Utah Attorney General Paul Van Dam is giving Provo-based Nu Skin International a checkup at the request of his counterpart in Michigan, who has accused the company of running a pyramid scheme.
"Mr. Van Dam is reviewing Nu Skin," said Farah Mahi, a spokeswoman for the attorney general. "We aren't investigating."The review is being conducted out of a "spirit of cooperation" with Michigan Attorney General Frank Kelley, who is investigating Nu Skin, she said. In March, Kelley released a statement saying he would pursue legal action against Nu Skin for allegedly selling business opportunities without being properly registered with the state.
Nu Skin has a nationwide sales force for its personal-care products made up of thousands of independent distributors. The company is described as a multilevel, or network, marketing firm.
"What we've reviewed so far hasn't concerned us," Mahi said.
Jason Chaffetz, a Nu Skin spokesman, said the corporation welcomes inquiries and is cooperating fully with the Utah attorney general's office. In addition, he said Nu Skin believes it will be able to resolve the Michigan issues and avoid a lawsuit.
"We feel very confident with what we're doing and what we've done," said Chaffetz about the company that began in 1984. "There has been no legal action against Nu Skin since we started."
Kelley said Nu Skin distributors in Michigan earn money and prizes just by getting a certain number of people to become distributors, rather than from product sales.
Multilevel marketing plans are legal in Michigan, but they must revolve around the retail sale of the products or service, he said. Marketing plans in which participants are compensated or rewarded simply on their ability to get more individuals involved are illegal.
Mahi said Michigan and Utah laws regarding multilevel marketing differ.
Representatives of Nu Skin and the Michigan attorney general's office met about two weeks ago. The corporation has until May 8 to draft a proposal of changes it could make to satisfy Michigan law.
Chaffetz said Nu Skin needs to place more emphasis on retail sales.