Wednesday, 8 June 2016

What is Herbalife?-The Truth about The Herbalife Scam

What is Herbalife?-The Truth about The Herbalife Scam
By Jennifer | April 1, 2014

“Our Mission is to change people’s lives by providing the best business opportunity in direct selling and the best nutrition and weight-management products in the world.”-

An Introduction-Why I Decided to Write This Herbalife Review

I’ve been to Herbalife nutrition clubs in the past because my fiancé loves the products and is trying to sell them. Herbalfe ‘wellness coaches’ give a complimentary shake for first time customers ranging from cookies and cream, vanilla, to dulce de leche. Their enthusiasm and energy is contagious and persuasive when they tell you of the thousands of dollars they make working part-time or how quickly they were able to turn it into their primary income. Then they tell you how much they enjoy ‘helping’other people reach their weight loss goals.

It seems like the perfect business opportunity of health and wealth.

I recently was in a Herbalife club because my fiance gave me a card for a free smoothie knowing a sales pitch was coming my way. I was kindly greeted by a distributor that gave me tea and a dulce de leche shake as I filled out some forms about my health and my diet. I was so close to buying the products when he told me of my body analysis and evaluation revealed my ‘real’ age and how Herbalife products can help me become more energetic and in better shape. I inquired about their business opportunity just to find out what he tells me.

“Or if you want to join the business, it’s a small start-up fee,” he said. “I make $2,000 a month just by working part time.”

After he said that, I thought of how hard direct selling is and how it might not be for me. I left and started my research, especially because my fiance has given samples of the product to me, my friends, and family.

What is Herbalife?

Herbalife is a 34-year-old global multi-level marketing company based out of Los Angeles, CA that sells ‘nutritional’ and weight loss products that are anything but healthy including protein shakes, snacks and supplements. 

Their first product, the Formula 1 protein shake is a soy-based meal-replacement drink that quickly became a best-seller. Skin care products were introduced a bit later. They’re now in 91 countries.

The hierarchy consists of 11 levels of sales reps beginning with Distributor and ending in Founders Circle. 

Distributors can make money by buying the products initially at a 25% discount while those on the Supervisor level get a 50% discount to ‘attempt’ to re-sell them for a profit. The second and preferred way is by getting royalties and commissions from a large dowline.

Herbalife History

Founder Mark Hughes was a passionate consumer of his own products and started selling them out of the trunk of his car after his mother had a premature death caused by an eating disorder. He later went on to recruit more distributors to join his business opportunity.

He trained unsuccessful distributors to tell a-rags-to-riches story known as ‘fake it until you make it.’

An example of what they say is , “I used to wash dishes for minimum wage and now I sell Herbalife and make $150,000 per year, drive a luxury car, and live in a fabulous mansion” using door to door and word of mouth advertising. Their slogan “Lose Weight Now, Ask me How” was featured on badges, flyers and posters.

Herbalife Selling The Dream

Seminars were a popular method to recruit; however, distributors would give misleading weight loss and health testimonials. 
They claimed that Herbalife products cured cardiovascular problems like heart disease, miraculously got a woman out of a wheel chair, and cured a tumor. Yet when they were investigated, they said that the products did nothing, that they just make your body stronger.

The Food and Drug Administration received complaints dating back to 1981, in which consumers experienced vomiting and diarrhea after consuming Herbalife.

A woman from Boston went through anaphylactic shock after taking the products in which her skin started to itch (common symptom), then she was unconscious and near death. 
After a doctor managed to save her life, he told her she was pregnant. She decided to abort her child because she was afraid of what the medication that saved her life affected her fetus. Even after she returned the products, she was told to keep using them.

Lin Friedman- a victim of intestinal disease sued Herbalife because she was told by a trusted friend that the products were safe after Lin told her that she had Chon’s disease since age 11. Laxatives are a serious threat to her and her friend only warned her after she had blood coming out.
Herbalife Criticized by Experts

The health hazards and a pyramid scheme sales structure were the focus of an ABC News report on April 22, 1985 and stated that Dr. Richard Marconi received his Ph.D. through a mail order course from an unaccredited school. The products were said to be mainly laxatives and diuretics with potential of potassium deprivation.

Dr. John Riddle said that Herbalife must be stopped by the FDA. 

Doctors said that the Herbalife product, K8 helps elevate the mood and stress and the main ingredient is Kaba which is an intoxicating beverage used in Tonga and Samoa. Like marijuana, it can become addicting and cause hallucinations. 

N-R-G gives people energy and Herbalife didn’t state that the main ingredient is caffeine. They said that some products are even toxic, bring false hopes in consumers most that do not benefit from the placebo effect, and that the products contain such a small amount of herbs that it’s not even effective. 

Dr. Fred McGuffin- Vice President of the National Arthritis Foundation said that the Arthritis Pain Reliever is ineffective and that there’s no evidence that there’s any benefit to it. 

Dr. Riddell also agreed that most of the products are expensive and useless.

They had warnings from the FDA for misleading claims that the products can cure a number of diseases including cancer, diabetes, and obesity. 

The weight-loss supplements have not been scientifically proven to cause weight loss.

In 1985, the California attorney general and the State Department of Health Services accused Herbalife with making false and misleading claims and running an “endless chain marketing scheme.” 

Herbalife settled that case for $850,000 and agreed to the court order to carefully track distributor sales and not exaggerate the health benefits.

Mark Hughes died at the young age of 40. His dead body was found with abundant levels of alcohol and anti-depressant pills

J.H. Whitney & Company and Golden Gate Capital bought out Herbalife for $685 million and took it private in 2002. 

Some of the weight loss products contained Ma Huang and Sida cordifolia which are two herbs containing ephedra- an appetite suppressant

They stopped using ephedrine in its products after several U.S. states banned that ingredient in supplements.

In April 2003, Michael O. Johnson joined Herbalife as CEO.

Herbalife had a public offering on the New York Stock Exchange of 14.5 million common shares at $14/share on December 16, 2004 when net sales were $1.3 billion. 

8,700 distributors claimed that Herbalife was simply a pyramid scheme in a lawsuit where $6 million were paid to the plaintiffs by Herbalife and its top earning distributors. 

Shortly after that incident, an Israel’s Health Minister began an investigation against their products after four persons using them were found to have liver problems.

Herbalife celebrated its 25th anniversary along with 35,000 distributors at a four-day event on Aril 2005. A few months later, Dr. Steve Henie became their Chief Scientific Officer.

Scientific studies in 2007 by doctors at the University Hospital of Bern in Switzerland and the Liver Unit of the Hadassah- a Hebrew University Medical Center in Israel found a connection between Herbalife, hepatitis and other health complications. 

Hospitals in Israel, Spain, Switzerland, Iceland, Argentina and the United States reported liver damage in a number of patients. 

Some recovered after they stopped taking them, the disease continued for some, and unfortunately, two patients died. 

Lawyer Christopher Grell, cofounder of the Dietary Supplement Safety Committee filed a lawsuit on May 2008 on behalf of a woman who got lead-related liver complications. 

On June, the lawsuit added distributors that gave her the products. Grell created a website for all harmed individuals the chance of redress. In 2009, an Israeli woman also sued Herbalife due to liver damage.

President and COO Greg Probert resigned because he didn’t completed his MBA.

Bill Ackman VS Herbalife

In December 2012, billionaire investor and CEO of Pershing Square Capital Management Bill Ackman

said that Herbalife has been running for so long because there has been nobody like him to expose the truth about them and made a $1 billion short bet against them, predicting the company’s share price will be zero which the federal government, state government and attorney generals will investigate. 

He claimed that Herbalife recruited new distributors through Online Business Systems that was convicted in Canada of running an illegal pyramid scheme by senior and top distributors Leslie Stanford, John Tartol, and Shawn Dahl of Vancouver, Canada- a member of the Chairman’s Club until June 2013.

“Herbalife knows about these deceptive practices, relies upon them, profits from them, and rewards the perpetrators with millions of dollars of remuneration, including discretionary bonuses,” Pershing Square stated.

Herbalife avoided Dahl, but they can’t deny that they rewarded Dahl’s business for more than 13 years. 

They have repeatedly denied that it targets minority communities including Latinos, that it pays recruiting rewards, and that it is a pyramid scheme. They refused to address the documented and false misleading practices by their top distributors. The network reports that Herbalife spent almost $2 million in its lobbying efforts last year while Bill Ackman spent $264,000.”-

Stop Herbalife’s Predatory and Deceptive Business Practices

On April 9, 2013, the company’s KPMG executive who directed Herbalife audits admitted to revealing confidential date to a golfing friend regarding Herbalife. They then hired Pricewaterhouse Coopers as its auditor on May 21, 2013.

In January, Sen. Edward Markey, a Democrat

from Massachusetts, requested details about Herbalife’s business structure and how its distributors earned commissions. He called on the SEC and the FTC to investigate. Edith Ramirez responded, “With respect to the allegations against Herbalife Ltd., a number of statutory provisions and the Commission Rules of Practice prevent me from discussing what action, if any, the Commission may take in any particular situation.”

An investigation of Herbalife has been requested by Attorney General Kamala Harris as well as in Nevada, Illinois, and New York. Brent Wilkes-Executive Director states they defrauded thousands of Latinos.

The League of United Latin American Citizens has been collecting accounts from Latinos across the U.S. including many undocumented immigrants who reported losses from $1,000 to $40,000. The organizations have set up a toll free number, 855 -701-5437 that Illinois residents can call to share their Herbalife experiences.

On Feb. 5, ULAC along with a leading national coalition along with the Southern Christian Leadership Conference of Southern California and the Congress of Racial traveled to Washington DC to demand an investigation with the FTC. They called their campaign “Stop HerbaLIES”. They also met with legislators from their home states as well as give an earful to Attorney General Eric Holder at the Justice Department.

The e Canadian Competition Bureau- Canada’s version of the FTC has launched a confidential investigation of its own.

Herbalife Pros
The startup costs are low.
Supervisors make money for developing, retaining and managing their distributors and for their sales of the product.
Bonuses and all-expense paid vacations are available to distributors with high-performing downlines.

What Makes Herbalife a Pyramid Scheme?

The reality is that 90-95% fail with Herbalife. Most distributors lose between $1,000 and $10,000 with 

the average distributor losing
$3,000. Some have lost much more and these figures do not count the hours they spend trying to sell the product, recruiting distributors, and other expenses. This is how Herbalfe makes most of its revenue. 

80% of all its distributors and 60% of Supervisors quit the scheme within one year and there is no evidence that the distributors engage in profitable retail selling. 

The average payment to Supervisors is $10.55 a week. According to Herbalife 2012, 88 percent of distributors didn’t receive a single payment.
Qualifying and staying a Supervisor involves spending 4,000 volume points in one month or 2,500 volume points each month where one volume point equals one dollar to become eligible for commissions or “royalty overrides”. The majority of distributors are unable to sell the product and incur a great financial loss.
Their average compensation is $4,485 per year. Only 2,321people are making over $25,000. 

Herbalife refuses to report how much of its product is sold to genuine customers and how much revenue they earn from signing up distributors. They refuse to disclose the average net profit or loss of Herbalife distributors.

To hide being an endless chain scheme, Herbalife made the Retail Sales Rules that require 70% of a distributor’s product purchases to be retailed to consumers before making a new order and that they have made retail sales to at least ten customers per month. However, they have failed to enforce it.

Products are overpriced and dangerous to your health and are never retailed to the general public.
Herbalife encourages high level distributors (the ones who got in first and who are at the top of the pyramid) to create and sell “Lead Generation Systems” to lower level distributors to supplement their income and to separate itself from their unethical conduct

Herbalife creates and sells distributors’ audio and video tapes, CDs, and DVDs in addition to the startup kit to “help” them. 

Distributors have said that the only way to succeed is to keep recruiting new distributors and that the most successful distributors are the ones that become “recruiting machines”.
Tired of Pyramid Schemes Like Herbalife? Learn from Millionaire Marketers Here that Care About Your Success-It’s Free!

Thousands of People Stating Their Herbalife Warnings
“Our neighbor recommended their minister to my parents for a cure for cancer (as my father has lung cancer)… [He] explained to my parents that Herbalife was the best cure for cancer…For a whole month every day, they [Her parents] paid $8 a day to drink three cups of Herbalife, aloe, tea and milkshake…, all it ever did was make my dad lose weight and put him into intensive care. It made his cancer spread even more, whereas chemotherapy was not an option, for the cells had spread fast and caused his lungs to collapse. He is now taking radiation therapy.This minister is a con artist and selling products to old people, saying its treatment for diabetes, cancer, arthritis…” Mema of Auckland on Nov. 15, 2012

“Caroline contacted me and emailed me about this fantastic opportunity to work from home so I could be with my child and earn money…I paid $9.99, then $39.00 and then $325.00. I stopped because it was getting more expensive…”- Dana of Perth on Nov. 11, 2011

“On March 8, 2006 my mother answered a classified ad in the Chinese newspaper leading her to Herbalife…she was quickly convinced… to pay a $200.00 fee…She obligingly put ads in the Chinese newspaper like the ad that she herself had answered to gain new recruits…She had not sold a single item to anyone nor recruited any new members. They persuaded her to purchase $3,700…of Herbalife products (of which she had only used up $1,056.42 before she left the job). She received no receipt in return for her cash. When another member asked for a receipt for a $20 deposit of their $200.00 fee they were told we don’t give receipts…

After two months and nothing to show for it, she left the company. Only $600…was refunded to her. She has been asking the managers of that branch for a refund of the unused portion of her $3,700 and the two sets of entrance fees of $400 ever since…It is clear that she is a victim of their pyramid scheme and fraudulent and unlawful practices. She is only one out of the countless Chinese people that fall victim to the practices at this branch of Herbalife.”- Xiu of Ozone Park, NY on Feb. 18, 2007​

“…The training I went to consisted of more obnoxious marketing about how great the products are, how rich people have gotten off of them, why you should get more people to join in, why you should buy tickets to more trainings and why you should go to their Extravaganza thing in Las Vegas. I learned NOTHING useful… PAY ATTENTION to the business practices of these people. They can be very shady. Omitting information from you is a big red flag..,”- Fatima of Walnut Creek, CA

“Everyone that talked about the millions they made probably lied… The pressure for attending meetings and bringing new adepts was on the verge of insanity and mostly offensive. I took the shakes as a part of a “healthy diet” to maintain my figure, but a year later, I had a total health breakdown, a winter cold turned into a very serious thing and I struggled to survive. Up to then, I had been a mostly healthy person. I realized this was all because of that “healthy diet” and soon I dropped all together: taking that stuff, recruiting, marketing, Herbalife. It was like waking up from a nightmare!”- Helena of Lisboa March 10, 2014

A family from Norton, Massachusetts said that they lost $130,000, including the family’s entire 401(K) investing in Herbalife.

Miguel Calderon lost $20,000 after being taught into this scheme through a friend at a time in his life where he was a really vulnerable individual because he recently underwent a heart surgery and was unemployed.

Hector Cruz said he never received a check even though he recruited about 15 people. He stopped selling Herbalife around 2006 and 2007 after working for a total of three year that consisted of some 60 hour work weeks and hardly made any money.

Ana Arias from Scottsdale, Arizona who was involved in Herbalife for three years. “It was a revolving door. I recruited hundreds of people into the business, and they all eventually separated from the business,” she said.

You can read further reviews on this here one from a woman of AZ whose bank account went on overdraft and her credit was damaged due to Herbalife.
Herbalife is REALLY Misleading…

Herbalife distributors list jobs on Craigslist often for Health and Wellness coaches in which people want to apply for, but end up being pitch the business opportunity. They say they lied because they needed a way to get them in.

“Live the Good Life…You can make thousands of dollars in just a few weeks… It’s fun and simple,” they tell you. But once you see the paperwork, it states that direct selling is hard work and that there are no shortcuts to success.

But they don’t tell you that upfront, they only tell you they have a proven business model, impressive training and a generous compensation plan. 

Selling Herbalife products is hard because the way they train you involves chasing your loved ones, handing out flyers and business cards, giving out business presentations, putting a sticker on your car, cold calling, and driving to meetings. Their marketing materials show a big emphasis on recruitment and not on sales. They use misleading testimonials to get people interested. You are encouraged to spend more money on training and sales aids until you give up.

Is Herbalife Even Good For You?

Herbalife claims their shakes are balanced meals with essential vitamins,

minerals and nutrients, but they don’t mention the toxins found in a great number of their products. High amounts of vegetable oils and soy are used that are harmful to your body. The vegetable oils are very unbalanced and causes inflammation. Soy slows down your thyroid, decelerating weigh loss. 

The whole program is designed to put your body into starvation mode due to the lack of essential nutrients. They use foods that will cause you to lose weight due to starvation, but then when you go off the diet, you will gain weight again which is beneficial for them.

Harmful Ingredients Found In Their Products

Genetically modified organisms (GMOs) – GMOs are formed when a gene from one species is moved to another, creating something inexistent to nature. They are bad for your body, the community, farmers and the environment. For eight reasons why GMO’s are bad for you, go to Other ingredients include MSG, fructose, artificial sweeteners, artificial flavors and colors including soy protein isolate, corn bran, caramel color, and soy lecithin.

Canola Oil (GMO) – The long-chain fatty acids found in canola have been found to destroy the sphingomyelin around nerve cells in the brain, sometimes leading to a worsening brain condition remarkably similar to mad-cow disease and in serious cases, the brain tissue resembles Swiss-cheese-full of holes. It also can cause loss of vision and a neurological disorders.

Carrageenan (Toxic Emulsifier) – It’s normally extracted using strong alkaline solvents. Even a small amount destroys human cells and is related to numerous cancers and digestive disorders. It has also been found to damage cell-mediated immunity and cause tumor growth.

Ephedra- Ephedra has known to cause psychosis, tremors, kidney stones, high blood pressure, sweats, rapid heartbeats, damage to the heart and other organs. It has been linked to strokes, seizures and death.

Lead- According to the Mayo Clinic, even a tiny amount of lead can cause health issues such as weight loss, stomach pain, fatigue, vomiting and irritability. The amounts found in Herbalife products were above what the law allows and deemed toxic.

Shellfish- can cause allergic reactions.

Caffeine- the Mayo Clinic states that the consumption of over 500 mg daily can cause anxiety, restlessness, hypertension and high blood pressure that can lead to heart failure, insomnia and headaches. Herbalife pills, tablets and products contain between 65 and 75 mg of caffeine per serving.

Milk-Based Ingredients- For those that are lactose intolerant, this can cause diarrhea, constipation and stomachaches.

It can also counteract with prescription medications, thus doctor approval is advised.

Any company that uses any of these ingredients doesn’t care about your health and they just care about making money. 

Herbalife is not an herbal supplement approved by the Federal Drug Administration (FDA).

Herbalife at a Final Glance…

At the end of the day, Herbalife might be here for now, but it is built on selling false dreams to vulnerable hard working people who are solely looking to make a better life for their families. 

You can get cheaper products at small companies, herbal stores, and/or online. Never join just to get a discount on their products largely because it is overpriced, dangerous and toxic to your body. 

Weight loss should consist of a balanced healthy diet and exercise. 

Herbalife is a product based pyramid scheme and nobody should waste their time, energy, or money into it because it’s not a sustainable company and could someday collapse and be shut down by the FTC.

Stay away from this company as a distributor.
Stay away from this company as a consumer,
or even as an investor.

To Your Success,

If you have any questions or comments about Herbalife, please state them below.

If you found this article helpful, please share it to help others!

Herbalife charged with deceptive practices, agrees to $200 million settlement, changes

This Wednesday, May 11, 2016, photo shows the exterior of Herbalife's corporate office in 
Los Angeles. Federal regulators have closed an investigation of the multinational, nutritional 
supplements company Herbalife. Though Herbalife was ordered to restructure its U.S. operations 
and pay a $200 million settlement Friday, July 15, 2016, it avoided being classified by the U.S. 
as a pyramid scheme. (AP Photo/Damian Dovarganes)

El Paso, Texas — The Federal Trade Commission is forcing Herbalife, which it has charged with deception, to make major changes.

Herbalife agreed Friday to a settlement with the FTC.

As part of the deal, the company will have to pay $200 million to consumers who lost money due to the company’s unlawful practices, according to documents released by the FTC Friday.

According to court documents, FTC found Herbalife made false and misleading statements, and had unfair business practices.

“The FTC has charged Herbalife with deceiving hundreds of thousands of hopeful people who saw Herbalife’s promotional campaign in English and in Spanish and signed on for what they thought was a legitimate and lucrative business opportunity,” FTC Chairwoman Edith Ramirez said.

It’s hard to miss Herbalife's presence in the Borderland. The multilevel marketing company directly sells diet and health products.

KFOX14 interviewed Herbalife enthusiasts at an outdoor fitness event.

“We come together, we love each other and help each other get results and get to the next level on the business," said Jenna Beadles, of Las Cruces.

“My role is to spread the word of Herablife throughout the community," said Jupe Boremann, of Las Cruces.

“There’s no secrets. They tell us how to be successful and get those results we want,” Beadles said.

In testimonial videos, brochures and opportunity meetings, the FTC found members brag about earning thousands of dollars a month, quitting their jobs and living lavish lifestyles.

At a meeting in El Paso, people lined up from autographs from top Herbalife sellers and members got up on stage and told the crowd how much money they made selling Herbalife. Some claimed to make tens of thousands of dollars a month.

But the FTC found half of Herbalife's "sales leaders" earned less than $5 a month on average from selling the company's products.

“The dream portrayed by Herbalife was an illusion. The vast majority found they could make little or no money selling Herbalife products,” Ramirez said.

Nutrition clubs could be found all around the Borderland, at one time. A 2012 report found more than 60 clubs opened in Las Cruces.

According to Herbalife’s own survey, cited in the FTC complaint, owners spent an average of $8,500 to open a club, but almost 60 percent reported making no money or losing money.

The FTC also determined members were not paid for actual products sold but were compensated based on how many people they could recruit to join the business.

As part of the settlement agreement, members must now earn a majority of their income through the sale of actual products and not through the recruitment of other members.

On Friday, reporters pressed the commissioner on why the FTC did not label Herbalife a pyramid scheme and asked whether that was part of the settlement agreement with the company, not to use the word “pyramid.”

Reporters questioned the commissioner on Herbalife's claims that its company had been determined to not be a pyramid scheme.

“The word 'pyramid' does not appear in our complaint, true. The core facts that we have alleged and considered to be problematic with the compensation structure are set forth in detail in our complaint. I will leave to readers to draw their own conclusions. They were not determined not to be a pyramid,” Ramirez said.

In a statement Hearblife said, "While the company believes that many of the allegations made by the FTC are factually incorrect, the company believes settlement is in its best interest because the financial cost and distraction of protracted litigation would have been significant, and after more than two years of cooperating with the FTC’s investigation, the company simply wanted to move forward."

Herbalife is now prohibited from “misrepresenting distributors’ potential or likely earnings. The order specifically prohibits Herbalife from claiming that members can 'quit their job' or otherwise enjoy a lavish lifestyle," the FTC said in a release.

“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,” Ramirez said.

The court documents also show, “Consumers have suffered and will continue to suffer substantial monetary loss as a result of Defendants’ violations of Section 5(a) of the FTC Act. In addition, Defendants have been unjustly enriched as a result of their unlawful acts and practices. Absent injunctive relief by this Court, Defendants are likely to continue to injure consumers, reap unjust enrichment, and harm the public interest.”

The FTC said its next step will be to distribute $200 million to consumers who lost money because of Herbalife’s harmful practices.

As of now, the FTC has not determined how that process will work or how long it will take.

If you've had an issue with Herbalife, we want to hear from you.

Call KFOX14 Investigates: 915-834-2185

A primer on what happened

At first glance, the news coming out seems to be more bullish than anything for Herbalife. After years of being pressed by hedge fund manager Bill Ackman and after an intense investigation by the FTC over whether or not the company has been engaging in a pyramid scheme (name as such since most of the money flow to the top of the corporate structure and must, by nature, collapse), the firm has gotton off with a fine of $200 million that must be paid to the federal government. In addition to this, management has agreed to settle with the Attorney General of Illinois in exchange for $3 million. Though this is all a tremendous amount of money, it's a drop in the bucket compared to the $774.2 million in cash and cash equivalents the firm currently has on hand.


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