So far, everything on my blog is from my own personal observations and research, having gone to several Usana meetings and talking to several reps. From my own experience, I am absolutely sure a pyramid is occurring at Usana. But I'm not the only one. There are other people out there with more information, who have been researching Usana longer. I hardly want to open the can of worms that is the Barry Minkow report, because of all the controversy surrounding that, and how long ago it took place. But I recently received a comment from someone with a lot of figures, and evidence that Utah Attorney General Mark Shurtleff was paid to endorse Usana publicly. His site can be found here:
http://www.geocities.com/terminatedramp/
Usana has gone as far as to persuade yahoo to delete his old account. I think discussion and debate is very important when something like Usana is spreading their own persuasive if not downright deceptive influence without challenge. Freedom of speech in my opinion is a basic human right. Instead of getting your critics banned from their respective hosts, Usana, I implore you to improve yourself so that the criticism would then ring false. You can't suppress this freedom of speech for long. Word will get out. So save yourself the embarrassment and get some proper regulations, please.
Tuesday, October 28, 2008
Sunday, October 19, 2008
Usana deceptive technique
In the first training I went to for Usana, I was taught to deceive my friends. We were told to write down a list of everyone we could think of. Then we were told that all these people were potential customers. We would call them, and from there the lies begin.
We were taught several "key points." I wrote them down like I was supposed to.
Here is what's deceptive about these things:
We were taught several "key points." I wrote them down like I was supposed to.
- Invite either on the phone or internet. It's harder to invite in person.
- Be excited. Show your passion. Changing lives and helping the world is exciting.
- Do not explain the business. Being new, you might make mistakes. And sometimes people don't listen to us, when they would listen to someone else. Instead, invite them.
- Don't make yourself look like you are doing it by yourself. Edify someone else (your director)
- Talk to your friends about what they want. Destination not the vehicle.
- Always schedule an appointment. Especially with the director.
- Most importantly, set the appointment in stone. Tell your friend that your credibility is on the line.
Here is what's deceptive about these things:
- This one is part of something they were telling us. "Give yourself an escape." This is so that your friend doesn't have a chance to back you into a corner. If you're online, you can always say you have to go, same with the phone. Your friend can't follow you and keep pressing you for answers. They even told us that if we're calling our friend on the phone, we should always say that we have something to do soon so they won't keep talking to us. All of this is good for Usana. See # 3.
- So we have to "be" excited. Which means that even if we weren't swept up in the exciting mob mentality of shouting and cheering during the presentation, we were supposed to feign it. Just neglect to mention that you yourself haven't seen the benefits of Usana first hand yet. And there's no way to guarantee that you will, because you probably got recruited from someone who hasn't reached that point either. A self-propagating deference of satisfaction that may or may not even gratify the person above you, let alone you, let alone your friend.
- This is the most suspect instruction of all. To our dear friends, we are told not to explain the business? Hmm is there something so bad about this business that even our closest friends might not want to join it with us if we told them? We're told to say that "I'm still in training" if they ask too much, especially about the pay. In this case, the less your friend knows about Usana, the better. At least until they're surrounded by a mob of undoubting supporters to put their mind at ease.
They gave us 2 reasons why we shouldn't do this. First, we might explain the business wrong. That doesn't seem likely, given how little we know at this time about it we couldn't say much. And we're certainly steered away from saying "I don't know," to any question. Do you really think your close friend would hold it against you if you made a mistake explaining something? Second, the presenter gave an example of a friend who listens to someone else but not to him. A lot of people identified with this. Friends who take the word of someone they're less acquainted with higher than their own friend? Doesn't seem like a true friend to me. - This is not deceptive. You do have people above you who can help you.
- Yes, you talk to your friends about their goals to move the subject away from Usana's unsettling business model. Show them the big prize to get them into the state of mind most suggestible.
Usana members often refer to Usana as a vehicle. The idea is that you're unsatisfied with live, you want to go somewhere. - Yes we all know how flaky some people can be if you just ask about hanging out. Although nothing is written down in a datebook, and directors are supposedly not that busy (They pride themselves on just that: having more time for themselves after joining Usana) we are told to call it an "appointment." Avoid the terms that are used within Usana: presentation, meeting, tabletalk. Just in case, make the appointment an hour early. We are always supposed to pick them up, too. That way they have no way of escaping once they get there.
- Usana wouldn't diminish your credibility if your friend didn't show up. They might try to tell you how to be more convincing so that your friend doesn't flake or something. But I don't believe anyone has been kicked out for having flaky friends. It seems pretty contrary to the "together" attitude they have at meetings. As always, you're welcome to correct me if I'm wrong though.
Usana Scam, the bottom line
Whether or not Usana can be called a scam or legitimate all comes down to this point. Are profits derived more from sale of product to consumer? Or from sale of "opportunity" to potential Usana members?
If it is the former, Usana is like any accepted business. It doesn't matter that it is built on MLM, which would not then be an inherently evil system. Usana is making it's money by selling to people who want products for their health. Usana just prefers the marketing advantages that MLM offers.
However, if it is the latter, Usana is absolutely an unsustainable pyramid scam. In my previous post, you can see exactly why that is.
Usana is set up in such a way that it is impossible to determine this quantitatively. Usana reps join, and continue their membership by buying products. There is no "fee" for joining in so many words. In fact you buy a pack of products, and the business center in your name comes with it.
But speaking qualitatively from my experience with Usana reps, and at Usana meetings and trainings, recruitment is far more emphasized than selling. It would be very surprising to me if their primary source of profits was not recruitment of new members. Although they join by buying the product, this would seem to be a loophole that allows them to be counted as customers.
Ok, let's go back to the beginning of what I was saying. In the first scenario I mentioned, Usana is a legit business selling products to consumers, with recruitment being a secondary source of income. The business is sustained by it's customers. This means stability. We don't have a system of customers becoming reps, thus saturating the market and increasing the demand for customers while decreasing the supply. But there is still something unsettling. I mentioned earlier that this would mean Usana is using the unique advantages of MLM. What are these advantages?
Let me make it clear that my focus is not to trash talk MLM in general. This entire blog is about Usana. Personally I don't really like MLM, although it could, in theory be set up in such a way that it is legit. My problem is MLM's advantage: trust.
You see, MLM's typically take advantage of one thing that friends and family have, that typical marketing (TV, magazine, billboard) doesn't. And that is trust. The tendency here is that this unique advantage allows for a much higher profit margin. In other words, friends and family can convince you to pay much more than you might otherwise pay for the same product, if you saw it on TV for example. A friend could tell you "This is amazing! It costs more than other brands, but it is definitely worth it!" And you believe your friend. After all, your friend has no reason to lie to you. Unless of course they're in an MLM, and they're making a profit off of you by ... let's not say lying, but rather "modifying their attitude." This was something I was told to do at the first training I went to, among other deceptive techniques. I was told to be positive at all times, whether or not I was really sure of what I was saying. Never mind the fact I hadn't yet been paid a cent from Usana, I had to pretend it was the greatest thing I could be doing, certainly superior to any job with a wage. Yes, this was more about selling the opportunity than the product.
Back to that, although I was never trained how to sell the product. If I were selling it, I would have to tell my friends that they should buy it. I would have to tell them that it was better than competing products. But how could I, when I have little knowledge of the nutritional industry? Usana claims superiority from several sources, but I would have to do a lot of research first to make sure these claims mean what they sound like, or I would definitely be deceiving my friends. And then it's me and Usana who make a profit at their expense. So maybe I bring them in so it's not so much at their expense anymore. Oh wait, now we're getting back to case #2. Darn! It's so hard to avoid that in MLM's isn't it?
If it is the former, Usana is like any accepted business. It doesn't matter that it is built on MLM, which would not then be an inherently evil system. Usana is making it's money by selling to people who want products for their health. Usana just prefers the marketing advantages that MLM offers.
However, if it is the latter, Usana is absolutely an unsustainable pyramid scam. In my previous post, you can see exactly why that is.
Usana is set up in such a way that it is impossible to determine this quantitatively. Usana reps join, and continue their membership by buying products. There is no "fee" for joining in so many words. In fact you buy a pack of products, and the business center in your name comes with it.
But speaking qualitatively from my experience with Usana reps, and at Usana meetings and trainings, recruitment is far more emphasized than selling. It would be very surprising to me if their primary source of profits was not recruitment of new members. Although they join by buying the product, this would seem to be a loophole that allows them to be counted as customers.
Ok, let's go back to the beginning of what I was saying. In the first scenario I mentioned, Usana is a legit business selling products to consumers, with recruitment being a secondary source of income. The business is sustained by it's customers. This means stability. We don't have a system of customers becoming reps, thus saturating the market and increasing the demand for customers while decreasing the supply. But there is still something unsettling. I mentioned earlier that this would mean Usana is using the unique advantages of MLM. What are these advantages?
Let me make it clear that my focus is not to trash talk MLM in general. This entire blog is about Usana. Personally I don't really like MLM, although it could, in theory be set up in such a way that it is legit. My problem is MLM's advantage: trust.
You see, MLM's typically take advantage of one thing that friends and family have, that typical marketing (TV, magazine, billboard) doesn't. And that is trust. The tendency here is that this unique advantage allows for a much higher profit margin. In other words, friends and family can convince you to pay much more than you might otherwise pay for the same product, if you saw it on TV for example. A friend could tell you "This is amazing! It costs more than other brands, but it is definitely worth it!" And you believe your friend. After all, your friend has no reason to lie to you. Unless of course they're in an MLM, and they're making a profit off of you by ... let's not say lying, but rather "modifying their attitude." This was something I was told to do at the first training I went to, among other deceptive techniques. I was told to be positive at all times, whether or not I was really sure of what I was saying. Never mind the fact I hadn't yet been paid a cent from Usana, I had to pretend it was the greatest thing I could be doing, certainly superior to any job with a wage. Yes, this was more about selling the opportunity than the product.
Back to that, although I was never trained how to sell the product. If I were selling it, I would have to tell my friends that they should buy it. I would have to tell them that it was better than competing products. But how could I, when I have little knowledge of the nutritional industry? Usana claims superiority from several sources, but I would have to do a lot of research first to make sure these claims mean what they sound like, or I would definitely be deceiving my friends. And then it's me and Usana who make a profit at their expense. So maybe I bring them in so it's not so much at their expense anymore. Oh wait, now we're getting back to case #2. Darn! It's so hard to avoid that in MLM's isn't it?
Monday, October 13, 2008
Usana Scam: Pyramid Scheme
Now Usana reps have a nice list of cookie-cutter responses to "pyramid scheme" acusations. They will first say "A pyramid scheme is defined as an unsustainable company with no products or services." Then they will cite their vast array of Usana products. Well the sale of actual products is secondary to the other form of commision: Recruiting. They do not emphasize actual sale-for-the-sake-of-sale at their meetings, nor do reps frequently discuss it to potential recruits. Emphasis is entirely on recruiting, and buying the products is something you have to do to join, so it simply becomes a tool of recruiting. Their second defense is to draw up a diagram of their compensation system.
Looks enough like a pyramid for me. Regardless, they will tell you that there is a key difference. They will emphasize the fact that there is a left and right side. What this supposedly does is to prevent someone on top from gaining the most money without doing any work. So what they are saying is that this prevents one person from taking advantage of entire other levels of people, because you wouldn't be able to simply get one person to do all the work for you. You would need to make sure both sides are growing, or else you don't get paid.
What this does, in fact, is it serves to convolute the payment system. The compensation plan is so bizzarely convoluted with points and downlines and bonuses that I was told by a Usana rep that it was impossible to calculate. She said this when I was trying to get answers from her in order to create an example of how much money it was possible or reasonable to make. Well of course it is possible, Usana has to calculate it in order to send out their paychecks. But it is so convoluted that an average person will have a difficult time trying to understand it all. And I believe Usana uses this to veil their truly pyramidal nature.
So there are two sides. This doesn't prevent anything. It actually only makes it harder for new recruits. Well it does prevent someone from getting paid if they just bring in one successful person. But if they bring in two, they get everything. So you can see why this hurts newer members most of all. Because they do not have enough members below them to balance the sides. Simply by having more members below you, this issue becomes irrelevant. If you have a larger number, it is easier to even it out. 100 members on one side and 99 on the other gives you 99% of your potential earnings while 2 on one side and 1 on the other would only give you 50%! So it is quite clear that this helps higher members to take advantage of lower members. And because a majority of members are lower members, it gives more money back to the company than they would normally have to pay out.
Now enough talking about why Usana memers are wrong to say that Usana isn't a pyramid scheme. Let's look at a simple example of why it is a pyramid. At Usana meetings, and among Usana reps, there is a much higher emphasis on recruiting. Which they call building a team, because they hate to admit they are recruiting. That's what they say bad companies would do. They claim not to be a pyramid because they sell a product, however this is very much down-played at the meetings. It's all about recruiting! They will tell you that that is how to reach a higher rank and how to make real money. They only really mention the retailing of products when these doubts are raised.
So where does all this recruiting get you? To recruit is to sell an idea. You sell this idea to someone who trusts you, that they will become a part of this business and be able to make money. Well there is also an emphasis at Usana on duplication, so that means that if you are making money by recruiting, people who you recruit (your downlines) should learn from you, and therefore make money by recruiting. So now we have a situation where you've made money by bringing in a few friends. And your friends have yet to make the money back that they've spent to join Usana. So what do they do? They follow your example, as Usana says they should, and they recruit their friends.
So let's say all of you are buying pro-pack in order to join Usana (you have to buy a "pack" of supplements to join.. and keep buying them to stay in) Pro-pack I believe costs $1400. So you were down by $1400 when you joined, but now you've made it all back and maybe a little extra by recruiting your friends. So now they are all down by $1400. I don't know exactly how many friends you would have to recruit to make back the investment, because of the bizzare compensation plan, but for the sake of simplicity and optimism, let's say 2, which I know to be less than the actual number. So now you have 2 friends who are down $1400 and you are now at 0. The outstanding investment is now totalled at minus $2800. So your friends, as I said, follow your example. They each recruit 2. Now there are 4 friends-of-friends who are out $1400, totalling $5600, while you are starting to see a profit. At each level, the unpaid investment keeps on growing. And when you give up at Usana, you don't get your investment back. So this shows that a larger number must always fail than those who succeed. Because one person's returned investment requires more than one person's new investment. And this is why pyramids fail. Except for those who are on top, who really are crooks. Even if you are a crook and if you want to be the person on top in Usana, I would tend to think it's already too late.
Still not convinced it is a pyramid scheme? Take a look at this excerpt from the Federal Trade Commision's website:
Usana is a great candidate for 1, 2, 3 and 6. Also note how much emphasis is placed against MLM's that pay commission on recruiting. You've been warned!
Looks enough like a pyramid for me. Regardless, they will tell you that there is a key difference. They will emphasize the fact that there is a left and right side. What this supposedly does is to prevent someone on top from gaining the most money without doing any work. So what they are saying is that this prevents one person from taking advantage of entire other levels of people, because you wouldn't be able to simply get one person to do all the work for you. You would need to make sure both sides are growing, or else you don't get paid.
What this does, in fact, is it serves to convolute the payment system. The compensation plan is so bizzarely convoluted with points and downlines and bonuses that I was told by a Usana rep that it was impossible to calculate. She said this when I was trying to get answers from her in order to create an example of how much money it was possible or reasonable to make. Well of course it is possible, Usana has to calculate it in order to send out their paychecks. But it is so convoluted that an average person will have a difficult time trying to understand it all. And I believe Usana uses this to veil their truly pyramidal nature.
So there are two sides. This doesn't prevent anything. It actually only makes it harder for new recruits. Well it does prevent someone from getting paid if they just bring in one successful person. But if they bring in two, they get everything. So you can see why this hurts newer members most of all. Because they do not have enough members below them to balance the sides. Simply by having more members below you, this issue becomes irrelevant. If you have a larger number, it is easier to even it out. 100 members on one side and 99 on the other gives you 99% of your potential earnings while 2 on one side and 1 on the other would only give you 50%! So it is quite clear that this helps higher members to take advantage of lower members. And because a majority of members are lower members, it gives more money back to the company than they would normally have to pay out.
Now enough talking about why Usana memers are wrong to say that Usana isn't a pyramid scheme. Let's look at a simple example of why it is a pyramid. At Usana meetings, and among Usana reps, there is a much higher emphasis on recruiting. Which they call building a team, because they hate to admit they are recruiting. That's what they say bad companies would do. They claim not to be a pyramid because they sell a product, however this is very much down-played at the meetings. It's all about recruiting! They will tell you that that is how to reach a higher rank and how to make real money. They only really mention the retailing of products when these doubts are raised.
So where does all this recruiting get you? To recruit is to sell an idea. You sell this idea to someone who trusts you, that they will become a part of this business and be able to make money. Well there is also an emphasis at Usana on duplication, so that means that if you are making money by recruiting, people who you recruit (your downlines) should learn from you, and therefore make money by recruiting. So now we have a situation where you've made money by bringing in a few friends. And your friends have yet to make the money back that they've spent to join Usana. So what do they do? They follow your example, as Usana says they should, and they recruit their friends.
So let's say all of you are buying pro-pack in order to join Usana (you have to buy a "pack" of supplements to join.. and keep buying them to stay in) Pro-pack I believe costs $1400. So you were down by $1400 when you joined, but now you've made it all back and maybe a little extra by recruiting your friends. So now they are all down by $1400. I don't know exactly how many friends you would have to recruit to make back the investment, because of the bizzare compensation plan, but for the sake of simplicity and optimism, let's say 2, which I know to be less than the actual number. So now you have 2 friends who are down $1400 and you are now at 0. The outstanding investment is now totalled at minus $2800. So your friends, as I said, follow your example. They each recruit 2. Now there are 4 friends-of-friends who are out $1400, totalling $5600, while you are starting to see a profit. At each level, the unpaid investment keeps on growing. And when you give up at Usana, you don't get your investment back. So this shows that a larger number must always fail than those who succeed. Because one person's returned investment requires more than one person's new investment. And this is why pyramids fail. Except for those who are on top, who really are crooks. Even if you are a crook and if you want to be the person on top in Usana, I would tend to think it's already too late.
Still not convinced it is a pyramid scheme? Take a look at this excerpt from the Federal Trade Commision's website:
If a plan offers to pay commissions for recruiting new distributors, watch out! Most states outlaw this practice, which is known as "pyramiding." State laws against pyramiding say that a multilevel marketing plan should only pay commissions for retail sales of goods or services, not for recruiting new distributors.
Why is pyramiding prohibited? Because plans that pay commissions for recruiting new distributors inevitably collapse when no new distributors can be recruited. And when a plan collapses, most people -- except perhaps those at the very top of the pyramid -- lose their money.
...
consider these seven tips when you make your decision:
1. Avoid any plan that includes commissions for recruiting additional distributors. It may be an illegal pyramid.
2. Beware of plans that ask new distributors to purchase expensive inventory. These plans can collapse quickly -- and also may be thinly-disguised pyramids.
3. Be cautious of plans that claim you will make money through continued growth of your "downline" -- the commissions on sales made by new distributors you recruit -- rather than through sales of products you make yourself.
4. Beware of plans that claim to sell miracle products or promise enormous earnings. Just because a promoter of a plan makes a claim doesn't mean it's true! Ask the promoter of the plan to substantiate claims with hard evidence.
5. Beware of shills -- "decoy" references paid by a plan's promoter to describe their fictional success in earning money through the plan.
6. Don't pay or sign any contracts in an "opportunity meeting" or any other high-pressure situation. Insist on taking your time to think over a decision to join. Talk it over with your spouse, a knowledgeable friend, an accountant or lawyer.
7. Do your homework! Check with your local Better Business Bureau and state Attorney General about any plan you're considering -- especially when the claims about the product or your potential earnings seem too good to be true.
Usana is a great candidate for 1, 2, 3 and 6. Also note how much emphasis is placed against MLM's that pay commission on recruiting. You've been warned!
Usana report
Over the course of 3 weeks, I went to Usana meetings here in Northern California. For those of you that don't know what Usana is, it is a Health Sciences compnay founded by Dr Myron Wents which markets it's product through Network Marketing or MLM (Multi-level Marketing)
What I found during these 3 weeks was a very disturbing cult-like pyramid scheme. At the meetings, members are systematically worked up into a frenzy of energy. If I were to bring up any doubts at a meeting, I would be told that I don't understand, or asked whether I were "serious," or told not to be so analytical. There were a lot of phrases that were repeated by several members over and over. The audience cheered in a reverent manner whenever higher members of the organization were brought up, and especially when the names of people in the Usana company itself, including it's founder.
From the beginning, I had a strange feeling about this. I didn't really know what it was. But now I have had enough time to thouroughly understand how Usana works. It is deceptive marketing at its worst combined with a lack of corporate responsibility and cultish undertones that I've already mentioned. I will post more of my findings in the future. Please discuss in the comments.
What I found during these 3 weeks was a very disturbing cult-like pyramid scheme. At the meetings, members are systematically worked up into a frenzy of energy. If I were to bring up any doubts at a meeting, I would be told that I don't understand, or asked whether I were "serious," or told not to be so analytical. There were a lot of phrases that were repeated by several members over and over. The audience cheered in a reverent manner whenever higher members of the organization were brought up, and especially when the names of people in the Usana company itself, including it's founder.
From the beginning, I had a strange feeling about this. I didn't really know what it was. But now I have had enough time to thouroughly understand how Usana works. It is deceptive marketing at its worst combined with a lack of corporate responsibility and cultish undertones that I've already mentioned. I will post more of my findings in the future. Please discuss in the comments.
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