Nu Skin fined $540,000 in China over sales practices, claims

Nu Skin Enterprises, a Utah company that sells anti-aging cosmetics and nutritional supplements, was fined more than $500,000 by Chinese regulators over allegations that it violated direct selling laws and that six Nu Skin distributors made misleading claims promoting products.

The regulatory action ends a probe that began in January, when China’s State Administration for Industry & Commerce began investigating the company following media reports.

“We continue to believe in the potential of China’s large and growing market,” said Dan Chard, Nu Skin’s president of global sales and operations, in a statement. “We remain committed to working cooperatively with the Chinese government to ensure the healthy, long-term growth of our business.”

Nu Skin was fined $524,00 for illegally conducting direct sales. The company was fined an additional $16,000 for product claims that Chinese regulators said did not have enough evidence. Six Nu Skin sales employees were fined a combined $241,000 for “unauthorized promotional activities.”

The company said it is taking steps to correct problems raised in the investigation.

Nu Skin, which began operating in China in 2003, had been under attack by the the People’s Daily since January, when the newspaper published reports accusing Nu Skin of lying about its business in the country, exaggerating its influence and organizing “brainwashing gatherings.”

The newspaper, the official paper of the Communist Party of China, also said the company was conducting illegal multi-level marketing activities in the country.

Shares of Nu Skin rose $14.92, or nearly 20%, Monday to $89.92.