FTC to return $200 million to 350,000 Herbalife victims
As part of the “we’re not a pyramid scheme, *winkwinknudgenudge*” settlement Herbalife reached with the FTC last year, $200 million will be returned to 350,000 Herbalife victims.
Quoting Jessica Rich, Director of the FTC’s Bureau of Consumer Protection, a January 10th press-release issued by the FTC reads;
We are pleased to announce that hundreds of thousands of hard-working consumers victimized by Herbalife’s deceptive earnings claims will receive money back.
Along with changes the company will make to its business structure, this is a win for consumers.
Which Herbalife affiliates qualified for a share of the $200 million was determined via FTC analysis of Herbalife’s records.
Generally, the FTC is providing partial refunds to people who ran an Herbalife business in the United States between 2009 and 2015, and who paid at least $1,000 to Herbalife but got little or nothing back from the company.
Most checks are between $100 and $500; the largest checks exceed $9,000.
The next phase of the FTC settlement will see Herbalife implement a retail centric compensation plan for their US market.
So with the refunds going to members and the program changes does this mean the end for Herbalife like Vemma?
They haven’t implemented the changes yet, but I believe Herbalife will crash in the US within a few years. Rather than run a legitimate Herbalife and go down with the ship, CEO Michael Johnson has already called it quits.
Problem is most of Herbalife’s revenue is from China, in which they’re still going to operate the same pyramid business model banned in the US (infact it’s probably worse because they don’t need to pretend to adhere to anti-pyramid regulations). That pretty much goes for Herbalife globally outside of the US.
They could go the MLM underbelly route and abandon the US, however that would probably be a bit too obvious.
I suppose it depends on who’s running the company when the time comes and whether or not they’re interested in legitimacy or making money whatever the cost.
Don’t you think they’ll find subtle and difficult to enforce ways to subvert the order?
Herbalife can’t change the order, they agreed to the settlement and its been signed off on.
There’s an auditor in place for 7 years or so IIRC to make sure they have adequate retail sales activity in the US.
just read about this over at Ethan’s website.
I have a couple of friends who have done Herbalife for a long time – like over 20 years. Be interesting hear how much they get paid.
I was a Herbalife distributed for 20 years mostly as a wholesale buyer.
What got Herbalife in trouble was their Nutrition Clubs. Most people didn’t have the money to open a retail establishment but it was the big push.
That is when they danced around their own rules and had a model that was contrary to network marketing principles.
Their model of business in China is strictly Retail, communist China doesn’t allow MLM because the masses are not to advance in status by there own efforts.
I got one of those settlement checks as a complete suprise. Being a wholesale customer I like most distributors just wanted products at wholesale. That is the main reason most people join a company to get wholesale.
That will probably be gone now and like the typical government correction they sent out a bunch of checks to people that were happy customers so they could look like heroes.
I never lost a dime at Herbalife unless you count it loosing money buying grocerys or any other product. If you think something is over priced or a bad deal most folks don’t shop there. Stocking products to qualify for commissions was always forbidden by their rules.
If you join something and don’t play by the rules and lose run to the government they will save you. Folk that’s not how life works.
What are you talking about?
The preferred customer class is nothing new in MLM. It exists precisely to offer a discount to retail customers in exchange for a monthly order commitment.
But hey, don’t let the facts get in the way of your anti-government sentiment.
Rules are meaningless if they’re not enforced.
And you’ll find almost anything goes MLM wise in China so long as the palms continue to be greased. Otherwise you might end up like Nu Skin.
No surprise there.
Herbalife (HLF) 2017 Business Outlook:
seekingalpha.com/article/4038221-herbalife-hlf-2017-business-outlook
Herbalife trims earnings outlook for the year, discloses SEC inquiry into possible corruption in China:
seekingalpha.com/news/3236401-herbalife-trims-earnings-outlook-year-discloses-sec-inquiry-possible-corruption-china
“Corruption in China” in MLM = “Oh oh we’re getting busted for paying officials to look the other way from our pyramid scheme.”
Same thing happened with Nu Skin – https://behindmlm.com/companies/nu-skin/nu-skin-settle-chinese-bribes-and-corruption-with-sec-for-765688/
Maybe the US won’t allow Herbalife to run a parallel pyramid business model elsewhere in the world after all.
Funny, nutrition clubs are not even acknowledged officially by HLF. They are not even allowed to display HLF logo outside.
In fact, some HLF fans tout them as as the most legal part about HLF, much like Pampered Chef’s cooking classes. Nutrition club is retail, even though it also acted as recruitment center.
You guys are just looking for scapegoats to blame not seeing the real problem: not enough retail. It’s really funny how you guys hit upon the few bits of true retail in HLF and decided THAT somehow made HLF illegal, when it’s the MOST LEGAL part of HLF.
fortune magazine has published an article yesterday, which puts a pro herbalife spin on the FTC’s returning of monies to herbalife ‘victims’.
it seems that with FTC chairperson edith ramirez on her way out, the FTC did not have time to ask victims to make claims. so affiliates who had paid in more than 1000$ to herbalife and received no commissions in return, were sent out checks to make up their losses.
according to fortune, many check recipients are claiming that they are not victims at all, but were discount buyers not expecting any earnings:
fortune.com/2017/02/02/herbalife-lawsuit-ftc-settlement-payout/
it’s not surprising that herbalife has found some press^^ to roll out a sympathetic story on how they were unfairly fined, as everyone has their own version of the truth, depending on their perspective.
however, one claim from herbalife seems important, as it will determine it’s success or failure under the changed comp plan:
i’m guessing preferred members will get jacked up to affiliate status once they recruit, and active affiliates will just keep recruiting more preferred customers till the cows come home.
herbalife has around 15% active distributors [IIRC] who are allowed 33% self consumption and 66% has to come from retail and preferred customers.
according to the FTC complaint herbalife had 39% retail and 22% from non recruiting discount buyers. that totals to 61%. not much of a gap to 66%, i guess.
how herbalife will design its new comp plan remains to be seen. will they add some autoship element on to preferred customers?