Washington, D.C.—Herbalife International of America, Inc., Herbalife International, Inc., and Herbalife, Ltd. plan to restructure their U.S. business as part of a Federal Trade Commission (FTC) settlement.
FTC says Herbalife’s multi-level marketing structure unfairly rewarded distributors for recruiting others to join, rather than reward them for what they actually sold, “causing substantial economic injury to many of its distributors.” Now, the company will have to restructure so as to reward participants for product sales, not recruitment numbers.
Herbalife must also give FTC $200 million to compensate individuals who believed they could earn a lot of money selling the company’s products. Participants were led to believe they would be able to earn thousands of dollars a month and make a career-level income, or more. Unfortunately, most earned little or no money.
Several sales leaders even functioned at a loss, spending $8,500 to open a “Nutrition Club” and then earned little or no profit in the end.
FTC is requiring the company to change these practices and pay an auditor to make sure the firm adheres to its restructuring plan.
FTC Chairwoman Edith Ramirez said in a press statement, “Herbalife is going to have to start operating legitimately, making only truthful claims about how much money its members are likely to make, and it will have to compensate consumers for the losses they have suffered as a result of what we charge are unfair and deceptive practices.”
Published in WholeFoods Magazine Online, 7/15/16