Nu Skin to suspend China distributor recruitments following probe

Tue Jan 21, 2014 8:17am EST

Jan 21 (Reuters) - Skincare products maker Nu Skin Enterprises Inc said it would suspend promotional meetings where it recruits new distributors in China, days after Chinese regulators launched probes into its business practices.

The company said in a letter to customers on Tuesday that an internal investigation found instances where some of its sales representatives had failed to "adequately follow and enforce our policies and regulations."

"We sincerely apologize for these unfortunate and unauthorized activities," the company said.

Chinese regulators launched probes last week into Nu Skin after local media accused it of exaggerating its influence and creditworthiness in brochures and organizing "brainwashing" gatherings.

Short sellers and other critics have accused companies such as Nu Skin and Herbalife Ltd of running illegal pyramid-type schemes, questioning their distribution model where distributors make money not only from their own sales, but also from those by people they recruit to become distributors themselves.

Nu Skin said on Tuesday that it would take corrective actions, which include further training and educating its employees in China.