When the FTC settles with – or sues – a company, we’re often trying to stop illegal behavior, return lost money to people as often as we can, and generally make unfair things fair and deceptive things true.
Today’s historic settlement with Herbalife goes one better: the FTC’s settlement significantly restructures Herbalife, changing – top to bottom – how it does business. And it makes the company pay $200 million back to people who lost the most money. This is a big win for anyone who paid lots of money to Herbalife, and people who might in the future.
You might know Herbalife through its extensive marketing in English and Spanish. Through print and video promotions, and glowing testimonials, Herbalife told people they could change their lives – quit their jobs or even get rich – by selling the company’s weight management and nutrition products:
“The days when I would earn a living cleaning houses are behind me…”
“When we worked in factories our earnings could only pay for basic needs, but now we can take our 12 grandkids on vacations.”
“When I got to ten thousand, I thought, well that wasn’t so hard after all, maybe I can get to fifteen, and I went from fifteen, to twenty, and then to thirty, and then even up to forty thousand dollars a month.”
Hundreds of thousands of people signed on for the Herbalife business “opportunity” – but most people made little or no money. In fact, the FTC’s complaint shows how half of Herbalife’s “sales leaders” earned less than $5 a month on average from selling the product. Instead, the incentives were to recruit more people who would then buy more product – whether or not there was a market to sell it.
That’s why this settlement is so important for consumers. Now, anyone who tries to make money selling Herbalife will be paid based on what they sell, not how many people they recruit. The settlement also requires the company – from now on – to make only truthful claims about how much money people are likely to make. And they have to be able to back those claims up.
Watch this space to find out how the $200 million will be divided among the people who lost money to Herbalife. We’ll keep you posted.
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In reply to Can you clarify what you mean by CRS
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.
In reply to Under the new compensation by ctressler
In reply to When Herbalife appeared in by Testifico
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In reply to The Herbalife short thesis by John Hempton
In reply to The Herbalife short thesis by John Hempton
In reply to I tried this scheme when by Amber
Watch this space to find out how the $200 million will be divided among the people who lost money to Herbalife. We’ll keep you posted.
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In reply to Mary Kay consultants make 50% by PFT
In reply to how do we get involved in by jefro67
Watch this space to find out how the $200 million will be divided among the people who lost money to Herbalife. We’ll keep you posted.
In reply to How were they paying before? by bowstrike
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.
In reply to Under the new compensation by ctressler
In reply to Let's get this straight. You by Zack
In reply to I too got caught up in this by Yanns Don't us…
Watch this space to find out how the $200 million will be divided among the people who lost money to Herbalife. We’ll keep you posted.
In reply to According to Herbalife Press by Rporcille
In reply to There are so many places by Victor
In reply to I was selling Herbalife as a by lgbe
Watch this space to find out how the $200 million will be divided among the people who lost money to Herbalife. We’ll keep you posted.
In reply to Is there anything I can do by Peg
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Read more about federal student aid on the U.S. Department of Education website.
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