Is Usana A Scam, Pyramid Scheme or Legit?

Welcome to my Usana review. In this review, I’ll answer the question if Usana is a pyramid scheme or any other type of scam.

I’ll share with you the characteristics of a pyramid scheme and then see if Usana shares these characteristics.

Over the last few years, I’ve been busy creating reviews about all kinds of online products and opportunities.

Some turned out to be fake others were legit ways to make money online but in the process, I learned how to spot scams.

After reading this post, you can decide for yourself if Usana is worth your energy, time, and money.

What is Usana Health Sciences?

USANA Health Science is a company that distributes and manufactures nutritional, skincare, body & hair care, energy products, and weight management products. Usana was declared the 14th largest multi-level marketing company in the world by revenue in 2020.

Dr. Myron Wentz an internationally recognized microbiologist, and immunologist founded USANA in 1992 and is currently the acting CEO. Usana products are sold in 24 countries via a network of independent distributors

Dr. Myron Wentz has won multiple awards such as the Lifetime Achievement Award From Children’s Hunger Fund and the Albert Einstein Award for Outstanding Achievement in the Life Sciences, 2007

USANA Health Sciences, Inc is located at. 3838 W. Parkway Boulevard, Salt Lake City, UT 84120

Usana Controversy 

The Fraud Discovery Institute Case
February 2007, a 500-page report was handed to officials at the U.S. Securities and Exchange Commission (SEC), the Federal Bureau of Investigation (FBI), and the Internal Revenue Service (IRS).

This report claimed that Usana was operating a pyramid scheme. The founder of the Fraud Discovery Institute Barry Minkow gave this document.

After a long investigation by the SEC in 2007, it turned out nothing incriminating was found. 

Usana’s Illegal business practices in china
In 2005, the Chinese government invoked a law called Regulation of Direct Sales and Regulation on Prohibition of Chuanxiao.

Chuanxiao is Chinese for MLM.

As a result, a lot of companies had to change how they did business in China.

According to the lawsuit, Usana violated the law multiple times by not changing its distribution model by recruiting Chinese citizens and having them register fake addresses in Hong Kong.

They’d also acquire companies with direct selling licenses in China such as Babycare. 

Usana took some of the MLM sales formerly reported in Hong Kong and moved them to BabyCare accounting, a move that would be a violation of the FCPA.

Until 2016 complaints still came in accusing Usana of distributing products through MLM. 

An investigation was started by the Chinese government resulting in Usana admitting fault, the arrest of baby care personnel, and the freezing of 300 million RMB in Babycare accounts.

How does Usana work?

Usana is a company that distributes nutritional, skincare, body & hair care, energy products, and weight management products. Instead of directly selling it to consumers they have chosen to use the MLM model which gives you the choice to earn money by:

• Selling the products for a commission
• Recruiting people to earn bonuses.

What is MLM?

MLM (a.k.a network marketing or direct selling) stands for multi-level marketing.

According to Wikipedia, multi-level marketing is a marketing strategy for selling products or services where the revenue is derived from a non-salaried workforce.

As a part of this workforce, you sell the products from the company, and/or recruit people to do the same thing. This group of people you recruit will work under you and is referred to as your downline.

The bigger your downline is the more money you can earn passively (technically speaking) because you’re getting paid a percentage based on the performance of your downline.

This also means the person that recruited you which is called your upline is making money based on your performance.

The act of recruiting turns an MLM company into a pyramid-shaped organization where the first people to join make the most and are on the top of the pyramid and those last to join are at the bottom.

Source: Wikipedia

MLMs have been around for a long time. There are Multi-level marketing companies active today that were founded in the 1950s. MLM has a lot in common with pyramid schemes, so scammers often use MLM to disguise their pyramid schemes.

Is it absolutely necessary to recruit people? No.

You can also stick to just selling products you can order at wholesale price and re-sell to make a profit. This is easier said than done for multiple reasons which are why most members try to recruit others so they can earn more money.

How to join Usana

Most people get referred to Usana but you can also sign-up through their website.

After that, you can become a Usana advocate by following these 3 steps.

Step 1: Sign-up & open a business center
You sign-up to become a member followed by paying a one-time fee.

After that, you open up your business center which is basically your store through which your product purchases, volume, and sales accumulate.

From this point on you’ll be able to purchase Usana products at a reduced price.

There are 2 types of memberships:
1. The preferred customer membership
2. The sales associate membership

Preferred Customers
As a preferred customer, you can purchase Usana products at a discount for personal use and that of friends and family.

Sales associates
Sales associates have the same benefits as a Preferred Customer.

They also have the capability to earn income through reselling Usana products and earning a residual income based on people you recruit as preferred customers or sales associates. 

Step 2: Purchase a Welcome kit & activate auto orders (optional)
You purchase the welcome kit with all the resources you need for your training. They’ll also encourage you to activate automated orders for an additional discount of 10% on all purchases.

The Welcome kit contains:

• A getting started checklist
• Online Resource Guide
• Need-to-Know USANA Policies
• Policies & Procedures/Compensation Plan Booklet
• Be More Business Brochure
• Some other catalogs

Step 3: Start building & earning
From this point on, you’re ready to recruit people and start reselling products for a profit.

Who can benefit from Usana?

Who would benefit from joining Usana’s MLM program:

• Expert salesmen
• Expert recruiters
• People that already have an audience

Who shouldn’t join Usana’s MLM Program:

• People that hate sales jobs.
• People that hate recruiting
• People that don’t have the budget for it
• People that expect to earn passive income
• People that expect to earn a full-time income

Usana Company products: Is there are legitimate focus on selling products?

One of the most important elements of a legit MLM  is the quality of their products and if they’re positioned correctly compared to the market from a financial perspective. 

In other words, Usana needs to have a legitimate focus on selling products. If companies use the multi-level marketing business model but make it impossible for people to earn money it can be considered a pyramid scheme in disguise.

Below I’ll share with you what I found out regarding the main elements that determine if there’s a legitimate focus on selling products which are:

• The quality of the products
• The safety of the products
• The price of the products compared to the rest of the market

Usana flagship products 

As said earlier, Usana distributes a variety of nutritional, skincare, body & hair care, energy products, and weight management products.

Among all the products in their catalog, Usana’s most featured products are:

Metabolism +
Profanol C1000
Coconut Craze Collageen Proteine bar
Healthpak
Celavive Vitalizing Serum

Are Usana products FDA-approved?

There are a lot of news outlets that mention FDA approval but when you take a deeper look you’ll see that that isn’t exactly true. The state of the facilities is aligned with what the FDA approves but nowhere on the FDA website do they mention the approval of the products themselves.

The only mention of USANA products I could find was an FDA article regarding some products that haven’t gone through the approval process yet.

There seems to be no indication that the products that are sold are FDA approved or even evaluated by the FDA yet

Does Usana offer quality products?

People seem to be very satisfied with USANA products when I look at ratings outside of the official website. On Trustpilot,  some reviews claim the products are of high quality.

I haven’t found a lot of other rating websites to confirm this, unfortunately. I do think if the products were extremely bad there’d be a lot more bad reviews since it this product has been a best seller a few years ago.

Are Usana products aligned with the rest of the market when it comes to price?

Usana has more products than I could cover individually but looking at the products in most categories I got a good idea of how much they’re charging. Usana sells a lot of products that non-MLM companies sell but at a higher price.

While opinions differ I do think the prices aren’t to the point that people wouldn’t buy them at all. I do think the difficulty of selling these products is higher than their non-MLM counterparts.

Pros and Cons

Pros

• No bad product reviews
  Negative reviews can be a sales killer. Luckily, most products don’t have negative reviews on big review websites. 
• Usana is a stable company
  Most companies disappear after 5 years. Usana has been in business since 1992 which means they know what they’re doing. Unless a crazy controversy or lawsuit happens it’ll be here for a long time.
• You can stay a member without accumulating PV
  Your account isn’t deactivated when you don’t fulfill your monthly quota. You won’t be eligible to earn a commission but you don’t have to purchase the starter kit again to become a member.

Cons

• You have to pay to play
  You have to purchase a specific amount of Usana products to stay eligible for earning commissions and bonuses. The same applies to getting commissions based on your downlines. The higher the rank, the more you have to purchase.
• Hard to scale
  Usana recruiting and selling requires you to be face-to-face with people. Unfortunately, they don’t allow you for example to use SEO to promote your website. Since you can’t be everywhere at once it limits how much money you can earn.
• No tangible benefits to a lot of products
  It’s hard to prove that these products work because it’s not really specified what they exactly do. The reviews are great but if anyone asks what it exactly is and what it improves it is hard to answer. 
• No signs of FDA Approval
  News websites report they’re following FDA guidelines when it comes to facilities and production which I admit is a good thing but there are no signs on the FDA website that indicate they have been officially evaluated for it yet.

Usana Company Compensation Plan

Usana is very similar to a traditional MLM when looking at its compensation plan. You either re-sell their products for a commission or you can recruit people and receive residual income, climb up the ranks, and earn bonuses.

In total there are 22 ranks that all come with their benefits such as getting a higher commission percentage of all your sales.

• Sharer
• Believer
• Builder
• Achiever
• Director
• Bronze Director
• Silver Director
• Gold Director
• Ruby Director
• Emerald Director
• Diamond Director
• 1-Star Diamond Director
• 2-Star Diamond Director
• 3-Star Diamond Director
• 4-Star Diamond Director
• 5-Star Diamond Director
• 6-Star Diamond Director
• 7-Star Diamond Director
• 8-Star Diamond Director
• 9-Star Diamond Director
• 10-Star Diamond Director
• 11-Star Diamond Director

Usana uses a binary compensation plan to distribute its products.

This means a member can only have 2 people directly under you in your downline. You’ll basically only have 2 legs and get paid based on the earnings of the lowest "performing" leg.

As you can see, your commissions are based on Bob's points instead of Jill's.

Additional recruiting efforts are meant to get 2 people under your recruits and so on. You also get paid a commission based on the shortest leg and the possible infinite levels below you. 

The binary system is built around what they call business centers. A business center functions as a hub through which all your business activities go.

Per business center, you can have a maximum of 2 legs but you’re allowed to have multiple business centers there are minimal sales quotas for keeping your Business center active.

As long as your Business Center is active you’re eligible to earn commissions. 

How much does it cost to start a Usana “business”?

To become a member of USANA you’ll have to pay a one-time fee of $9,95 for the welcome kit. After that, there is a yearly renewal fee of  $20. 

This doesn’t sound bad but there are some other costs you have to take into account when becoming a Usana distributor. 

To open a business center you need to place an order of 200 points which is $200 worth of products.

In total to start you’ll pay $229,95 in the first month.

To stay eligible for commissions you need to bring in at least 100 points in personal sales every 4 weeks which equals $100 worth of products.

On a yearly basis, you’re basically investing $1329,95 just to get to the minimum sales order quota (per business center)

Other indirect costs to take into account are:

• Products for personal use
• Products used for samples and demos
• Cost of attending meet-ups and conferences
• Phone bills, Wi-Fi bills, electricity bills, etc.

How much can you earn with Usana?

There are 6 ways to earn money (based on recruiting and direct selling) in their compensation plan you can take advantage of such as:

• RETAIL SALES 
• WEEKLY COMMISSIONS
• LIFETIME MATCHING BONUS
• INCENTIVES
• LEADERSHIP BONUS
• ELITE BONUS

Your rank will decide which of these ways you can use to earn money.

In theory, the sky is the limit but in reality, we know because of factors such as your ability to recruit, your competition, and the performance of your downlines there’s is often a limit. 

You can read everything you need to about these bonuses in the compensation plan but I’m more interested in real numbers. Luckily, Usana has published an income disclosure.

There’s a lot of information in this document so I have decided to share with you the summary of my findings in quick bullet points of how much money members are making per year.

• Less than $0 is being earned by 28.7%
• $0 to $250 is being earned by 42.9%
• $251 to $500 is being earned by 8.7%
• $501 to $1,000 is being earned by 7.4%
• $1,001 to $2,000 is being earned by 4.7%
• $2,001 to $5,000 is being earned by 3.8%
• $5,001 to $20,000 is being earned by 2.8%
• $20,001 to $50,000 is being earned by 0.6%
• $50,001 to $100,00 is being earned by 0.2%
• $100,001 to $200,000 is being earned by 0.1%
• $200,001 and above is being earned by 0.1%

These numbers don’t take into account non-commissionable purchases of the members. In other words, this is the revenue they earn not the profit.

According to the U.S. Bureau of Labor Statistics (BLS), the average US full-time income (including overtime, commissions, and tips) is somewhere around $54,132 a year.

This means less than 3.8% are earning the average US full-time income.

Also, more than 70% are making less than $30 a year (excluding yearly renewal fees).

This is confirmed by the New Zealand government statistician for the Commerce Commission, Dr. Murray H. Smith. 

He has been involved as an expert witness in cases that involve pyramid scheme allegations over the last 10 years. 

In a report, he wrote very few Usana distributors are likely to become wealthy, stating "You can make a very strong argument that this could be a pyramid scheme." 

He also said that those at the top of the structure are more likely to make more than those at the bottom of the structure; and that as the company grows it will become harder to recruit others.

You do have to take into account that his conclusions are made from a statistical standpoint rather than a legal standpoint.

That being said, when you take into account the costs needed to start and what people are earning it doesn't look good.

Why aren’t people earning decent money with MLM companies like Usana?

I have summed up the reasons why it’s hard to make money with Usana and MLM companies in general into 3 points. As a Usana advocate, you’ll have to deal with the first 2 points mentioned below.

1. MLM companies are often associated with pyramid schemes
MLMs have a pyramid recruiting structure that you often have to join to be able to make decent money or at the very least not lose money. The problem is a lot of pyramid schemes disguise themselves as MLM programs making it difficult to differentiate the two.

This is the biggest problem why most distributors have a difficult time recruiting people. The moment people hear about how you can make money by recruiting people red flags appear in most people’s minds.

This isn’t good for your sales.

2. You have to invest your money to earn commissions consistently
You’re only eligible for bonuses and commissions if you buy their products. The bigger the bonuses, the more product you have to buy. You do get discounts but if you can’t sell the products I can see you easily fall into a financial deficit (which happens to the majority of distributors of MLM companies).

3. The price of the product often isn’t aligned with the market

It’s hard for a multi-level marketer to sell products because most MLM products are much more expensive than similar products sold by non-MLM companies. This means even if you’re really good at recruiting your downline still needs to sell those same expensive products for you to make decent money.

You can see that translated in these statistics I found about Multi-level Marketing.

• Nearly half (47%) of MLM participants reported that they lost money.
• One in four (27%) MLM participants reported that they broke even (made no money).
• MLM participants are 7% more likely to declare bankruptcy during their lifetime.
• Direct sales have risen 79% in the last decade, but MLM participants continue to lose money.
• 90 – 99% of distributors in multilevel marketing only receive a couple of hundred dollars in commission per year.
• Out of the 33,000 interviewed, 90 people made enough money to cover the costs of building their businesses.
• 50% of the people who start a network marketing enterprise abandoned it in the first year.

Sources:
FTC
AARP
Jobsinmarketing.io

Is Usana a pyramid scheme?

To answer this question we need to know what a pyramid scheme is.

What is a pyramid scheme?

A pyramid scheme is a type of scam where people are promised money for joining the scheme and recruiting other people instead of selling products and services. 

No selling of a product or service is involved whatsoever.

So you might be wondering where the money comes from.

The people that join are expected to pay a one-time or a monthly fee and in exchange for that, they get a percentage of the fee of everyone they recruit after.

The remaining money goes to the creators at the top of the pyramid.

The problem with this model is from a mathematical standpoint it’s impossible for everyone to make money because you simply run out of people.

Take a look at this picture below showing how it’s impossible for everyone to earn money.

Source: Wikipedia

As you can see, in this pyramid model it’s required to recruit 6 people. You’ll notice from the 12th level and further, it’s not possible anymore for everyone to earn money.

The 2.2 Billion people on the 12th level need 13.1 billion recruits in total for them all to make money which is more people than there are currently on Earth.

At the point that people can’t be recruited anymore, the pyramid collapses because not enough money is coming in to pay members and sustain the pyramid.

Looking at the description of what a pyramid scheme is, Usana can’t be classified as a pyramid scheme from a legal perspective. Usana products have given people a method to make money without recruiting people.

That being said, there are pyramid schemes that disguise themselves as MLM companies because MLMs also use a pyramid structure but sell products and services. 

Jon M Taylor. a prominent figure in the research of MLM’s and Pyramid schemes calls these product-based pyramid schemes.

He came to the conclusion that this variant is a lot more dangerous than its predecessor.

A few examples of these can be found on the FTC website,  such as Vemma an  “MLM/Direct-selling company” that supposedly was selling liquid nutrition products but turned out to be a pyramid scheme.

Ultimately they settled and had to pay a fine of $238 million and were suspended from partaking in recruiting practices to distribute their products.

These pyramid schemes offer products that are incredibly hard to sell with the goal of pushing you to recruit.

They also put an emphasis on bonuses that can be earned by recruiting other recruiters and starting an endless cycle of recruiting.

These pyramid schemes bring in money by the members paying for a membership and them purchasing products.

From that point on it’s the same as a traditional pyramid scheme but is this the case with Usana? 

Let’s take a look good look at what I found out about Usana.

Are Usana products unsaleable? 

No. There seem to be a lot of reviews of customers that are satisfied with the product because of the quality they provide.

There does seem to be a small misalignment when it comes to price when you compare it with the rest of the market but not to the point that it’s impossible to sell products.

Does Usana pressure its members to recruit others?

I don’t think Usana is pressuring people to recruit others.

Most legit MLM companies let you sell the products at a retail price and let you keep the profit. This is an option that Usana offers.

It is hard to solely make money by selling products ( as the numbers indicate) but not impossible.

Most of the bonuses offered also seem to be focused on sales than recruitment. This isn't the case with a pyramid scheme.

Do people make money with Usana?

Looking at the income statements it’s safe to assume that 90% are barely making any money or have made no money. 

It might not look like it at first sight but you have to take into account that income statements are focused on revenue instead of profits.

It doesn’t take into account the monthly accumulation of points that is necessary to stay eligible.

When you do the math the majority of the people that are included in the most recent income disclosure lost money.

Has an investigation taken place and what was the outcome?

An investigation by the U.S. SEC ( Securities and Exchange Commission) has taken place in the past based on accusations of false claims and Usana operating as a pyramid scheme.

The SEC found nothing incriminating during its investigation.

That being said, it has been a long time since the initial investigation.

Verdict

Is Usana A Pyramid scheme?

I can’t say with 100% certainty that Usana is not operating as a pyramid scheme.

Investigations in the past also have ruled the chance of it being a pyramid scheme out but looking at the income disclosure, something still seems off. 

I wouldn’t recommend taking advantage of this opportunity

Is Usana a scam? 

No. Usana isn't a scam. 

A year-long investigation has been done by the SEC regarding accusations of Usana scamming people. 

After a year-long investigation, nothing incriminating was found that indicates they’re scamming customers. 

According to customer testimonials, people think the products are overpriced but seem to be pleased with the quality.

Usana has done some sketchy things in regard to getting into foreign markets such as China where MLM is forbidden but overall I can’t call Usana a scam.

Usana Alternative

Unfortunately, USANA isn’t for everyone. 

It comes with significant financial risk and it’s hard to scale because most of the marketing is done face-to-face and you can’t be at multiple places at once.

This is why I suggest to those that don’t want to deal with these 2 factors an alternative.

It is called affiliate marketing. 

It’s the method I use to earn most of the money I earn online.

How do you earn money with affiliate marketing?

You don’t have to sell products or services and you don’t have to recruit people.

The only thing you’ll be doing is referring people (that already are interested) to merchant websites such as Amazon, Walmart, and eBay. 

When people buy something based on your recommendation you’ll get a percentage of the purchase.

My #1 recommendation is an affiliate marketing training platform with more than 1.5 million members. 

Memberships are basically an all-in-1 package that comes with expert-level training, resources, and support from a community of people doing the same thing. 

Want to learn more? Take a look at my comprehensive review of the affiliate marketing platform.

Do you have any experience with MLM or Modere let me know in the comments!

That’s all for today. 

See you in my next post!

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