National Consumers League statement on FTC’s settlement with Herbalife – National Consumers League
July 15, 2016
Contact: NCL Communications, Cindy Hoang, cindyh@nclnet.org, (202) 207-2832
Washington, DC—The National Consumers League (NCL) today welcomed the Federal Trade Commission’s (FTC) action to require fundamental restructuring and significant consumer redress as part of its settlement with multi-level marketing company Herbalife. In March 2013, NCL was the first consumer group to call on the Commission to investigate allegations that Herbalife was engaging in a sophisticated pyramid scheme. In March 2014, the FTC responded to calls from NCL and others by opening an investigation into the company’s conduct.
The following statement is attributable to NCL Executive Director, Sally Greenberg:
“The FTC’s action today addresses many of the concerns that NCL and other experts on pyramid schemes raised about Herbalife’s business practices. Specifically, consumers will benefit greatly from the settlement’s requirement that Herbalife base its compensation structure on verifiable retail sales to end-users of the product, not recruitment of new distributors. This is the core distinction, as enumerated by more than 30 years of case law, between a legal direct-selling company and a fraudulent pyramid scheme. The settlement’s requirement that at least 80 percent of product sales, companywide, must be made to end-users will further address concerns about a lack of retail sales to buyers outside the business opportunity. The FTC’s settlement will also address many of the blatantly unsubstantiated earning claims made by Herbalife’s distributors to entice new recruits to join the business opportunity and keep existing distributors paying to remain in the business opportunity. We look forward to the FTC’s forthcoming guidance to the direct selling industry as an opportunity to address the persistent lack of clarity that has characterized many industry practices.”
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About the National Consumers League
The National Consumers League, founded in 1899, is America’s pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit www.nclnet.org.
