will never have a chance to make back their investment. This is the reason pyramid schemes are illegal in most countries.

MLM and Network Marketing:

Multi-level marketing or MLM offers a similar multilevel compensation structure as pyramid schemes. The key difference with MLMs and pyramid schemes is that in MLMs there are products or services being sold to consumers outside the system.

Sometimes the line between MLMs and pyramid schemes is vague but generally speaking in a legit MLM you can't earn income simply from recruiting. The people in your downline need to do sales as well and you earn commissions from those sales.

Also most of the revenue of the whole company should come from the sales of products or services, not from participation fees.

Sometimes things get a bit sketchy, when it's unclear if the sales reps/associates are actually counted as customers when they buy products from the company.

Some MLM have been classified as pyramid schemes by authorities but most haven't been. Thus, MLM or network marketing is not the same thing as pyramid scheme and at least for the time being they are legal in most countries and especially in the US.

Overview Of The Company: Usana

Usana Health Sciences is an American multi-level marketing company based in Utah. Usana focuses on the health, nutrition and personal care niche.

The company is headquartered in West Valley City, Utah and has it's own manufacturing facilities there as well. USANA products are sold in 24 countries.

Their mission is: "to develop and provide science-based health products of the highest quality, distributed internationally through direct sales, creating a rewarding opportunity for our Independent Associates, shareholders, and employees.".

The company's core values are excellence, community, integrity and health and they claim to offer

Usana was formed in 1992 by immunologist Myron Wentz. Dr. Wentz originally had a diagnostic testing company called Gull Laboratories in Salt Lake City but he turned it into a supplement manufacturing facility with an MLM distribution model.

It has since grown to a global company with over 300 000 individual sales reps. Usana has had a fair share of controversy, media coverage and lawsuits that we'll talk more about in a minute.

Usana is also a well-known sponsor of athletes, including Olympic level athletes and they offer a sponsor program called Athlete Guarantee Program which includes a guarantee that if an athlete tests positive for a banned substance as a result of taking Usana nutritional products, Usana will compensate that athlete twice their current income. Pretty neat.

Usana is in a way a pure MLM as it's products are not available through regular retail channels but can only be purchased through one of their independent associates (MLM reps) or by direct order from the company.

Usana is a part of the Direct Selling Association and publishes their Code of Ethics on their website.

The CEO of the company has been Kevin Guest since 2016.

Products Of Usana

Like we already established, Usana focuses on science-based health and personal care space and they manufacture most of their products on their own facilities.

Their business model seems to be targeting premium high-quality products on a significantly higher price-point than equivalent commercial store brands.

The main categories of their products are:

  • Nutritional: Different kind of vitamins, minerals and detox plans
  • Food & Energy: Nutrimeal, energy supplements and protein shakes
  • Skincare: Skincare products and hair and body care.
  • Healthy Living: Oral care products

Business Opportunity of Usana

Since Usana is an MLM business, it offers a business opportunity as an independent sales associate. Since it's a huge company, they also have regular positions as well. I want to be clear that I'm not referring to them as a business opportunity.

What It Costs To Join

To become an associate you are required to purchase a welcome kit that costs $29.95. The welcome kit contains business information.

There is apparently no requirement to buy products to become an associate and start selling. Usana actually states that most people become associates to buy products at a discount price.

How Can You Make Money

There are three ways to make money with Usana, like there is with most MLMs. You can sell products directly to consumers, you can sponsor them to become Preferred Customers and you will earn a commission from the products they buy from the company or you can recruit additional associates to earn commissions of their sales.

Usana is open about the fact that only a small percentage of their associates sell Usana products as a full-time income source.

You won't earn any kind of compensation simply for recruiting people, you will only earn commissions from the sales your recruits make.

Compensation Plan

Usana has a fairly complicated looking compensation plan, which is fairly standard with MLMs so it's not really a surprise.

You can find their compensation plan here.

Usana uses what's called a binary compensation plan. What's a bit disconcerting is that you will apparently need to buy a minimum amount of new products each month to be eligible for your commissions.

This means that you will need to invest money each month in products to be able to produce any income from your sales. If I understand this correctly, it creates a form of synthetic demand.

Is Usana A Pyramid Scheme

No. I wouldn't call Usana a pyramid scheme. But it's definitely an MLM where most associates don't make significant income. That said, they are open about this fact.

There are three questions I like to ask when accessing how likely it is that an MLM is a pyramid scheme:

  1. How long has the company been around?: Usana has been around since 1992. Pyramid schemes are generally short-lived as they will eventually get caught by authorities or media. This doesn't seem to be the case with Usana.
  2. Are there products or services being sold: Yes. Usana has physical products that are being sold to consumers. Pure pyramid schemes don't generally have significant revenue from selling products to consumers. That said, it seems that there might be some synthetic demand on Usanas products since it seems associates are required to buy a minimum amount of monthly products to keep earning income.
  3. Are there any lawsuits and court rulings?: Yes. Usana has had a few run-ins with the authorities, most notably in 2007 San Diego's Fraud Discovery Institute accused Usana of running a pyramid scheme which resulted in an investigation by the SEC, which found nothing incriminating. In 2017 there was a class action lawsuit, which ended in the complete victory for the defendants (Usana)

So there are a couple of lawsuits, but they have all turned out good for Usana. And it's no wonder. Usana seems to be remarkably open about the income potential and code of ethics for sales. And they publish the income structure publicly.

I don't really know how an MLM can be more open about the business opportunity they offer. The numbers they show prove that most people don't make significant income with the system.

Is Usana A Scam

No I wouldn't call Usana a scam. They are definitely an MLM and the business opportunity they offer is definitely not a get-rich scheme.

They are very open about the fact that over 50% of their associates didn't make any income in 2017 and that almost 80% made less than $250 the whole year.

That still doesn't make it a scam, it makes it a business opportunity where your own actions will dictate how much you earn. Most people aren't cut out for direct selling. It only becomes a problem or a scam if people are being recruited on false pretenses and expectations.

While Usana doesn't condone this kind of recruiting, one of the biggest issues with MLMs is that there are always dishonest individuals who are willing to lie about the income potential to get people to join MLMs. The mother company has very little in the ways of monitoring for this sort of behavior.

As for the products, they definitely aren't the cheapest but you have to remember they are manufactured in the US versus many store brands come from Asia where the manufacturing is cheaper.

I still suspect there is a hefty premium on their supplements but it's nothing new under the sun. Companies have asked premium for high-quality products since forever and consumers have been willing to pay for it.

The products seem to be science-based, even though there is the whole point to be made that most vitamins and supplements are completely unnecessary or even bad for you if you eat a healthy, diverse diet rich in whole foods.

But that doesn't make the products a scam. In fact, they are likely as high quality as supplements come. It's up to the consumer to decide if they are something they want to invest in.

They would only become a scam if there were yet again false claims of their effects on health, and it seems Usana is wise enough to not make such claims. Or allow it's associates to make such claims.

All that said, I can't really recommend Usana as a business opportunity because the odds are against you. It's a long hard way to the top and the longer an MLM has been around, the harder it is to get a lot of people into your downline.

Also, it seems that the FTC has been going after MLMs that were previously considered legal. So it might be that the regulations of MLMs might be tightening in the future.

How I Make Money Online

In case you are looking for a way to start a home-based business, I'd like to take a second to suggest an option.

I have two websites that make me income on automation 24/7, even when I sleep. You can check out how others are using this same business model to create success as well. (that's an affiliate link)

In short, it involves creating content around specific niches of your choosing, on a website you own. You then create search engine optimized content to get traffic through search engines. Just think about how you wound up here.

You can then convert that traffic into revenue in several methods. One of the best ones is affiliate marketing. But if you are involved in an MLM business, you can use this method to get sales and recruits as well. It's your site, you decide.

Affiliate marketing is a form of revenue sharing where the affiliate simply refers a customer to a vendor and the vendor takes care of all the actual business and customer service. But the affiliate earns a commission for referring the customer.

The great thing about this is that it doesn't involve any manual work once set up, you can create pieces of content that work for you 24/7 and thousands of people have made fortunes with this.

You can also work on your company from anywhere in the world. All you need is an Internet connection. So if you like traveling, this is the perfect opportunity for you.

Some say this business model is too competitive or dead these days but they are simply wrong. Otherwise, you wouldn't be reading this.

But it easy or a get-rich-quick type of deal. You need to create a bunch of content and know what you are doing if you want to stand a chance.

If you want to learn exactly how I managed to create my income producing websites, check out my review of my number one recommendation for learning these skills below, it's free to join.

Also check out my free 7-day course that shows you in a very simple step-by-step manner how to create your own website and initial steps towards making money online:

You can enroll for the 7-day course by submitting your email address into the form below. I will not spam your email and you can unsubscribe anytime. 

Conclusion

I hope you found my Usana review useful and it answered most of your questions. If you have any questions, feel free to leave them in the comments section below and I promise to get back to you.

Usana doesn't seem to be a pyramid scheme but it's definite an MLM that offers a business opportunity where in my opinion the odds aren't on your side. But some people do great with MLMs.

I would still personally recommend online affiliate marketing as it offers a business model with real passive income and the freedom to work when and where ever you want.

But this business isn't a get-rich-quick scheme. You need to work in the form of content creation for months before earning anything.

Just like with MLMs, most people who start with online business, end up failing. But those who learn the skills, take action consistently and stick through the initial growth period will succeed.

It is a marathon, not a sprint. You need to think long term and see the incredible potential this business model offers. So definitely consider my recommendations you can find in the previous chapter.

Thanks for reading and remember to share in social media if you found this post useful! Thanks.

 

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