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Herbalife called out for being a pyramid scheme, seeks settlement with feds

Accusations state that only those salespeople at the top of the company make money, while more than 90% of distributors earn nothing or even lose out.


Sweet smell of success: Herbalife in deep water

While researching this article on the on-going melodrama that is Herbalife I decided to just go to the source and get my own take on things. It didn’t take very long: A few phone calls to the local Herbalife contact and the next thing I knew I was invited to an information meeting with other distributors, team leaders and potential Herbalife members. A couple of things jumped out at me, namely everybody gets a piece of the pie: if I sell a bottle of shampoo my team leader gets a cut and the leader above him/her gets a cut and someone living in Belize gets a cut.


Invest in Herbalife

The other thing is that I need to purchase all my products. I need to purchase the initial presentation kit and any other products I may need along the way. This is neither good nor bad. I assume everyone from Avon to Sweet Scent Candles or Mary Kay Cosmetics operates the same way. Ultimately the big money isn’t selling, it is in building a team and having that team create a team and so on and so on with the team leader getting a percentage of whatever it is those teams/individuals are selling.

The buck stops…somewhere

OK enough of that. I’ll probably kick myself in the morning but I opted out of becoming an Herbalife member. Not everyone can remain so cavalier: Billionaire investor William (Bill) Akman (who by his very nature has invested heavily in Herbalife and lost) has spent more than a year locked in a legal battle with Herbalife accusing the company of operating a pyramid scheme. Naturally the company contests Ackman’s claims.

Akman’s Herbalife odyssey has run a winding road in the last few years: initial accusations led to the case being dismissed back in March 2015 but then going back to trial and now Herbalife is looking to find some type of resolution (read about it here)

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Enter the FTC

So now the FTC is involved and Herbalife is trying to resolve this is such a way as to not put a dent in its multi-million/billion/gazillion dollar empire. The ramifications go deeper than just William Akman trying to recoup his losses. Plenty of other independent sales organizations (see above) are paying attention to see how this plays out because they risk falling victim to the same accusations.

Herbalife. It’s not just a job. It’s a lot of other people benefitting from each and every sale you make.


Written By

Nearly three decades living and working all over the world as a radio and television broadcast journalist in the United States Air Force, Staff Writer, Gary Picariello is now retired from the military and is focused on his writing career.

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