View Full Version : Is Nu Skin / NUS Operating in China??? Is it Legal There?

08-07-2012, 07:16 PM
CitronResearch.com (http://citronresearch.com/)

Doc Bunkum
08-07-2012, 08:00 PM
Nice find!

This paragraph is a classic:

In the United States, multi-level marketing (MLM) has become part of our economic fabric. It is not our proudest achievement, but nonetheless it has become a part of our society – one that sells dreams along with an array of overpriced products that most people can live without just fine.

08-08-2012, 12:37 PM
From what I understand, as long as it acts only as direct selling, NOT MLM, it's legal to operate in China. Amway has been there for years.


Looks like they operate just like how Mary Kay was exposed on Tom Ashbrook's On Point.

08-08-2012, 04:39 PM
My favorite part of the piece was when the Chineese rep was asked to explain the comp plan, she drew a chart of a pyramid, but they aren't a pyramid. :RpS_lol:

08-09-2012, 11:50 AM
Law Firm to investigate Nu Skin over potential violations concerning China operations.

Law firm to investigate Nu Skin over potential violations concerning China operations (http://www.cosmeticsdesign.com/Regulation-Safety/Law-firm-to-investigate-Nu-Skin-over-potential-violations-concerning-China-operations)

The material is copyrighted but you can read it at above link.

Doc Bunkum
08-09-2012, 01:57 PM
Nu Skin’s shares fall after China report (http://www.sltrib.com/sltrib/money/54651162-79/china-skin-shares-company.html.csp)

The Salt Lake Tribune
First Published Aug 07 2012 07:47 pm •

Nu Skin Enterprises shares took a beating Tuesday after a research firm alleged the Utah company was running a multilevel marketing businesses in China, despite laws that prohibit it in many parts of the country.

A report by Citron Research pointed to "widespread violation of Chinese law" by Nu Skin, which markets nutritional and anti-aging products through independent distributors. Those distributors earn commissions through networks of others who are recruited into the company, a form of commerce is prohibited in some areas of China.

The Provo company’s shares fell 9.2 percent to finish down $4.50 at $44.36 a share on the New York Stock Exchange.

In a statement, Nu Skin said it was "confident that our China operations are in compliance with applicable regulations as interpreted and enforced by the government of China."

08-11-2012, 03:03 PM
The 2 Faces Of Nu Skin - Seeking Alpha (http://seekingalpha.com/article/786721-the-2-faces-of-nu-skin?source=msn)

I like the comments on the above article concerning the Citron Research article, particularly comments made by Jonathon2012. In one comment he gives a link to Nu Skin's team elite website NuSkin Enterprises ™ | TeamElite (http://www.nseteamelite.com/recognition-bd)
Click on "China" to see the list of top achievers. Don't be fooled by the long list of successful distributors. Many of the people are listed twice and three times with different names to make the list look longer. A Blue Diamond achiever is someone who has 15 active executives on their first line. To be an executive, those people had to sign up at least two other people. The fact that Chinese people are even listed as Blue Diamonds or Executives reveals the MLM business model. Chinese people are signing up other Chinese people in the hopes of becoming wealthy... not to sell product in a direct selling environment, and the money is rolling away from those who need it the most, away from the Chinese economy and into the bank accounts of those who already have so much money they don't know what to do with it all.

The team elite website is the one I used to compile the padded numbers list on my site, after reviewing the padded numbers list on Diederik's site. Jonathon2012 shows that by clicking "China" on the page, you are able to see the people who have signed up many many many Chinese people.

Who cares if they are getting salary and health benefits! That's just one small hoop Nu Skin has to jump through in order to continue operating in China.

08-12-2012, 02:58 PM
The attorneys are jumping in. If Nu Skin is operating illegally in China, it si going to get interesting really fast!

Bronstein, Gewirtz & Grossman, LLC Announces Investigation of Nu Skin Enterprises, Inc. -- NEW YORK, Aug. 8, 2012 /PRNewswire/ -- (http://www.prnewswire.com/news-releases/bronstein-gewirtz--grossman-llc-announces-investigation-of-nu-skin-enterprises-inc-165409616.html)

Doc Bunkum
08-15-2012, 09:25 AM
Wednesday, 15 August 2012

Deutsche Bank's Bill Schmitz, has all but admitted that the 'Nu Skin' Racketeers have conspired to subvert the rule of law in China. (http://mlmtheamericandreammadenightmare.blogspot.ca/2012/08/deutsche-banks-bill-schmitz-has.html)


Last week, the bosses of the 'Nu Skin' racket very-wisely declined to appear on CNBC to participate in a debate with short-seller, Andrew Left (Citron Research), who has attempted to warn 'Nu Skin' share holders, and potential buyers of 'Nu Skin' shares, that the market-value of 'Nu Skin Enterprises Inc.' might very-well collapse in the near future due to the fact that a constituent company of this global, criminogenic, corporate labyrinth has clearly been acting in breach of the law in a country, China, where legislators have applied common-sense and identified so-called 'Multi-Level Marketing' as being just another means of dissimulating a pyramid scam. However, any attempt by the bosses of 'Nu Skin' to mislead the viewers of CNBC, or to withhold key-information, would have constituted wire fraud. Consequently, these grinning charlatans sent a very precisely-worded statement to CNBC. ...

08-15-2012, 10:35 AM
Thanks Doc. That blog is a brilliant collection of must reads!

08-15-2012, 02:32 PM
So Citron Research is now equated to Einhorn, eh? :) I'm sure they love the comparison. :D

08-15-2012, 02:33 PM
I thought Robert Fitzpatrick helped the Chinese government write the MLM laws? How did NuSkin got involved?

08-15-2012, 02:42 PM
I thought Robert Fitzpatrick helped the Chinese government write the MLM laws? How did NuSkin got involved?

That is a very good question. Time for more digging!!!

08-15-2012, 02:43 PM
Ah, that was from David Brear's website. He's FIERCELY anti-MLM. In fact, I had a LONG engagement with him on someone else's blog. :D Long story.

The short version:

DB: all MLMs are fraudulent and should be banned
K: the law doesn't say that. There's a difference between MLM and pyramid scheme fraud.
DB: then the laws are wrong

How do you converse with someone like that? :) It's documented on one of my blogs somewhere. Enough said.

Doc Bunkum
08-15-2012, 04:21 PM
Originally Posted by kschang

I thought Robert Fitzpatrick helped the Chinese government write the MLM laws? How did NuSkin got involved?

That is a very good question. Time for more digging!!!

When recent presidential candidate Jon Huntsman Jr. was Utah's governor, he visited China with a Nu Skin delegation and persuaded that country to ease its regulation outlawing multi-level marketing companies.

Where Beauty Is Skin Deep (http://online.barrons.com/article/SB50001424053111904370004577390241476503930.html#a rticleTabs_article%3D1)

In 2006, Huntsman took representatives of both companies (Nu Skin and Usana) on a trade mission to China, which has largely banned MLM companies from operating because of their business practices. Huntsman lobbied the Chinese to open their markets to MLMs. He also did the industry an important regulatory favor that year. At the behest of the Direct Selling Association, the trade lobby for multilevel marketing companies, the state Legislature passed a bill that essentially gutted Utah's anti-pyramid-scheme law.

Bad Business Under Jon Huntsman
As governor of Utah, Huntsman helped boost an industry that preys on victims with pyramid-scheme-like practices. (http://www.motherjones.com/politics/2011/09/jon-huntsman-pyramid-scheme-mlm)

I might add, I think that Stephanie Mencimer, who wrote that last piece for Mother Jones, is brilliant!

Stephanie works in Mother Jones' Washington bureau. A Utah native and graduate of a crappy public university not worth mentioning, she has spent the last year hanging out with angry white people who occasionally don tricorne hats and come to lunch meetings heavily armed.

She's been going after MLM's in Utah full throttle.

By the way, she is looking for MLM victims to interview for another story. I would encourage all of you to help her find some likely candidates - she is looking in particular for people who turned to MLM as a result of the bad economy. Her email is smencimer@gmail.com

Keep at it, Stephanie!

Doc Bunkum
08-16-2012, 02:08 PM
David Brear12 August 2012 14:57

The bosses of the 'Amway' mob never took the risk of transforming their corporate front into a public company in the USA, but they must be cursing the bosses of 'Herbalife' and 'Nu Skin' who did.

Ironically, 'MLM income opportunity' racketeers have all steadfastly pretended to be free-market capitalists, and their propagandists have accused free-thinkers (like you and me) of being anti-capitalists and anti-free-enterprise. Yet the latest challenges to the big 'MLM' lie have come from short-sellers (like David Einhorn and Andrew Left)who are perhaps the ultimate example of free-market capitalism in action.

For a long time, I have suspected that this might happen one day. It seems that open-season has now been declared by short sellers, on the greedy 'MLM income opportunity' racketeers who have foolishly tried to hide behind public companies, but whose officers are fully-accountable to their share-holders.

David Brear (copyright 2012)

'MLM' The American Dream Made Nightmare (http://mlmtheamericandreammadenightmare.blogspot.ca/2012/08/effectively-valueless-nu-skin-shares.html)

08-17-2012, 01:45 AM
Stanford accuses Nu Skin of using researcher's name without permission

Nu Skin told not to use researcher's name | Reuters (http://www.reuters.com/article/2012/08/17/us-nuskin-stanford-idUSBRE87F13W20120817)

08-17-2012, 09:23 AM
Stanford accuses Nu Skin of using researcher's name without permission

Nu Skin told not to use researcher's name | Reuters (http://www.reuters.com/article/2012/08/17/us-nuskin-stanford-idUSBRE87F13W20120817)

By Anna Yukhananov and Phil Wahba

WASHINGTON/NEW YORK | Fri Aug 17, 2012 2:17am EDT

(Reuters) - Stanford University has sent a "cease and desist" letter to Nu Skin Enterprises Inc asking the company to stop using a university researcher's name in its advertising, adding new scrutiny to the skin product maker's business claims and practices.

According to a copy of the letter emailed to Reuters, Stanford geneticist Stuart Kim is listed as a "Nu Skin Partner" in developing its ageLOC anti-aging products, though he has nothing to do with the company. Nu Skin touts its skin creams and pills as using innovative technology to "reset" genes that promote a more youthful look and feel for its clients, according to its website.

"Neither Dr. Kim nor Stanford is a 'Nu Skin Partner' and neither has anything to do with the company," states the letter, signed by Steven Rosen from Stanford's Office of the General Counsel.

Wouldn't want to lose something that juicy. Great find, kschang!

I think all this publicity will draw much more attention from the authorities here in the USA!


08-17-2012, 12:18 PM
Thanks SBM and Kasey, I went to the link but could not find that article but did find one as SBM posted.

I am saving as a pdf file.

section of report:


On Thursday, Citron also accused Nu Skin of exaggerating the scientific claims of its anti-aging products and said that would make them vulnerable to scrutiny by the U.S. Food and Drug Administration.

In a regulatory filing last week, Nu Skin said the FDA had recently stopped shipments of the company's Galvanic Spa facial treatments, which use an electric device to deliver a purifying skin gel. The agency now believes the product could require clearance as a medical device. These facial treatments made up less than 1 percent of revenue in 2011, Nu Skin said.

In a further update on Thursday, the company said it has stopped all imports of the Galvanic treatments and was prepared to register the product as a medical device. The FDA clearance could take 6 to 9 months, the company said.

But Citron Research said FDA clearance may be required for other Nu Skin ageLOC products, and could potentially lead to their recall in the United States if the FDA decides they could be considered drugs.

The FDA treats all products that make medical claims as drugs, and a company would have to conduct trials to prove the claims before they could sell their products. Cosmetic products do not require clinical trials or FDA approval before they are sold.

Nu Skin CFO Wood on Thursday told analysts at a conference in Boston that the company expects sales of the ageLOC family of products to reach $800 million, or roughly 40 percent of what Wall Street analysts think the company will take in this year, according to a webcast of the meeting.

Nu Skin told not to use researcher's name - Chicago Tribune (http://articles.chicagotribune.com/2012-08-17/lifestyle/sns-rt-us-nuskin-stanfordbre87f13w-20120816_1_nu-skin-skin-products-stanford-university)

Doc Bunkum
08-17-2012, 12:35 PM
Appears Citron Research is going after Nu Skin big time! :scared_1:

Citron is Unraveling the Big Lies at Nu Skin (http://www.citronresearch.com/wp-content/uploads/2012/08/NuSkin-Citron-ChinaandUS.pdf)

August 16, 2012

Nu Skin is :
* operating an illegal MLM in China,
* in apparent violation of FDA and/or FTC regulatory law in
the U.S., and
* lying about a scientific research relationship with
Stanford University for their flagship technology AgeLOC.

And worse, they are instructing their own sales
representatives to deceive anyone who questions the actual
scientific basis of Nu Skin's product claims...

18 page document.

WOW! :shocked:

Doc Bunkum
08-17-2012, 01:30 PM
From Investor Village 2-19-2011:

Andrew Left of Citron Research convicted of fraud and barred from association with the National Futures Association




Link here:
http://bit.ly/MpCol1 (http://www.nfa.futures.org/BasicNet/Case.aspx?entityid=0244735&case=95BCC00020&contrib=NFA)

To confirm, from NFA's website:




Doc Bunkum
08-18-2012, 06:13 AM
Preying on an Easy Mark (http://www.forbes.com/sites/taesikyoon/2012/08/17/preying-on-an-easy-mark/?utm_source=dlvr.it&utm_medium=twitter)

Forbes - 8/17/2012

Shares of Nu Skin (NUS) Enterprises have been hammered over the past ten days after Citron Research released two reports accusing the company of perpetrating illegal marketing tactics in China, violating FDA regulatory law and deceptively associating themselves with the highly-regarded Stanford University....

Sound like pretty damaging stuff, huh? However, if you take a closer look, it seems quite clear that the data and evidence they present simply aren’t substantial enough, nor have enough credibility on their own, to come to the conclusion they reach...

And in conclusion...

In my view, Citron is clearly taking advantage of a market where investors have become accustomed to selling on any hint of bad news, whether warranted or unwarranted. It disgusts me as both an analyst and an investor that they were able to do this with such ease and swiftness. But it angers me even more that they were able to do it on the strength of two research reports that do not contain near enough evidence to support their accusations. The fact that the newest report reads exactly like the SAME type of exaggerated marketing hype, with its in-your-face headers, bold and highlighted sentences, and “But wait, there’s more!” shtick that they themselves accuse NUS of is especially outrageous. It also smacks of desperation.


Clearly a lot more going on here than meets the eye.

As one reader notes in the Comments section...

Citron & people like them are vultures & cannibals. They are manipulating the market & I’m sure have puts on the options. Then they will buy stock when its super cheap!!!! This should be illegal. When will brilliant minds make choices for the betterment of all rather than just their deep pockets!!!!!

Be interesting to see how this all plays out!

08-18-2012, 06:34 AM
It's interesting also that both Reuters and MSNBC are describing Andrew Left and Citron as "known short sellers" the same term used to describe the activities which brought down former fraud investigator turned securities fraudster, Barry Minkow.


MSNBC.MSN.com (http://www.msnbc.msn.com/id/48550926/ns/business-stocks_and_economy/t/nu-skin-shares-fall-after-short-seller-questions-china-ops/)

Doc Bunkum
08-18-2012, 06:52 AM
It's interesting also that both Reuters and MSNBC are describing Andrew Left and Citron as "known short sellers" the same term used to describe the activities which brought down former fraud investigator turned securities fraudster, Barry Minkow.

All I'm saying is we had better be careful spreading this "Nu Skin operating illegally in China" story because it could blow up in our faces!

This Andrew Left character seems a tad shady for my liking.

08-18-2012, 08:04 AM
Citron's claims that Stanford university is up in arms appear to be well substantiated. The questionable medical claims about the AgeLoc products seem quite apparent and may well be investigated. The pyramid allegations for China will need to be documented better it seems to me. The fact reps are forced to purchase to participate in the pay plan is quite common and that will prove to be the largest proportion of customers no doubt. The investors will want to see a substantiatial real customer base and despite Nu Skin's lofty claims there really isn't one.

If we have another Minkow shorting the stock behind the scenes it seems to take the teeth out of the allegations, but remember Minkow was found to have made truthful reports. The only thing he got nailed for was his tinkering with the stock. Minkow's greed got him every time. So, this will indeed be very interesting to watch!


Doc Bunkum
08-18-2012, 08:27 AM
I'm sure the Mormons at head office can't be too pleased these days with the China story and Sandie's penchant for gang bangs coming up at the top of search results for Nu Skin. :RpS_smile:

08-18-2012, 10:22 AM
All I'm saying is we had better be careful spreading this "Nu Skin operating illegally in China" story because it could blow up in our faces!

This Andrew Left character seems a tad shady for my liking.


we can't stick our hands in a bucket of snakes and not expect to be bitten, I guess.

Doc Bunkum
09-13-2012, 02:42 PM
Citron Publishes Open Letter to FDA seeking transparency about Nu Skin’s AgeLOC products (http://www.citronresearch.com/wp-content/uploads/2012/09/Open-Letter-to-FDA-and-FTC-re-AgeLOC.pdf)

Yesterday, news broke that as of last Friday, the FDA sent a "15-day warning letter" to L'Oreal, the world's largest cosmetic company, ordering it to cease and desist making claims for its widely marketed cosmetics line, Lancome.

The specific basis for FDA's complaint is :

" The claims on your web site indicate that these products are intended to affect the structure or any function of the human body, rendering them drugs under the Act."

Citron goes on to say... (http://www.citronresearch.com/index.php/2012/09/12/citron-publishes-open-letter-to-fda-re-ageloc/)

It is Citron's opinion that what is a pimple for L'Oreal may be cancer for Nu Skin.

Let's hope! :RpS_smile:

09-16-2012, 11:12 PM
When should FDA provide feedback? Next week or later? Any idea?

According to the FDA warning letter to L'Oreal, Nu Skin definitely got problem.

Check their website in Chinese, there are tons of words mark AgeLOC, should be drug.

Doc Bunkum
09-25-2012, 09:50 AM
That Galvanic Spa gimcrack is quite the device!


Bet that thing would grow hair on a billiard ball if somebody tried.

09-25-2012, 10:05 AM
Golly gee,

you wouldn't want to get that stuff on your hands or your body, would you ??

Wolfman would have nothing on you after a few weeks of that.

Doc Bunkum
01-20-2013, 09:59 AM
I was recently shown the product by a distributor. Having a scientific background, I found it hard to believe that a surface gel massaged into the skin can ‘restore your youth gene clusters’. The fact that the product was distributed via MLM rang alarm bells. The proprietary galvanic facial massager used to massage the gel into the face is widely available through Alibaba from Chinese manufacturers!

Jennifer October 29, 2012 at 6:01 am

RICK RHOADS, Pharm.D. (http://www.biorenewskincare.com/blog/exposed-real-nu-skin-ageloc-product-review/) October 29, 2012 at 3:18 pm

Jennifer, It’s amazing how a scientific background will help decipher the truth behind the talking points. Good for you! I don’t have too much experience with MLM distribution but it would make sense that a higher price would be necessary to pay all the commission.

As a side note, the MLM model ensures thousands of sales agents to promote your product. That might be the reason that I have received many messages that basically recycle the same talking points.

Thanks for the comment!


You're right, Rick, a person doesn’t have to have too much experience with MLM to understand that a higher price would be necessary to pay all the commission - just a little common sense! :RpS_wink: