Herbalife Under Investigation


Herbalife under investigation for pyramid scheme

The Federal Trade Commission to investigate whether Herbalife (HLF) is a pyramid scheme. All Nicole Lopez wanted was a crack at the American dream and a chance to work at home closer to her kids. Instead, she got a nightmare, losing thousands of dollars after trying to sell Herbalife, which makes weight-loss shakes and nutritional supplements.

Earlier Tuesday, the National Consumers League released a letter urging the FTC to take action because the allegations against Herbalife could impact consumers. The group said it had met separately with representatives from Herbalife, Pershing Square and the Direct Selling Association, and concluded that an investigation is the best answer to determine whether Herbalife is a legitimate business or whether it operates a pyramid scheme.

Ackman alleged in December that Herbalife was a pyramid scheme and made a bet the stock would fall, arguing that the company makes most of its money by recruiting new salespeople rather than on the products they sell. Herbalife disputes that.
• Herbalife stock surges after Icahn grabs stake
• Icahn vs. Ackman: Investors take squabble to TV

“If you’re an honest person and you want to do an honest business, there’s no way you can succeed,” Lopez Herbalife under investigation for pyramid scheme said, sitting in the kitchen of her Utah home.

Unwilling to recruit other people to sell Herbalife, which is how most Herbalife reps make money, she quit after 11 months and lost the $10,000 she invested.

On Wednesday, Herbalife said in a statement “We regret that the National Consumers League has permitted itself to be the mechanism by which Pershing Square continues its attack on Herbalife.”

“We are pleased that the National Consumers League, the nation’s oldest and one of the most respected consumer protection organizations, has requested that the FTC launch an investigation of Herbalife,” Ackman released in a statement.

“We believe that a thorough investigation of Herbalife will reveal it to be a pyramid scheme that has harmed millions of consumers in more than 80 countries around the world.”
After a 10-month investigation into so-called multi-level marketing, CNBC found dozens of people with similar stories. Multi-level marketers sell products through a network of distributors, many of whom work at home and get paid by selling products, as well as recruiting other distributors.

Herbalife maintains that it is a financially strong company that has created meaningful value for shareholders.
Last month Herbalife Ltd. denied a media report that it was the target of a law enforcement investigation. At that time the FTC would not confirm or deny whether any government agency was investigating Herbalife.
“Allegations that Herbalife’s business model is a pyramid scheme are serious charges with serious consequences for consumers and those who are recruited to sell Herbalife’s products,” said Sally Greenberg, executive director at the National Consumers League. “The FTC is the federal agency with the right mandate and expertise to explore these allegations.”

Herbalife under investigation for pyramid scheme Many of the people interviewed discovered that selling the products was harder than they thought. After hitting up family and friends to buy products, sellers often resorted to spending hundreds and even thousands of dollars buying sales leads, which sometimes led nowhere. The real money, they found, is in recruiting others to sell the product, creating what’s known as a “down-line” of distributors. The more distributors they recruit, the more money they are likely to make, based in part on a combination of bonuses and commissions.

The debate has garnered the attention of Wall Street, with hedge fund titans now battling over Herbalife’s stock.

Herbalife shares finished Tuesday down 2.1% at $40.38. Another investor, Dan Loeb of Third Point LLC, has disclosed an 8.2 percent stake in Herbalife, a vote of confidence in the company.
Shares of Herbalife fell 23 cents to $40.15 in premarket trading Wednesday. Its shares have traded in a 52-week range between $24.24 and $73.
CNBC heard claims of thousands of dollars a month — even $10,000, $20,000 and $65,000. One featured speaker, Olga Valencia, a successful distributor, recalled how “my first car was a Mercedes that I bought with Herbalife.”

Herbalife strongly rejects criticism that the company is a pyramid scheme.

32 Responses to Herbalife Under Investigation

  1. Jessica Bechtold March 14, 2014 at 5:56 am

    Herbalife is like any other job. You get into it what you put into it. I don’t mean money either I mean time and effort. First of all, its against herbalife’s policies to buy sales leads so anyone not following our standards should have their id # yanked.They tell you to use the products so you feel amazing and get results. That is the only money you have to spend EVER. If you chose to spend on advertising or other things like that, its your choice. I am a stay at home mom of 2 small children. I get to be with them all day while my husband works and then when he is home its time to get to work. I have lost 40lbs by eating herbalife. And now I get to do fit camps, 5weeks to 5k trainings, weight loss challenges, shake samplings & HOM’s. I choose to do these events as a way of helping my community get healthy and as a avenue of getting the herbalife name out in the public.I have to get out in the community and talk to people. If they don’t see me and my results how will they know. I take my kids out for walks and hand out shake sampling invitations. I wear my button showing how much weight I have lost so people ask me about it. I hang flyers in stores. This is MY business and if I am going to work around family events and my children and husband than I have to find time to really work hard or I am not going to make any money. Plus I know the amazing results from these products so I want to share them with everyone. Its amazing how many people are obese in this world and are looking for that one thing that could be their saving grace. I believe we have the best nutritious food out there. Its just in powder and tablet form,

    Reply
    • gen0music March 16, 2014 at 5:31 am

      God all these moms in their ponzi schemes… tut tut tut.

      Reply
  2. vicente March 13, 2014 at 12:45 pm

    Chris Powell bode shakes are better. http://dreambigypr.vemma.com

    Reply
  3. Jennifer March 12, 2014 at 6:39 pm

    90% of what you hear is opinion 10% fact….No one can ever take away my amazing journey with Herbalife. I have lost over 80lbs and am able to be home with my 3 beautiful daughters. I love that I get to help others step into the best version of themselves. We are not the enemy. We build people up and inspire. I love what I do and am grateful that Herbalife found me when I needed it the most. Herbalife is changing lives for the better everyday, I know this because I am one of those lives. Thank you for listening:) ” For things to change you have to change, for things to get better you need to get better” Be the Change!

    Reply
  4. Linda March 12, 2014 at 11:17 am

    Dear God, the positive comments on this matter come from people who understand that direct sales is not a get rich scheme, it’s a business where relationships are built and customers are cared for, the ones who are just on here to sell their products, do not understand the business they are in, and have not learned that to be successful you have to be trustworthy and not try and ‘recruit’ other direct sales people by disrespecting a competing company, and anyone who says that it’s a pyramid scheme, well, they are either failed distributors who did not realise the opportunity they had hold of, or they are people who have closed minds, and we all know that your mind should be like a parachute, always open. I have complete and utter faith that Herbalife will be found to be what it is, a direct sales company, just like Avon, Kleeneze, Betterware, Forever Living, Body by Vi, and so on, even Alan Sugar has faith in this business model, why else would he start Tropic if for one minute there was a doubt, so for all you other distributors that have taken this opportunity to knock Herbalife, just remember, if Ackman gets his way and takes it down, then he’ll take every direct sales company down with them, just saying like…………….

    Reply
  5. TiniD March 2, 2014 at 12:33 pm

    Don’t be foolish, you can’t loose money with herbalife, you have special products in your hands, it’s a fair company, excellent product, you work either way, nobody is going to press you for anything. It is not a pyramid, it is a triangle, and if yes what’s the problem?? You have to see clearly, open your mind!!!

    Reply
    • mandy March 2, 2014 at 1:57 pm

      Arh you are one of the brainwashed distributors. When I trained as a psychologist I learnt quick smart what they were doing!

      Reply
  6. Dave February 28, 2014 at 6:04 pm

    Could be worse. Could be Kleeneze (UK)…

    Reply
  7. bodywraps101 February 28, 2014 at 8:14 am

    Direct Sales is a way to do business, just ask; Donald Trump, Robert Kiyosaki & Bill Gates. Love Network Marketing, it has allowed me to stay home with my children, make extra money and the whole food products made by the company I am with have truly changed many many lives including mine.

    Reply
  8. sue February 28, 2014 at 6:34 am

    Herbal life is rubbish juice plus is the way forward best thing ive ever done lost just over 2 stone snice October juice plus is not a diet its a way of life the way uou see food the health benefits are fantastic !

    Reply
  9. jenny February 27, 2014 at 8:15 pm

    Herbalife works it depends on how u take it . If u want to lose weight and havent change ur eatting habits dont expect to lose weight. I lost 19 pounds just takin the products without any exercise. i think before u want to be a distributor you should take the products and see how it works for u that way u can help others . That way we can fight with overweight in our Society

    Reply
  10. sean February 27, 2014 at 4:20 pm

    This is a pyramid scheme…These people had me going to door to door for them inviting people to their “group interviews” I lost more money and friends doing this joke of a buisness

    Reply
  11. Pieter Egriega February 27, 2014 at 8:43 am

    So let us think about it, I sell hamburgers at $3 and I sell 100 hamburgers, I make $1 on every hamburger I sell, so I make $100 and McDonalds make $200 dollars and 100 people just got fatter…..mmmmm sounds like capitalism to me? and to think the US is the country that tried to shoot communists……mmmm Im appalled.

    Reply
  12. Anna February 27, 2014 at 5:23 am

    HERBALIFE – SUPER !!!

    Reply
  13. Ben Jones PT February 27, 2014 at 4:19 am

    Wow better late then never!! This news IS well old!! Herbalife HAVE set the standards & are doing so right now & have been doing for the past 35yrs!! Oh by the way they won the court case!! Goodnight!!!!!

    Reply
  14. Corrina February 27, 2014 at 1:46 am

    scam! Herbal Life don’t give a crap about changing lives! how do you think the big men are so rich!?…by selling the product to people who get sucked into their product!…look at the labels and research for yourself what exactly is in the product!…It’s ingredients are cheap, processed and not good for you! I had Reps trying to sell the product to me and it comes across like the individuals selling this product don’t have a clue about nutrition and are just sucked into this belief that herbal life is awesome!…Juicing is the way forward…make your own shakes! At least you know what your body is consuming.

    Reply
    • duplesdm February 27, 2014 at 1:25 pm

      I don’t believe it’s a pyramid scheme. It’s just a another way of direct marketing. I bought Herbal Life products twice in the past from two different people and must say, it did nothing for me at all. I’m now using Mannatech’s products and we had amazing results in the four years that we’ve been using it. These are REAL food products, with more than 90 patents worldwide.

      Reply
  15. Mandy February 27, 2014 at 12:44 am

    I was a Herbalife distributor. It is a pyramid selling scheme. I was actively encouraged by my sponsors to recruit and to tap eveyone I know for sales! The products do work for the average jo; I lost 5st whilst on them! Ive heard just recenly of distributors selling Herbalife to weight loss surgery patients; this is DANGEROUS because of the high sugar and artifical sweetners in the products. Despite what they tell you, they are not trained and do not know what they are talking about in regards to weight loss surgery patients. These products WILL make you ill if you’ve have weight loss surgery!

    Reply
  16. Steve February 27, 2014 at 12:44 am

    I am involved in 2 network marketing businesses in the UK. This woman needs to take a look at herself before blaming everything and everyone else. How stupid is it to invest $11,000. That’s not how this type of business works.

    Reply
  17. Alice February 26, 2014 at 10:31 pm

    I was contacted by some dude at Herbalife a while ago and it was clearly a scam. Delighted that I wasn’t tempted to get involved. Sounds dodgy to me

    Reply
  18. Jackson Lim February 26, 2014 at 7:46 pm

    Sounds to me more like an unsuccessful person sitting at home waiting success to fall from the sky and then putting all the blame to the company she joined. I’m not a Herbalife member but if you think about it, if it was not Herbalife that she joined, she would also blame any other companies that she’d have joined because it takes efforts and commitment to be successful, and all I can guess from this woman’s claims is that she does not have these qualities. So, do not put the blame on MLM system.

    Reply
  19. Aldo February 26, 2014 at 3:37 pm

    I have recently joined Herbalife, call it what you want but this is a company dedicated to making a real change to peoples nutrition and health with a super class product and training. Almost a quarter of adults are classed as obese, Herbalife is working for people all around the world, don’t let their hard work go to waste.

    My understanding is that no one has to take on additional team members if they don’t want and buying sales leads would be against the rules. If people are stupid enough to do that then that’s their fault.

    Why not investigate all the companies that are putting fats and sugars into our products and making the nation obese. Its interesting to see that Bill Ackmans 4th top holding company is Burger King. Is this a war against Herbalife or a war against healthy people? Acording to Insider Monkey ‘Bill Ackman is a long term value investor, taking advantage of short term downward moves in prices’. Is this all part of his plan to move in on shares once he has completed his task of bringing them down?

    Network marketing is a great way for people to earn additional income that fits around their lifestyle and give them a work life balance that is taken away from us when working for big corporations. I am sure Bill will be happy for us to all be so busy we have to go to Burger King on the way home after working a 12 hour shift because there is no time left in the day for a healthy balanced meal.

    Reply
    • brandon March 9, 2014 at 2:51 pm

      There is sugar, whey, and artificial sweeteners in Herbalife. And as the sibling of a very well to do rep I will say out right it is a scam

      Reply
  20. Ben Gaul February 26, 2014 at 2:49 pm

    Like anything else in life, you get out what you put in. Amway, which has been in the MLM biz far longer than Herbalife, is responsible for creating more millionaires than any other LEGAL entity in American history.

    From a legal stand-point, “pyramid schemes” are about “you put in $10.00 and then get other people to put in $10.00 underneath you, of which you get to keep a dollar from each.” No goods are exchanged or offered. Just money trading hands on an ever escalating basis.

    I personally don’t feel MLM is a pyramid “scheme,” so much as it is a way to annoy your friends and family. Real money is generated off the sale of real goods, but I’m annoying enough already. I don’t need to charge people for the opportunity to hear me tell them how to live their lives.

    Reply
    • Andrew Ihegbu February 26, 2014 at 5:06 pm

      Pyramid Schemes are Ponzi Schemes. Ponzi schemes are scams in which the returns paid to those above are taken from the investments made into joining the business from those below. The system requires an ever growing amount of people within the system just to sustain itself, thus cannot be a business.

      Put it this way, for you to make that $10 back you have to make a minimum of 9 times that for the people above you. Well then what about those below you? They each have to make 10 recruits to make their money even and thus make $100 for the business just to get $10. Now that’s $1000 invested in the system, $100 in your pocket, everyone you employed has broken even and there is now 100 new people that are $10 out of pocket.

      Let’s review that for a second, so you can see exactly how the money is stolen from everyone.

      Now we have 111 people in the system.

      You = 1 person

      The 10 people you recruited = 11 people total

      The 100 people they recruited (10 people each) = 111 people.

      Everyone donated $10 so there is $1110 in the system.

      You made $110 as there is 110 people below you in the pyramid, and the 10 people you employed made $10 each. $10×10 people = $100. $100
      + your earnings makes $210

      Where’s the other $800?

      It was taken by whoever started the system and you all just got scammed.

      Sure you might be $100 better off, but to do so you had to make the people that started the scam $800 better off and in the process involve 100 new people in the scam, sooner or later, a hell of a lot more people lose than win, and it’s usually sooner as the pyramid chart shows above.

      Reply
      • Ben Gaul February 27, 2014 at 11:41 am

        Perfectly put.

        Reply
      • Kira Griffiths March 23, 2014 at 5:10 am

        What about MLM companies that you do not invest any money in to join. The only money you spend is to purchase products like you do at any retail store you pay money and in return get a product or service to use.

        Reply
  21. Dennis February 26, 2014 at 11:28 am

    I love this. What incredible stupidity. This woman actually admits that she never sponsored anyone. I quote “Unwilling to recruit other people to sell Herbalife, which is how most Herbalife reps make money, she quit after 11 months and lost the $10,000 she invested.” Heck I have been involved in many MLM companies and never made a cent. But most of them did have good products and when I was in Herbalife I found the product shakes tasted incredible and I was amazingly losing weight. Nobody in these companies ever promise success and most fail because growing a team of people is hard work and not everyone is cut out to do it. What I see is all of these companies spend time and money trying to encourage people that they can do it and build a motivating fire in them to do it by building a dream of what is possible. This person wants to take down a huge successful company simply because she couldn’t do it. We have to take account for our own failures. Network marketing is not for everyone. Obviously this person is one of the millions out there that couldn’t cut it. Myself included…

    Reply
    • SwahaVai February 26, 2014 at 3:13 pm

      I used Herbalife products for almost 2 years because I worked long hours and I could not have meals as often as needed. Not once in my 2 years did someone try to recruit me. They were more like a great group of people who encouraged others to just be healthy regardless of what Herbalife products you used or not. I get that this is not how it is everywhere. But the pyramid scheme isn’t company wide either. So, Dennis, I respect what you say here. Thank you for sharing!

      Reply
  22. Cheyene February 26, 2014 at 9:18 am

    This is why I’m so grateful someone wise steered me away from herbalife and toward a different, organic company. Loving my extra income…and the way I feel. My heart breaks for those whose money went down the drain.

    Reply
  23. Sam February 26, 2014 at 9:05 am

    Wall Street is a pyramid scheme. with the Fed at the top dont be fooled…

    Reply

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