Indian Herbalife affiliates begging for shutdown?
When one considers the MLM industry globally, often at times it feels like the industry transitions through a simultaneous time-delay.
Typically due to a lack of legal precedents and litigation, as MLM spreads through countries of different economical tiers, I can’t help but observe the same issues and problems cropping up as they did years ago in other countries.
Those seeking to take advantageous of new markets use the same tactics deployed one or two decades ago by those that came before them in what are now well and truly established markets.
Some of these marketing tactics are legitimate… and some not so much.
One that falls squarely on the “not so much” side of things are outrageous claims made by an MLM company’s affiliates, typically deployed to talk up the benefits of a company’s product line.
Echoing product claims made over the past few decades in US markets that have seen numerous MLM companies penalised and, in some cases, permanently shutdown, Herbalife’s Indian distributors are apparently running around making all manner of medical promises.
On its official website, Herbalife makes a level-headed pitch for its herbal tea mixes: “Ditch the coffee and soda for this refreshing and tasty alternative. Feel reinvigorated with this natural energy lift, our answer to fatigue caused by stress. It’s delicious, instant and low in calories.”
There’s even an asterisk to note that the Food and Drug Administration has not evaluated these claims.
But in the hands of one independent Herbalife distributor based in West Delhi, India, peddling her wares on Facebook, that same herbal tea mix offers a lot more upside.
Among her “9 Reasons to Drink more Herbal Concentrate Beverage,” it “may suppress lung cancer growth,” “may halt colorectal cancer” and, most enticingly, “it causes prostate cancer cells to commit suicide.”
Another India distributor’s LinkedIn profile, deleted after CNBC requested comment from Herbalife via email, explained that “Nutritional herbal food helps to maintain your Weight & Health.”
The distributor added, “We have also achieved good results in controlling Acidity, Asthma, Blood Pressure, Cancer, Diabetes, Heart Diseases, Cells Proper Counting, Thyroid, Knee Pain, Back Pain, Body Weakness, Women’s Health, Metabolisms, Child’s Physical & Mental Growth, Under Weight, Over Weight & Physical Fitness / Health etc.”
“Maintaining your weight and health” fair enough… but all that other stuff? Prostate cancer cell suicide!? Yeah…
On the regulatory side of things I believe Herbalife’s affiliate marketing claims would fall under the jurisdiction of the Department of Consumer Affairs.
As part of their public awareness campaign “Jago Gharak Jago”, India’s DoCA advise warn the public to ‘be aware of “‘misleading advertisements” and “false misleading ad promises”.
Whereas the FTC’s role in regulating claims such as “Herbalife’s products can cure cancer” are clear-cut, the extent with which DoCA investigate such claims is not clear.
I note that there’s a strong emphasis on consumer reporting on the DoCA website, indicating a potential lack of pro-activity on behalf of the department on such matters.
I did try to find a closer FTC equivalent who operated with more apparent autonomy but came up blank. The Competition Commission of India was the closest I could find, however they seem more concerned with regulating business practices than anything on the consumer side of things (note that Herbalife India themselves don’t make any of the claims cited by CNBC).
Perhaps more worrying than Herbalife’s affiliates claims is the company’s own stance on the matter:
Our distributors are independent contractors and, accordingly, we are not in a position to directly provide the same direction, motivation and oversight as we would if distributors were our own employees.
As a result, there can be no assurance that our distributors will participate in our marketing strategies or plans, accept our introduction of new products, or comply with our distributor policies and procedures.
What’s more amazing is that the above wasn’t a direct response to claims made by Indian affiliates, but rather was pulled from Herbalife’s most recent 10-K filing in the US.
A Form 10-K is an annual report required by the U.S. Securities and Exchange Commission (SEC), that gives a comprehensive summary of a company’s performance.
In a country where time and time again the argument that “we had no control over what our affiliates did” has not held up in court, it’s ultimately baffling how Herbalife’s response can be effectively boiled down to: ‘so long as our direct employees aren’t making the claims, we don’t give a shit’.
And if that’s Herbalife’s official company stance on affiliate advertising claims in the US market, who knows what Herbalife’s affiliates are getting away with elsewhere in the world.
In India at least apparently prostate cancer cells are so fearful of Herbalife’s products that they just give up and… well, whatever it is cancer cells do to “commit suicide”.
Personally I have no idea where Herbalife’s “they aren’t our employees so we don’t care” stance stems from. I’ve certainly don’t recall an MLM company’s affiliates being held personally responsible by the FTC for false and misleading advertising claims in the US, do you?