critique of Nutrition for Life enforcement action

a critique of the Nutrition for Life enforcement action

Various regulatory agencies proposed to impose sanctions against Nutrition for Life, but these agencies chose not to pursue such sanctions after changes were made to the company's program. The gist of this page is to address two questions raised by this behavior:

Did the changes to the Nutrition for Life program bring the company into effective compliance with the law?
Given that these were not minor technical violations, is it good public policy to allow Nutrition for Life to get off with what is essentially a warning?

The Illinois Attorney General's office claims that their agreement provides a "shield of protection" for consumers. The provisions in this agreement are similar to those in consent agreements that have been made with other multi-level marketing companies by federal and state authorities.

These provisions include prohibitions on front-loading, requirements to have a certain number of retail customers and a certain percentage of sales to retail customers, accurate disclosure of average incomes of other distributors, and a provision for the company to buy back unsold inventory at the original price less a re-stocking fee. Although these may sound good on paper, in practice they have probably done as much to hurt as to help people who are introduced to these programs.

Bottom line on the Illinois Attorney General's agreement with NFLI

The provisions in this agreement were similar to those that have been reached with other mlm companies. Nevertheless, these provisions do nothing to prevent a company from disguising a pyramid scheme as a multi-level marketing business opportunity. The only benefit distributors receive from these provisions is to be able to get back a piece of what they have paid, and the value of this is even questionable. Regulators should be creating effective guidelines to ensure that compensation plans cannot be structured to turn them into pyramid schemes.