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Multi-level marketer Herbalife will pay $200 million back to people who were taken in by what the FTC alleges were misleading moneymaking claims. But when it comes to protecting consumers, that may not be the most important part of the just-announced settlement. What could matter more than $200 million? An order that requires Herbalife to restructure its business from top to bottom – and to start complying with the law.

Advertising in English and Spanish, Herbalife pitched its business opportunity as a way for people to quit their jobs and make the big bucks. Other ads promoted Herbalife as a means for already hard-working people to provide a little more for their families: “When we worked in factories our earnings could only pay for basic needs, but now we can take our 12 grandkids on vacations.”

But don’t start packing the kids’ bags because according to the FTC, it’s virtually impossible to make money selling Herbalife products. As explained in the complaint, our analysis shows that half of Herbalife “Sales Leaders” earned on average less than $5 a month from product sales. For folks who invested the most to build an actual retail business – a brick-and-mortar store that Herbalife called a Nutrition Club – the majority made nothing or even lost money. 

Which brings us to the inconvenient little secret about Herbalife that the FTC’s complaint alleges: The small number of distributors who actually made money made it not by selling products to people who wanted the company’s powders, pills, and potions, but rather by recruiting others to serve as distributors – and encouraging them to buy Herbalife products.

The lawsuit alleges that Herbalife deceived consumers into believing they could earn substantial income from the business opportunity or big money from the retail sale of the company’s products. In addition, the complaint charges that one of the fundamental principles of Herbalife’s business model – incentivizing distributors to buy products and to recruit others to join and buy products so they could advance in the company’s marketing program, rather than in response to actual consumer demand – is an unfair practice in violation of the FTC Act.

Under the settlement, that all has to change. The order requires Herbalife to drop its current system of rewarding distributors primarily for recruiting a “downline” of people who will buy the product at wholesale, without regard to whether there are customers out there who really want the merchandise. Under the new compensation structure, success in the Herbalife marketing program must depend on whether participants sell products, not on whether they can recruit additional distributors to buy products.

You’ll want to read the order for the detailed dos and don’ts, but they’re all closely tied to the law violations alleged in the complaint. Here’s just one example: The order requires a clear differentiation between people who join just to buy discounted products for their own use and those who join the business opportunity. For people in the bizopp, 2/3 of rewards must be based on verifiable retail sales, with no more than 1/3 coming from product designated as “personal consumption.”

And it’s not a “we’ll take your word for it” thing. The order includes teeth that will put a financial bite on non-compliance. To make sure everyone at Herbalife is on board with the new set-up, 80% of the company’s net sales will have to be real sales to real buyers. If that doesn’t happen, the rewards that high-level distributors pocket will be cut. What’s more, for the next seven years, Herbalife has to hire an Independent Compliance Auditor to monitor what the company is doing to comply with the new compensation plan. The Auditor will report to the FTC, who will have the authority to replace that person should it become necessary.

We’re glad to be returning $200 million to consumers. (Details about the refund program will be available soon.) But another key goal is to dismantle the alleged deception and unfairness built into how Herbalife does business. As the company rewrites its advertising claims and restructures its compensation system, we’ll be watching. The Auditor will be watching. And consumers should be watching, too.


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July 15, 2016
According to Herbalife CEO and Herbalife Press Release- Herbalife was deemed NOT to be a pyramid scheme and NO changes to their business model will be made. Seems very contradictory to this.
January 17, 2017

In reply to by concernedcitizen4

They have restructured their whole system, the reason many have stepped down
Jaime Westman
January 24, 2017

In reply to by concernedcitizen4

It is not a pyramid... it is MLM... they have made changes.... i am a distributor... the way customers are invoiced as well as tracking personal consumption.... as well as how you market the business opportunity has all been changed.
Joe smith
May 18, 2017

In reply to by Jaime Westman

MLM, pyramid same fudgeing thing the difference is the product. Name it whatever you Primerica,WFG, melaluca, amway same principal. Screw family and and friends let the top make money while you are starving and drop out after you spent all of your savings and can not afford to stick around.
Bety Morales
September 03, 2017

In reply to by Joe smith

I agree with Joe Smith, Herbalife brain wash people to think they can make money and win vacaccion, most of their checks make me laugh!!!! But again they are brain wash with calling this " your own bissness " but in reality is NOT people open your eyes. Jajajaj I seen people over the YEARS having nothing anything and 5, 6 7 and so on years and they are in the same place... when is this people are going to learn this is no money bissness. What are they waitting for? Maybe when something happens like Enron or when it falls and the top people in the pyramid take your money and leave you with $0. This type of pyramids sooner or late falls.
Sara Reyes
December 20, 2017

In reply to by Bety Morales

Definitely not a company worth doing business for. They are loaded with tons of incompetent employees who are only in it for the money. I was lied to from the beginning and am now being put on a run around to get a refund when all along I have done what I was told from multiple people in the company. It’s likd everyone is a walking dollar sign to them! Would be nice if corporate returned calls and emails. Good luck getting someone who actually knows what they are doing, I’ve gotten two in more than 15 people in “corporate” that I’ve spoken to in the last 7 weeks. Definitely do not recommend this company! I’m beyond dissatisfied. And then one of the Compliance specialist had the nerves to send a letter to my uplines stating she terminated my account (as though she fired me) when I requested to terminate because of her unresponsivness, lack of communication within the company, etc. Don’t bother doing business with them!
March 02, 2018

In reply to by Joe smith

The word scheme insinuating that Herballife is illegal. I am not involved with this company, but I don't believe that it is a scheme. People gets products when they pay. This person said, "screw family and friends let the top make money while are starving and droping out after spent all of your savings and can not afford to stick around." First of all, which business or company that the owner doesn't get more than it's employees? What company's top position people gets paid less or equal to bottom tier people? Not all network marketing is a scheme. Everyone who joins a network marketing is in business for themselves so if you don't work, you don't get paid. We all learned that there is no free lunch!
June 27, 2018

In reply to by Summer

It's very inaccurate to try and compare the 2 like you are trying to do. The difference here is that people on the lowest rung of a mlm will make nothing and many will end up going into some crazy debt over it but if you're workinging for an actual company, even the people at the bottom are still going to be paid for their work. I'm not sure why the differences are so hard for you and many like you to grasp. And people working for real companies also don't have to worry about the higher ups flooding the workplace with too many people doing the same job like luluroe did when they started oversaturating the market with far too many of their their "consultants". So when it comes down to it, I would much rather have a crappy low rung job that actually pays me for my time than to end up broke and in debt with a bunch of crappy product I can't seem to get rid of. No thanks.
June 19, 2020

In reply to by Guest

I agree, ppl buy into this myth that they are running a business. I seen it first hand in a family member. These ppl are just motivational speakers who bring great energy and prey on naive ppl about all thats waiting on them. Its very time consuming, my family member spends tons of time away from family and acts as if her upline is God almighty and believes everything he says. They spend their own money buying all these products in which to only promote themselves accumulating points & all the while padding the uplines pockets. They try to recruit ppl and act like they’re doing u a favor and have the nerve to get mad when ur not interested in the gimmick. They alienate family and friends for this mess. Its like a cult!!!! Id rather know im being compensated for my tiime. These ppl are just employees themselves working for someone else and selling someone elses nasty overpriced product and to naive to even know it.
May 27, 2021

In reply to by Guest

This is two years too late, but there are a number of problems with your argument. 1) The person above may be trying to compare a company and a MLM business, but his point remains valid: people at the top of all businesses make the most money. 2) If you don't work at your job, you wouldn't get paid, because you would be fired. His point is that while a lot of people have been deceived and lost money due to deceptive practices (and they should be compensated), a lot are also lazy, didn't do any work to earn money, and blame the company for their laziness. 3) Lots of people in America are unable to live on their income at bottom-rung jobs due to rising costs in pretty much everything, especially health care. Some jobs don't provide enough for their employees either. Yes, you shouldn't be in something where the practices are sketchy and you are going to go into debt. For god's sake, quit if you're going into debt, and there are red flags. That's just common sense. However, if a person does absolutely nothing and the compensation plan is clear and fair, then that's not the company, that's on the person. What job would pay you to do nothing if it's expected you to work to earn your keep?
June 14, 2017

In reply to by Jaime Westman

They stole from low income families ... They contuined to recuite people with little to money forcing them to keep buying products you must be paid by them if your stating that it's not a scam....herballife is a scam and should be shut down....your lying about income and are being paid to lie about things that thousands of innocent people where taking adavatage should be ashamed
November 07, 2017

In reply to by Jaime Westman

Usually when a business changes anything in the business model, means the money isn't being controlled
July 15, 2016
Dear FTC, Kudos to you for finding illegal activity at Herbalife. So why in the world would you allow it to exist with a $200M slap on the wrist? This is exactly why the public is losing faith in public institutions. If what you allege is true, then this company basically does not have a real business other than swindling people. Yet they get to keep on going? What!!!??? Its like telling a robber who has been caught robbing over many years, "Hey, you can't actually take merchandise from a store without paying for it. We will assign an auditor to watch you every time you walk into a store to make sure you pay for what you buy." Really FTC???? I have no interest in the stock or the hedge funders battling over this company. However I am disgusted that you allowed Herbalife to exist even though you found that they illegally ruined the lives of a lot of vulnerable people. Shame on you!!!
September 22, 2016

In reply to by zack

Sorry about the way you feel about Herbalife, it's clearly known that once Herbalife gives them money they will never be allowed back into Herbalife which is very fair. Me as a distributor I love my job and the pay is wonderful specially when you work hard for it. Some people expect to make a big investment and do t have the customers, they have to attend training meeting which they don't and that the reason why they fail in this business. I love it!! I have hetbalifes back and when We just keep growing everyday , too bad those people won't be able to come back , it's their loss
Evelyn Baeza
January 24, 2017

In reply to by Mary

How could I know if I'm getting a check in the mail I called the number for no one picks up.
Carol Frysinger
February 22, 2017

In reply to by Mary

I got into Herbalife about 15 years ago and they took me for $5,000.00 and as hard as I tried, i never made a dime. Am I eligible for a refund?
January 17, 2017

In reply to by Herbajenn92

I know people who got a check, not even knowing why, and they are still in herbalife
June 01, 2017

In reply to by Herbajenn92

How do i know if they sent me a check but I don't live their anymore?
June 01, 2017

In reply to by Alma

If you have questions, Alma, you can call the Refund Administrator at 844-322-8146.

June 27, 2018

In reply to by Herbajenn92

With all due respect, statics just don't back up any of your claims. And I find it hard to believe that all those people failed because they "just didn't work hard enough". That's complete crap. Only the 1% at the top actually makes any profit off this garbage. And the rest of them can't even break even no matter how hard they work. Stop acting like the problem here is those people just not giving it their all. They were absolutely set up to fail from the very beginning. You say you do well with herbalife, well good for you. But that doesn't make these people's terrible experiences and less valid.
Jaime Westman
January 24, 2017

In reply to by zack

Herbalife has great products and a huge number of supporters... now the system that was abused has gotten cleaned up... what i find is most people find ways to bend the rules.... so now the company had to shine lights on those doing so and put a stop to it. Herbalife has also helped a lot of people with overall wellness... so you say they have ruined lives... the other side of that coin is they have also helped save lives too....
May 12, 2017

In reply to by zack

i was introduced to herbalife 6 years ago as a way to help ad on weight with proper exercise and the meal program that was put together for me to follow i gained the weight and most of it was muscle iIm 6'3 and my lowest weight was 165 and today Im 205 stronger and in the best shape of my life and im 41 years of age .. once I got amazing results i looked into the business side because alot of people kept asking what i did to get the results ... we are a results driven business and there are tens of thousands getting amazng results maybe even more but i love herbalife because its given my community a blue print to proper nutrition and for that im for ever grateful .....i dropped out in the 8th grade but because i was committed to get a great result im now able to show others and also follow up with my clients hold them accountable as they hold me accountable for the things we say we want in life ... im sorry for those that came int this business but didn't have the business mindset .. People just want Amazing results and when you care enough about the people and help them reach their goals you become family and we have a family in herbalife ...a bunch of happy people looking to help each other be our very best .... i don't mind all the changes going on with our company i'm here for life and we just want to help people ....its a shame that you guys see this awesome respectful community of people doing something good for the community and some way people will try to make it look bad ..... change your mindset ...change your life ....
May 14, 2017

In reply to by zack just like scientology and organized religion with their tax exempt status... all scams that people are very much aware of, yet, keep buying into...
July 16, 2016
Am I eligible
July 16, 2016
Does think action start from the beginning of this company's existence?, and how do you know who the people are that get this money back? I feel like I am a victim as well from 2006 I paid for membership, it cost me over a $1000.00. What can I do to get my money back.
August 03, 2016

In reply to by Brooklyn77

Oh my goodness! $1000? I'm with a 30+ yr old company (not mlm), making money and it only cost me $19. No scam with my company! Customers and business builders pay the same!!! And all get the same discount of roughly 40%. I certainly feel for all that got scammed into paying a lot of money up front. Hope you get some of your money back.
March 29, 2017

In reply to by PSOL

I love it! A scammer promoting another scam on an article about scammers!
August 16, 2016

In reply to by Brooklyn77

For one Herbalife membership has never been $1000.00 bucks best thing to do is go to the person who signed you up and ask for your money back
February 14, 2017

In reply to by kawi510

It doesn't cost a 1000 but they get you to invest 1,000 up to 3000 dollars in product so you can become a supervisor and have 50percent off the products. So, don't come on here pretending to be legit. Distributors are not trained to sell packages they are trained to recruit becaus thats how the money was made.
January 16, 2017

In reply to by Brooklyn77

My mother and I both received a check this week... I haven't touched it, we almost thought it was to good to be true...
January 18, 2017

In reply to by Anonymous

I received one! It's legit cash or deposit it! I did this in 2012 and spent over $1,000 to become Supervisor and the got stuck with all the product I couldn't sell. I still have unopened items I wonder if I can return them and get the rest back. Thank you FTC !!
July 16, 2016
I have Been an Herbalife member for four years now and just recently found that not one cent of the money I used to purchase products for myself and family has went toward my account I was told to spend a certain amount to build discounts as well as reputation so I can be looked at as an supervisor and distributor in the future and yet those people that I thought were in my corner were not
July 17, 2016
Does the settlement include the people that was duped into trying to sell the products and lost money?
July 17, 2016
While there are several major good aspects to the settlement to prevent Herbalife from scamming people, the FTC did not mention the abusive tool scam practices. I believe the tool scam will return, as the upper level of Herbalife "leader" scum-bags will be making far less money under the new requirements and threaten to leave unless Herbalife allows them to scam their downline via the tool scam. Examples are the lead generation and other methods of scamming their downline, such as various meetings, books, CDs, website access, voice mail, etc. Ignoring the tool scam issue was a major FTC error.
July 18, 2016
Dear FTC, The CXO suite, the top distributors, distributors in the BOD, executives, the HLF compliance department did things that to a layman appear to be criminal in nature. Furthermore, even if somehow criminality was not in the cards for whatever reason, how can it be that those people have not been terminated or severely reprimanded? This void is only exacerbated by the fact that former FTC Commissioner, Pamela Jones-Harbour, was brought into HLF two years ago and another commissioner was brought in recently. The optics of the combination of all these aforementioned questions and seemed inactions create an feeling of helplessness to the public that says that fraudsters get away with murder (figuratively, but may perhaps literally). What if anything are the FTC and other agencies to bring accountability to the criminals that appear in videos, presentations, trainings, and a vast array of evidence which - mind you - start from the CEO to the HLF President, to the COO, to the CFO, all the way down the line. What if anything? Meaning, if there are no consequences to these people who clearly violated the public, what is to stop such activities not only from them, but also from the rest of like-minded people viewing the HLF results? Much more was expected from the FTC. While there is much celebrating, one has to be disappointed that in years of effort the findings where the same that were known and available years ago. Findings and conclusions that could have taken a few months if not less. In the meantime, HLF got way with hurting millions of people, destroying lives, and stepping on anyone who dared to speak up via threats, smears, retribution, and legal maneuvers. $200 Million was a very empty penalty. HLF Free Cash Flow gathered that through the fraud on a quarterly basis. 2 Million churned per year out of $Billions. The penalty does not fit the accumulated crimes. HLF has already began dismissing and belittling the FTC and the Federal Government. The Independent Auditor is not transparent enough with the public and that is a major problem. HLF is still not transparent to the public and that is a problem. Will the public have access to the emails, records, documents, findings, from the investigations? The black-box environment allows HLF and such companies to do all the things that the FTC outlined in the findings and rulings. I for one expected much more from the Federal Government.
September 14, 2016

In reply to by FTC_HLF_Criminals?

What about other companies that were party to Herbalife - like PTI - who offered tools/training to get you there faster than going directly through Herbalife as a consultant - and same goal????? After expecting thousands of dollars to be paid, stopped. A company like PTI should be included in what happened with HLF - probably more so than just HLF by itself!!!!!!!!!!!!!!!!!!!!!!
July 18, 2016
How can we be added to this settlement?
July 19, 2016
I have been a user of Herbalife products since 1999. I love the products. I think it's unfair to put limits to how much I can buy for myself and family. Herbalife has never made me feel that I have to open/operate a Nutrition Club to be successful. Herbalife never told me that this was a get rich over night kind of deal. Herbalife has never told me to buy x amount of products, so I can move up the marketing plan. All these allegations are incorrect. Yes, there may have been some Distributors that pushed it a little too far, but it was NEVER Herbalife. Yes, I do take advantage of the Marketing Plan to get the best discount for me and my family, and I will be very upset if I lose my 50% discount. Yes, I do retail products, and I have made extra income. However, I wouldn't say I am doing it to get rich. For those Distributors who feel like they have been taken advantage of, you are wrong... Most businesses do not earn a profit right away and most businesses (even outside of Herbalife) fail within the first year. Being an entrepreneur is a risk, and if you've taken a business course, you would know this. Soon everyone will know how much Herbalife is loved. I will continue to use the products regardless if there is a compensation plan to go along with it. The FTC made a bad decision to collect $200M and return it to people who knew what they were getting themselves into... Sue the wrongful Distributors NOT Herbalife.
July 20, 2016

In reply to by Julie_Michigan

The FTC did a long investigation, and while your experience may be true, there are many others that have been tricked with deceptive claims. If what you say true and the settlement was unjust against Herbalife, Herbalife wouldn't have agreed the terms nor to pay $200M, and most importantly, have their reputation damaged. After this settlement many people will think it through before joining Herbalife.
July 23, 2016

In reply to by Julie_Michigan

"Being an entrepreneur is a risk" - News flash, you are not an entrepreneur, and that statement in and of itself speaks to the brainwashing these schemes use as a tool. You may very well be a victim and just not realize it. In reality, you should have described yourself as a 'consumer' and a 'salesperson' for the company Herbalife. And since you claim to have retail sales, this settlement shouldn't be a problem for you - unless of course, those customers are like you and sign up to get a discount on their own consumption which anyone can do. This can negate your mark up making it a lousy sales job and hardly an entrepreneurial business. Round and round we go. Read, inherently flawed business model.
January 08, 2017

In reply to by Char

So, if I buy a McDonald's or Chicfila franchise, am I an entrepreneur? Aren't I just buying someone else's idea and building it to my own purpose. So, if I go to work at a car sales company where my sales manager gets a cut of his sales team's commissions, is the car company a pyramid scheme? People just need to do their research before jumping in, and realize that success takes ALOT of hard work, time, and yes, money. Sometimes, the more money you have to build your business the faster you'll make that money back. This is true in ANY corporate sales environment. Maybe the FTC should look deeper into people who are getting rich in a government beauracracy? How do you get Rich as a public servant?
June 09, 2017

In reply to by Deeds

The difference between Herbalife and a fast food joint is simple You can do the math and know. I sell a 1,000 of cheeseburgers so I can break even to run my a business. For a pyramid scheme, you would do the math and say, To break even I must sell 1,000 of cheeseburgers, plus get 6 other people to open a Mcdonald's restaurant themselves to make my McDonald store to make money. To make my store succesful I will not make money at my building but get others to give me money for running their own store as far as "Maybe the FTC should look deeper into people who are getting rich in a government beauracracy? How do you get Rich as a public servant?" I could not agree with you more!!
August 01, 2016

In reply to by Julie_Michigan

The problem was with how people were rewarded/compensated. Instead of a fair retail margin they could stack the deck by purchasing any amount under their own account and would often do so at the end of the month for that 'next bonus'. The compensation structure made it a lose lose situation and placed the consumer in a position to not win.. Yes most businesses don't make money right away....some do with no risk to the direct sales person. You should keep using Herbalife if you love the products!! Just know the compensation part will change, there will now be safe guards to protect those that do want to try to build a business. The FTC had to go after Herbalife...just like they sent warning letters to Young Living and DoTerra for inaccuracies or dangerous comments made by a majority of their distributors.
August 19, 2016

In reply to by Julie_Michigan

"For those Distributors who feel like they have been taken advantage of, you are wrong." Way to be open to what happened to others bro. That was your experience? Nope, gonna brush what you're telling me aside as a lie. Is it just me, or does every person who uses Herbalife have this same closed minded view of the world? If what others say doesn't match what Herbalife has told us it must be a blasphemous lie! Go team!

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