Nu Skin International distributors in Connecticut can't make specific earnings claims without making it clear that not all sales representatives make money in the multilevel marketing firm.
That was among the terms of an agreement reached last week between the Provo-based personal-care company and Connecticut Attorney General Richard Blumenthal. The attorney general filed a lawsuit against Nu Skin in January alleging the company is an illegal pyramid scheme and is deceptive and unfair in its business practices.Nu Skin paid Connecticut $85,000 for consumer-protection programs as part of the settlement.
"Nu Skin may no longer entice potential distributors with claims of phenomenal earnings or financial independence and must place a larger emphasis on product sales rather than on recruitment," Blumenthal said in a written statement.
In signing the agreement, Nu Skin admits no wrongdoing or violation of law.
Steven J. Lund, executive vice president, said the accord reiterates the company's "commitment to establishing consumer protection principles that may be used as a standard for the entire industry." Nu Skin is a responsible corporate citizen, Lund said.
Blumenthal said the settlement includes provisions beyond those agreed upon by Nu Skin and five other states last December.
"This agreement establishes new standards by which multilevel companies operating in Connecticut will be judged," he said. Provisions include:
- Bonuses based strictly on recruitment are prohibited. Additional compensation based upon sales volume will be available to distributors.
- A buy-back policy allowing distributors to receive 90 percent of the purchase price whether the person stays with the company or not.
- Distributors must make at least five sales per month. This and other requirements are to eliminate stockpiling of goods.
- Nu Skin will provide new participants a written statement on the past performance of its distributors, a toll-free number to obtain the information and a 30-day recision period with a 100 percent refund of all materials purchased.