NU SKIN COMES OUT SWINGING IN FIGHT AGAINST ACCUSERS

Published: Friday, July 26 1991 12:00 a.m. MDT

Nu Skin International appears to have a new theme song: The Who's "We're Not Gonna Take It."

Accused in several states of operating an illegal pyramid scheme, the Provo-based multilevel marketing firm has decided to mount an offensive. Nu Skin takes issue with the way national and local media have portrayed the company."Enough is enough," said Jason Chaffetz, Nu Skin administrative assistant for public relations. "We're frustrated and disturbed that a number of inaccuracies continue to be perpetuated."

To combat the recent media blitzkrieg, Nu Skin will mount a national advertising campaign - a first for the company.

The counteroffensive will include commercials on the CNN cable-TV network and full-page ads in The Wall Street Journal and USA Today. National full-page display ads in the two newspapers cost between $57,000 and $105,000. Nu Skin relies on word of mouth to market its line of cosmetics and nutrition products.

Nu Skin also hired a Los Angeles-based public relations firm with international muscle to pump up its sagging image.

"We've got a challenge in front of us," said Tony Winders of Paladino and Associates. "I really think we can combat the negative image."

Paladino fired its first volley Thursday in the form of a news-wire release. The story quoted Nu Skin founder Blake M. Roney, a Brigham Young University graduate, rebutting segments of a "Nightline" program that aired on ABC a week ago.

Phil Paladino, head of the PR firm, said, "What is presently occurring is an obvious smear campaign against Nu Skin."

Chaffetz said Nu Skin also plans to send written and video press releases to 1,100 news organizations nationwide.

"What about Nu Skin?" will be the theme of the national campaign, although the aforementioned song by the British rock group The Who could aptly describe Nu Skin's feelings.

Chaffetz said the company, which was founded in 1984, has sat back and taken "lots of blows in the stomach."

No more. "We're not going to take it anymore," Chaffetz said. "We're going to come out swinging."

Michigan Attorney General Frank Kelley laced on the gloves in March when he issued a notice of intended action against Nu Skin, accusing the company of violating the Michigan Consumer Protection Act. In short, Kelley charges that Nu Skin - which anticipates $500 million in sales this year - is an illegal pyramid scheme. Other states, including Utah, are also investigating Nu Skin.

Law enforcement officials want to determine whether Nu Skin dealers earn money for recruiting new distributors rather than selling products. In a pyramid, the pool of potential participants eventually dries up, causing the structure to crumble and leaving the few at the top with a lot of money, while those at the bottom lose out.

Nu Skin officials say distributors can't make a dime by simply signing up new participants. Distributors can, however, receive a bonus on the wholesale value of the products recruits buy from the company, according to Nu Skin literature. Chaffetz said company policy states that those products are to be sold by distributors and not stockpiled to make monthly quotas. Some top-level executive distributors have five-figure incomes monthly.

Since Kelley's March announcement, media from coast-to-coast - including USA Today, Newsweek and Fortune - have jumped on the Nu Skin story.

"We'd just as soon not be in the media - positive or negative," Chaffetz said.

The emergence of Nu Skinmania has left the company little choice.

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