Almost none of the business builders want to make money anyway, according to CFO Gil Fuller, so no one need worry. He says that only about 12% of Usana associates want to actually make any money, and only about half of those actually try to make money.

Here are a few of the facts that we know about Usana Health Sciences distributors:

• 67% never make one penny in commissions. That’s according to Usana’s own documents, summarizing 2006 commissions paid out.
• 87% or more lose money in the business. Usana executives confirmed this statistic to the Wall Street Journal.
• 2.6% of Usana’s distributors receive 72% of the commissions paid out, again confirmed by Usana’s own documents

Yet when asked on yesterday’s conference call about the information being put out by Fraud Discovery Institute, the conversation focused on proving that distributors don’t mind the fact that they’re not making any money in Usana. (And the analysts apparently fell for it, by the way. No hard questions from them!)

Here’s how the conversation went:

Bill Leach –  Neuberger Berman: “The latest ravings from Mr. Minkow suggest that 87% of your distributors aren’t making any money. Maybe you can watch their latest thing on YouTube. But they had this couple that lost $5,000 supposedly. Could you just comment on that? He keeps referring to your documents and saying that, you know, as reported in your documents.. Is there any truth to that at all?”

Gil Fuller: “Well you know, I think the trouble with referring to his spinning of that information is it really is just, just spinning, uh in our view. Uh, uh. In, in results that we’ve… in surveys that we’ve done… uh, which are consistent, I think, with uh, DSA data, uh, most people get into direct selling. whether it’s us or anybody else. Tupperware, Avon or whatever. Most people get in there for, to benefit from the products. That’s certainly the case with us. So you only have about something on the order of 12% of people who, uh, get into this business with the intent of making money and only a small fraction of those, maybe half of those or something, do it with the intent of doing it more than part time.

So, uh, what he ignores in his machinations is the element of time with regards to who’s gonna make money. You know, it’s kind of stating the obvious, but the people who work at it are the ones that that in fact generate the income for themselves. Those that don’t or do it for product reasons, obviously don’t… So. uh..”

Dave Wentz: “Yeah, I mean, one of the things that a lot of associates focus on is just making enough money to pay for their products. Uh, which of course is not a possibility if they are buying their products retail from uh GNC or Wal-Mart or whatever. So uh, making money for them isn’t the goal, uh, just covering the cost of their products may be the goal. For others of course, it.s just customers that [inaudible] 75% join just focused on the nutritional benefits and 25 join focused on the business aspect. So, what percentage of uh, people who go for it are successful? I mean I don’t think we’re different from any other business whether it’s real estate, or stocks, or whatever. It’s people who work hard, stick with it, do it right, are successful.”

This argument that no one really wants to make money anyway fails on several fronts.

• 70,000 of the company’s North American reps are Preferred Customers, while 142,841 are Associates. Preferred Customer is the “I just want to get my vitamins at a discount” plan, while “Associate” is the “I want to build a business” option. If 88% of Usana reps were really just interested in purchasing vitamins, wouldn’t they sign up as Preferred Customers? Yet only 33% of the reps are Preferred Customers.
• With 142,841 .average distributors. and 70,000 .active. preferred customers and total direct sales of $246.5 million in North America for 2006, this averages to about $89 every four weeks, per associate or preferred customer. (Well it’s actually lower than that, but let’s give them the benefit of the doubt.) What does $89 every four weeks get an associate or preferred customer? About 84% of a 28 day supply of the HealthPak 100, one of the company’s best-selling products.
• The first problem with the above point, is that it proves that products are not being retailed.
• The second problem is that it proves that the distributors and preferred customers aren’t even buying enough vitamins for themselves to use them regularly. This debunks this whole “they want vitamins at a discount” theory.

When are people going to see this “business opportunity” for the fraud it really is?