China fines Nu Skin US$540,000 for illegal sales, claims

Bloomberg

Tue, Mar 25, 2014 - Page 14

Nu Skin Enterprises Inc was fined US$540,000 in China for selling items illegally and making product claims it could not verify as part of a government probe into alleged abuses by the direct seller of skin and hair cleansers.

Six sales employees were also fined US$241,000 for unauthorized promotional activities, the Provo, Utah-based company said yesterday in a statement, about two months after the investigation was announced by the Chinese government.

Nu Skin said it is taking steps to correct issues raised in the review.

“We remain committed to working cooperatively with the Chinese government to ensure the healthy, long-term growth of our business,” Nu Skin president of global sales and operations Dan Chard said in the statement.

Nu Skin said it was penalized US$524,000 after some individuals sold products that had not been registered for direct sales. The seller of LifePak dietary supplements and Nu Skin facial scrubs said it was fined US$16,000 over claims about products that lacked sufficient documentary support.

It is not aware of any other Chinese investigations.

The government started its investigation after a report in the state-owned People’s Daily claimed that the company operated a “suspected illegal pyramid scheme,” brainwashed trainees and sold more products than it was allowed.

China banned door-to-door sales in 1998, saying it wanted to end “a decade of rampant pyramid sales abuses.”

The country lifted the ban seven years later.