What about Amway? Nu Skin International officials wonder why Michigan Attorney General Frank Kelley is going after their firm when one of the world's largest multilevel marketing company sits in his backyard. Amway - which anticipates $4 billion in sales this year - is located in Ada, Mich.
Blake Roney, Nu Skin president, called it "ironic, or perhaps not" that Kelley was eager to attack Nu Skin on national television prior to taking legal action against the company.To imply that there's some connection between Kelley and Amway's location in Michigan is "pure fantasy," said Chris De Witt, a spokesman for the attorney general's office. "He's reaching for straws," De Witt said.
"It's hard for us to have a rational idea of what they're doing," said Nu Skin spokesman Jason Chaffetz of Michigan officials. Roney said Nu Skin is no different than network marketing companies such as Amway, Avon and Mary Kay.
Amway underwent federal scrutiny in the 1970s. The Federal Trade Commission determined the corporation was not a pyramid scheme because distributors primarily received compensation for selling products rather than signing up new participants.
The "Amway standard" emerged from the federal investigation, said Gary Hansen, director of the Utah Division of Consumer Protection. Under the model, disrtibutors are to derive 70 percent of their income from product sales.
"There are some questions the attorney general has about Amway," De Witt said. "The attorney general is not a fan of multilevel marketing period."
But the FTC findings prevent Kelley from pursuing legal action against Amway, he said.
"They have received the bill of good health from the Federal Trade Commission," De Witt said.
Chaffetz said Nu Skin is confident it will be able to reach a settlement with Kelley in the near future.