Is Nu Skin a Pyramid Scheme?

Chances are you’re here because you’ve been approached by somebody selling Nu Skin products who has told you about an incredible ‘business opportunity.’

It sounds great – who wouldn’t want to make some extra cash by recommending products you love to your friends while getting fit and losing weight at the same time?

However, you’re a little hesitant.

Maybe you think that everything sounds too good to be true, or you’ve heard people saying things like ‘Nu Skin is a pyramid scheme!’ and ‘Nu Skin is a scam!’ and you want to do your research before diving in headfirst.

In this article, we are going to dive into the Nu Skin MLM opportunity and find out what being a Nu Skin Brand Affiliate is really like (ie what you can expect working for Nu Skin) and whether Nu Skin is just another pyramid scheme in disguise.

Is Nu Skin legit?

Let’s find out.

Is Nu Skin a Pyramid Scheme? A Deep Dive Into the Nu Skin MLM

The Basics

What is MLM and is Nu Skin an MLM?

In case you were wondering, YES, Nu Skin is an MLM company (although Nu Skin reps prefer the term ‘network marketing’).

MLM stands for multi-level marketing, and MLM companies are also referred to as network marketing companies or social selling companies.

MLMs have been around for years, and popular MLMs include Color Street, Beachbody, Monat, Arbonne, and even Avon!

You don’t receive a salary in a multi-level marketing company.

Instead, you earn money from selling products to people you know and recruiting others into the business.

When you recruit a new person and that person begins earning money, you will earn commission from the sales and recruits generated by THAT person.

This continues down in multiple levels (hence multi-level).

Imagine a triangle.

If the person at the very top of the triangle recruits 10 people, and every one of those 10 people recruit another 10 people, and each one of those people recruit another 10 people, you’ll be making commissions from EVERYBODY within the triangle because they’re all in your direct downline (the people underneath you in an MLM are referred to as your ‘downline’ and you’re their ‘upline’).

All you had to do was recruit 10 people and you make money from 1100.

While MLM companies like Nu Skin also give you the chance to make money from selling their products, most of the people in MLM companies prefer to recruit others because they stand to make a lifelong passive income from that person, whereas if they sell a product they’re just going to receive a one-off commission.

The ultimate aim of somebody in an MLM then, is to have as many people in their ‘downline’ as possible, enabling them to form large amounts of passive income for little work.

mobile phone in pastel colours — People in MLMs often rely on social media to attract customers

What is Nu Skin?

Nu Skin Enterprises was founded in Provo, Utah, in 1984 by Blake Roney, Sandie Tillotson, and Steve Lund.

Having been around for almost 40 years, Nu Skin are not new to the game, and are active in 53 world markets at the time of writing.

Their primary focus is on skin care, and its flagship product is the LumiSpa, an electronic tool that massages cleanser into the skin to reduce the appearance of pores and prevent breakouts.

Their ageLOC skin care line is an anti-aging series featuring creams, serums, oils and more, and the ageLOC products are some of Nu Skin’s most popular.

They also have over 200 other products including hair care products, oral care and makeup.

Now, while Nu Skin reviews are generally good, their products are definitely on the pricey side.

A moisturiser from Nu Skin costs around £45, and the cheapest LumiSpa device on their website is £222.99 (note that this does come with a cleanser).

If you’re desperate for the LumiSpa tool, then you can find countless Nu Skin alternatives on Amazon for a fraction of the price.

This is typical of MLM companies, because when you buy a product, you’re also paying the commission of whoever sold it to you, whoever recruited that person into the company, whoever recruited that person, and so on, and so forth.

Nu Skin state that they pay approximately 43% of their product revenue in sales compensation to their distributors.

This means that almost half of the sales price goes to commissions, showing how big the mark-up is on Nu Skin products.

a pink headband and bath products — Nu Skin sells health and wellness products

Inside the Nu Skin Opportunity

How do you make money with Nu Skin?

Nu Skin’s compensation plan reveals a 4-step programme to make money as a Brand Affiliate with Nu Skin.

1. Enrol with Nu Skin

This is pretty self-explanatory. New distributors must enrol with Nu Skin and begin recommending products to friends and family. They can earn up to 25% commission for every product sale.

2. Teach Others

This is where the recruitment element comes in. You must teach others to enrol with Nu Skin and begin finding their own customers.

The first level of people that you directly recruit are called your Level 1, or L1. This means that if you recruit three people, you will have three people in your L1.

When people in your L1 begin selling products, you will receive a 5% commission, known as an L1 Bonus.

3. Become a Sales Network Executive

To move up within the company and qualify as a Sales Network Executive (and earn higher commissions), you must make a certain amount in GSV, or Group Sales Volume.

Yourself and your L1 recruits do not count as a group. In order to qualify as a group, your L1 people must have recruited their own L1 team (meaning that your downline would be two levels deep).

You cannot get to stage three without recruiting others into the company and teaching them to recruit.

4. Teach others how to become Sales Network Executives

You must now teach your team how to become Sales Network Executives, meaning that you teach them how to recruit a ‘group’ as opposed to one level.

When you do this, you will qualify for extra bonuses because you get rewarded whenever people you have recruited recruit others and therefore move up in the company.

You will notice that 3 out of 4 of these steps involve recruiting others into the company, and 2 of 4 involve your recruits recruiting people.

Sidenote: is ‘recruit’ still sounding like a word to you? It isn’t to me.

Anyway, remember this focus on recruitment, because it will become important later.

recruitment gif — There is a big focus on recruitment in Nu Skin

How much do you make with Nu Skin (is selling Nu Skin worth it?)

In order to see whether Nu Skin Brand Affiliates are making money, we must take a close look at their Income Disclosure Statement.

An Income Disclosure Statement is a document that allows us to see exactly how many people are earning money with an MLM company, and how much of it they’re making.

Active Brand Affiliates are the only people who were eligible to earn any income with Nu Skin. In 2021, only 37.03% of all Brand Affiliates were Active Brand Affiliates.

Nu Skin’s 2021 Income Disclosure Statement from its Active US distributors found the following:

12.72% earned an average of $37 per month
1.74% earned $114 per month
4.13% earned $635 per month
1.38% earned $1227 per month
0.93% earned $2304 per month
0.20% earned $3589 per month
0.34% earned $5782 per month
0.15% earned $9670 per month
0.24% earned $39,066 per month

The remaining 78.16% of Active Nu Skin distributors made no money in 2021 (and don’t forget that this number is only a percentage of the 37.03% of people who were even eligible to earn money with Nu Skin).

It’s a bit of a brain scramble, but we can clearly see that most Nu Skin distributors are making very little money, and these figures are before expenses.

calculator and other stationary — It’s important to track expenses in an MLM

How much does it cost to be a Nu Skin distributor?

In the income disclosure statement, we saw that most Nu Skin distributors were either making zero or very little money.

However, this number does not take into account the costs involved in signing up to Nu Skin and maintaining your Nu Skin ‘business.’

Nu Skin distributors like to advertise the fact that it ‘costs nothing’ to join the company, and this is true, in a sense.

However, if you do sign up without buying anything, you won’t have any products to sell, nor will you be able to show yourself using the products to demonstrate how they work to potential customers.

The cheapest Nu Skin introductory package on the UK website is a whopping £404.23, and although you don’t have to buy it, you have to buy it, y’know?

The reason why Nu Skin don’t make this introductory product package mandatory is because ‘The law governing Multi-Level Marketing does not allow an investment of more than £200 in the first seven days’ (source).

By making it almost impossible to avoid purchasing this costly starter package, Nu Skin are toeing the line with both legality and ethics.

And that’s not all.

In order to even qualify as an Active Brand Affiliate, you have to earn 2500 ‘points,’ which come from your sales, the purchase of your starter kit and the Nu Skin Automatic Distribution Reward programme (ADR).

The ADR is a monthly autoship programme where you set up a standing order for £152 per month to Nu Skin and they will send you 4 products in return (just 4!).

Signing up for the monthly autoship is essential if you want to qualify for sales commission.

This means that Nu Skin are essentially forcing their distributors to spend a significant amount of money on Nu Skin products every single month in order to receive any commission from sales the distributor makes to their own customers.

You also have to hit monthly sales targets in order to stay ‘active’ and make commission.

Other expenses include:

Products for personal use
Products used for samples/demos/ giveaways and promotions
Expenses incurred through hosting ‘socials’ including products, food and drink, gas etc.
Social media promotions
Cost of attending meet-ups and conferences
Phone bills, Wi-Fi bills, electricity bills etc.
Costs of running a blog or other promotional website (including webcams, microphones, lighting etc. if the person has a YouTube channel)

In other words, the people making 100 bucks with Nu Skin are probably spending all of that and more on Nu Skin products.

Is selling Nu Skin worth it?!

Not if you ask me.

confused gif — People in Nu Skin often end up spending all they earn on more Nu Skin products

In order to see whether Nu Skin is a pyramid scheme in disguise, we must first outline what a pyramid scheme actually is.

What is a pyramid scheme?

Pyramid schemes are very similar to MLMs, but the main difference is that MLM distributors are supposed to make more of their money from product sales rather than recruitment.

A traditional pyramid scheme takes an initial investment from each member and promises to pay them for enrolling others into the scheme, meaning that people are buying into an ‘opportunity’ to get rich.

However, as members increase, recruiting quickly becomes impossible and so most members are unable to profit or even make their initial investment back.

The Wikipedia diagram below illustrates just how unsustainable this business model is – after just a few levels of recruitment, the scheme would have recruited everybody in the world and there would be no-one left to recruit!

Because it’s impossible for most people to make any money in a pyramid scheme, pyramid schemes are illegal.

However, most pyramid schemes have got wise to the fact that they have to offer a product in order to appear legit, but even though a business may have products, the focus will always be on recruitment rather than product sales.

Because there are so many of these ‘pyramid schemes with products,’ around, the FTC hasn’t quite caught up yet, and so many people believe that just because a company hasn’t been shut down yet, it can’t possibly be a pyramid scheme, which simply isn’t true.

In order to see whether Nu Skin is a pyramid scheme, we must attempt to answer 3 questions.

1. Are most people unable to profit?

Yes.

When we looked at the Nu Skin Income Disclosure Statement, we saw that the vast majority of distributors were not making anything close to a full-time wage, and that many of them were likely losing money.

With only 37.03% of Nu Skin distributors even eligible to earn money and just 21.84% of those people making money, the idea that Nu Skin is a real ‘business opportunity’ seems ludicrous.

2. Do you have to ‘pay to play?’

Absolutely.

Not only are Nu Skin representatives having to buy super expensive introduction packages and sign up to monthly autoships of products, but there is another reason why Nu Skin distributors may end up spending money on Nu Skin.

We learned earlier that in order to remain ‘active’ and receive any commission, distributors have to hit a monthly sales target.

If a distributor is struggling to make sales but wants to continue earning commission, they might actually buy products themselves which count towards their target.

The reality is that although Nu Skin ‘officially’ costs nothing to join, almost every single distributor will wind up spending hundreds, or even thousands, on her Nu Skin business.

3. Is there a heavy focus on recruitment?

Of all the MLM companies I have researched over the past couple of years, Nu Skin has one of the most aggressive recruitment strategies out there.

3 out of 4 of the steps on Nu Skin’s compensation plan involve recruiting others into the company, and 2 of the 4 involve your recruits recruiting people.

You can also have up to 9 levels in each of your ‘downlines,’ which is a lot, even for MLM.

In fact, a major red flag of a pyramid scheme is 5 levels in a downline.

With 9 levels in the Nu Skin ranking system, Nu Skin has one of the most extreme and highly leveraged compensation plans out there.

Of course, you can make a small amount of money selling Nu Skin products, but you will never progress within the company that way, and the only real way to make real money with Nu Skin is by recruiting a lot of people.

4 women linking arms — Nu Skin is all about recruitment

Red Flags of a Pyramid Scheme

Recruitment of participants is almost unlimited in an endless chain of recruiters recruiting recruiters.
‘Ranking up’ is achieved by recruitment rather than product sales.
Distributors must ‘pay to play’ by purchasing lots of products, meaning that new recruits are the real customers.
There are at least 5 levels of participants, creating great leverage at the top.
Most of the money travels up the upline, rather than staying with the person selling products. This creates an incentive to recruit rather than sell products, and means that the vast majority of the money is trickling up to the top of the pyramid.

Nu Skin Controversies

Nu Skin isn’t without its fair share of lawsuits and other legal issues.

Here are a couple of noteworthy Nu Skin controversies.

In 2016, Nu Skin settled at $47 million for operating a pyramid scheme after being sued by China in a Utah federal court.

Nu Skin was also forced to pay an additional $750,000 for bribing a top Chinese official with funds from Nu Skin’s charitable division.

Yes, you read that right.

Nu Skin used funds from its charity pot to bribe a Chinese official.

The company was also fined $540,000 by Chinese regulators in 2014 for ‘selling products illegally and making product claims that it could not verify.’

Due to making false health claims about its products, Nu Skin had to pay $1.5 million in 1997 to resolve charges from the FTC about fat loss claims that they made about their supplements.

There are countless other Nu Skin legal issues, but we would be here all day if we were to go through them all!

FAQ

Is Nu Skin a Chinese company?

Nu Skin is an American company, but its largest customer base is located in China.

Is Nu Skin a scam?

Nu Skin is not a scam because if you pay for products, you will receive them. Nu Skin is a legit MLM company, but that does not mean that it is a good idea to sign up with them.

Is Nu Skin a Mormon company?

As Nu Skin is based in Utah and is Mormon-owned, Nu Skin can be considered a Mormon company.

Is Nu Skin ethical?

Here at NYBB, we don’t believe that MLM companies are ethical. As far as the products go, Nu Skin do not test on animals, and so their products can be considered ethical.