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Soapboxmom
02-23-2012, 06:28 PM
Quatloos! • View topic - Herbalife Convicted For Pyramid Selling In Belgium (http://www.quatloos.com/Q-Forum/viewtopic.php?f=5&t=8065)

The most amusing part of this whole sordid saga is Clements rant about it:





MARKETWAVE ALERT #202

January 26th, 2012






MarketWave, Inc. Len Clements
800-688-4766
MarketWave@cox.net















Belgium on Verge of Banning M.L.M.?
Herbalife Case Reveals Confusion over "Customer"
2012 Favorite Company Vote Underway





Belgium Court Rules Herbalife an Illegal Pyramid Scheme

Back in 2004 a not-for-profit consumer advocacy organization called Test-Aankoop (Test-Purchase) filed a complaint with Belgium's Commercial Court charging that Herbalife violated aspects of their Market Practices Act. The court has finally ruled on the matter, saying Herbalife was unable to show a significant number of retail customers beyond their distributor base, thus "a consumer or a business stands to make money which is more likely the result of introducing new consumers or businesses into the scheme than from the sale or use of products."

Herbalife was also fined 5,000 euro ($6,550) for "each breach" that occurs two months after the date of the ruling (after mid-February).

Herbalife is challenging the ruling. The company currently has about 2.5 million distributors doing business in 79 countries.

The court's decision can be read here:

Herbalife - Belgian Court Decision (http://www.scribd.com/doc/76678476/Herbalife-Belgian-Court-Decision)


Herbalife claims that in spite of Belgium only accounting for 0.65% of total revenue, they are confident they can show the decision is based on "factual errors" and "misinterpretations of the law", and are committed to the Belgium market. Herbalife's response to the charges can be found here:


Herbalife statement regarding Belgian Commercial Court Ruling - MarketWatch (http://www.marketwatch.com/story/herbalife-statement-regarding-belgian-commercial-court-ruling-2011-12-16)


Commentary:

If the court's ruling in this case sticks it will create a devastating legal precedent in Belgium that will all but outlaw M.L.M. in that country (making it the third such country - the bathwater soaked baby was also thrown out in China and Nepal).

Of course, a few of the higher profile anti-MLM critics are exploiting this decision, claiming this is what they've been trying to convince U.S. authorities of all along. That is, M.L.M. companies are all pyramid schemes because most of the product is purchased and consumed by the reps themselves, not by non-distributor retail customers. There are two things wrong with that. First, Belgium law, as it pertains to pyramid schemes, is not only much different than U.S. law, or any other country's laws for that matter, it is unreasonable and draconian. Here's a sample, taken directly from the court's decision:

Market Practices Act: Article 91, 14
"The following misleading business practices are under all circumstances considered to be dishonest: setting up, managing, promoting a pyramid scheme where the consumers have, upon payment, a chance to receive income from, either recruiting new consumers in the system or from the sale or the use of products."

A chance to receive income from the sale of the product! That makes it a pyramid scheme? Another section of the Act (Article 99) says the same thing. So if a distributor can't even make money by selling the product, it begs the question, why is any M.L.M. company even thinking about doing business in Belgium? But even if this is merely a misinterpretation of the law, and sales to end user customers are legitimizing, the Belgium courts have also declared distributors are not customers. Let's root for Herbalife to set the court straight.

There's good evidence that, in fact, the court has been mislead by the plaintiffs (who I suspect are themselves being mislead by certain anti-M.L.M. critics who make a living misleading plaintiffs, government agencies and courts about our industry). For example, Test-Aankoop ironically uses Amway's "70% Rule" as a measure of legitimacy, but then describes it as a requirement to sell 70% of one's inventory to non-distributor "end users". This is far removed from what Amway's "70% Rule" actually means. It simply restricts a rep from buying more inventory until at least 70% of all previous orders have been sold or consumed - to or by anyone. It's just a rule to prevent front loading and stockpiling of products, as most countries, including the U.S., completely understand.

So no, this action is not even remotely indicative of how the laws may be applied in the United States, or any other part of the world. In fact, most countries, and our own FTC, rightfully and fully recognize that distributors can be, and often are, customers. Let's do the thinking that the Belgium court obviously hasn't done. If someone is a regular customer of an M.L.M. product, because they actually like the product, wouldn't it make sense that they might want to sign up as a distributor to get the product at a lower price, and maybe make a few bucks by referring others to a product they're already inclined to recommend? Let's think some more. If you were looking to join an M.L.M. program wouldn't it make sense that you'd narrow down the several hundred choices to the few who have products you are actually interested in using? Perhaps even sampled and benefited from? Does it make any sense at all that you'd choose to become a distributor for a product that you haven't even tried, let alone tested and didn't like? I'm not suggesting some distributors don't make such nonsensical decisions. Some do. But the large majority don't. They choose to enroll as reps for, and get on autoship to buy, products they actually like and want! How is that not a customer?

Also, Test-Aankoop, and the court, key in on the fact that in Herbalife, like virtually all M.L.M. companies, a rep can make more money by enrolling other reps and building a downline sales organization than from their own product sales. But, doesn't this also describe virtually all companies! Doesn't Century21 make more money by recruiting more real estate agents? Doesn't Coca-Cola make more money by getting their product into more stores? When Ray Croc decided he could make more money by getting a bunch of
other people to sell his hamburgers and taking a small cut of their sales than he could by selling his own hamburgers, his McDonalds Corporation become one of the most admired success stories in American history. But if an Herbalife distributor applies the identical strategy - I can make more money by getting others to sell Herbalife products and taking a small cut of their sales than I could by retailing my own Herbalife products - they become a "predatory" operation promoting an illegal scheme.

Well, at least in Belgium. At least for now.


Lenny is obviously confused at to how a customer should be defined. A customer / end user buys a product for personal use and not because it is required to participate in the pyramid pay scheme.

His comparison to franchises like McDlonald's is glaringly ignorant. Those that purchase a franchise have a restaurant that sells only to customers. They do not endlessly recruit other franchisees into the mix. Perhaps Lenny would like to give us the customer to franchisee ratio for McDonald's. I would bet there is more than a fraction of a customer or a handful of customers per franchisee.

Kudos to Belgium for chasing these MLM varmits out!

Soapboxmom

littleroundman
02-23-2012, 07:18 PM
C'mon, I mean "everybody" knows Clements is always right, after all he:

* is an international lawyer

* is smarter than any court or legislators

* wears his underpants on the outside of his tights and is able to leap buildings in a single bound.

http://i218.photobucket.com/albums/cc153/thelittleroundman/Superman1.jpg

scratchycat
02-24-2012, 09:12 AM
Quatloos! • View topic - Herbalife Convicted For Pyramid Selling In Belgium (http://www.quatloos.com/Q-Forum/viewtopic.php?f=5&t=8065)

The most amusing part of this whole sordid saga is Clements rant about it:
Lenny is obviously confused at to how a customer should be defined. A customer / end user buys a product for personal use and not because it is required to participate in the pyramid pay scheme.

His comparison to franchises like McDlonald's is glaringly ignorant. Those that purchase a franchise have a restaurant that sells only to customers. They do not endlessly recruit other franchisees into the mix. Perhaps Lenny would like to give us the customer to franchisee ratio for McDonald's. I would bet there is more than a fraction of a customer or a handful of customers per franchisee.

Kudos to Belgium for chasing these MLM varmits out!

Soapboxmom

Thanks for this one SBM and I have personal information on it here in the US and they should be chased out of here.

I was 'down on my luck' in Selma, Alabama, and trying to get a job for person of my race and age was out of the question. Right now I cannot remember how I got 'hooked'. Perhaps an ad in local newspaper and I went for it. All they ever wanted was for me to buy more product and SELL, RECRUIT, SELL!! I sold some, I was a good sales person at one time. Then I went totally broke and wound up with about $400 of product that I could not GIVE AWAY!

They play on the vulnerable and believe me I was and guilible along with it. There are other reason for this but no need to go into that. I would NEVER advise anyone to get into this racket. Get you some good vitamins, eat right and exercise - don't listen to these con men.

Doc Bunkum
02-25-2012, 09:22 AM
They play on the vulnerable and believe me I was and guilible along with it. There are other reason for this but no need to go into that. I would NEVER advise anyone to get into this racket. Get you some good vitamins, eat right and exercise - don't listen to these con men.

Thanks for that, SC.

I just revived an old post at scam to piss off some Scamway jerk currently blowing about what a wonderful opportunity Scamway is.

Here's this one lady's insights - insert Herbalife or any other MLM and the same thing applies:


Please, please DO NOT JOIN QUIXTAR (affiliated with the giant Amway MLM)


I am just here to warn anyone who is thinking of joining a MLM or pyramid scheme to NOT join Quixtar. My fiance started doing Quixtar.. he spent every second listening to motivational CD's, going to meetings, trying to "get" new people to join the Quixtar "team." He spent ridiculous amounts of money on products from Quixtar (energy drinks, vitamin supplements, etc..) that he would not have purchased had it been at a regular store. (Supposedly you make a profit from the things you buy online from yourself, but the profit is about 8%... so spending $300 on junk you wouldn't normally buy would give you less than $30. not worth it.)

He was spurred on by the promise of a better life- he would be able to stop working, spend more time with family (we have a 1-yr. old daughter), but the more you get into Quixtar, the MORE time you have to spend on it. He was brainwashed- I couldn't even talk to him anymore because he wouldn't listen and I felt like I was just talking to the CD's in his head. He completely changed his views on everything- he became a born-again Christian (which isn't bad in itself, but when you are compelled to do it because of Quixtar and the power of the masses, it's not for the right reason)...

We ultimately broke off the engagement because of Quixtar. It is such a powerful vehicle that has a force of the masses behind it. He put Quixtar before everything else in his life, and it was so hard to even tell him that because he kept saying he was doing it for us. That's what Quixtar made him think. He would come to his upline about personal and other problems instead of coming to me... It was really creepy. He became a different person.

I know this is a long post, but I just don't want anyone else to get hurt like I did. There were many nice, great people that were a part of Quixtar, just like John, but it doesn't matter if you think you are the most SKEPTICAL person... John was, and he got sucked in just the same.

I hope that this helps anyone who was thinking about joining Quixtar. I feel I need to tell my story so I can help others avoid this "business." It is a waste of your valuable time.

Sincerely,
Sarah

scratchycat
02-25-2012, 12:25 PM
Thanks for that, SC.

I just revived an old post at scam to piss off some Scamway jerk currently blowing about what a wonderful opportunity Scamway is.

Here's this one lady's insights - insert Herbalife or any other MLM and the same thing applies:

You are so right Doc! It can be applied to all those MLMs. The guy I connected with pursued me ever where I went by phone - even to where I was employed and he was good!! He had me believing because I was wanting to believe I could make enough money to support myself. Well, I woke up finally and never talked to him again. He finally stopped calling. When people are desperate they are most vunerable and these people are trained to find that right spot to get to you. It is best to never let them give you the sales talk EVER!!

Remember Fuller Brush, vacuum cleaner salesmen, Shaklee, Sarah Coventry Jewelry, life time cookware, oh so many others... You might make a tiny bit of money but you are making the people at top very rich while you continue to buy the product. I got in that JerkyDirect thing for a few months at $7.99 per mo and never sold one bag other than what we consumed and we really did not like it, so that was cancelled. I suppose if we really liked it and were going to spend that much each month it would have been okay but we have local jerky companies that have much better stuff for less!!! All learning lessons we need to share with others.

scratchycat
02-25-2012, 12:53 PM
When I was much younger I was involved in cosmetic sales and I did really good because I liked and used the cosmetics but I also sold them to friends because they really worked and they were not so expensive. It was much like Avon back when Avon gave parties. After the price of gas went up I could no longer make any money by giving shows so I just gave it up and bought the product from a friend.

My experience with Herbalife was in 2001 and lasted only a few months (thank goodness!!). I got a job with a local hospital and worked there for a few months before I left Selma. I just wanted to share in order to help others. Now, I have my own website and sell products with my art designs. I don't sell much but get satisfaction out of being able to use my talents.

I am also thankful that I am now retired and don't have to seek employment. Those were tough years working 8 hrs. a day to earn enough to scrape by. Joy oh Joy, but they were fun also!!

scratchycat
02-26-2012, 09:22 AM
When I was much younger I was involved in cosmetic sales and I did really good because I liked and used the cosmetics but I also sold them to friends because they really worked and they were not so expensive. It was much like Avon back when Avon gave parties. After the price of gas went up I could no longer make any money by giving shows so I just gave it up and bought the product from a friend.

My experience with Herbalife was in 2001 and lasted only a few months (thank goodness!!). I got a job with a local hospital and worked there for a few months before I left Selma. I just wanted to share in order to help others. Now, I have my own website and sell products with my art designs. I don't sell much but get satisfaction out of being able to use my talents.

I am also thankful that I am now retired and don't have to seek employment. Those were tough years working 8 hrs. a day to earn enough to scrape by. Joy oh Joy, but they were fun also!!

Another thing I want to add to this, in all the times that I tried these 'sales' jobs, I never 'recruited' one person. I was selling the product because I liked it and because I never made a lot of money there was no way I was going to try and bring someone else into the business unless they really wanted to sell the product. Things have really changed in 10-25 years when we were selling products and before there has been such an influx of internet online businesses. Most of these don't even sell a product, they just do reselling for things that are free online. Of course all those type of companies yell 'recruit' at you because that is the way to make the big money. It was just not in my character to do that so I didn't. I was sorry when Fashion 220 was bought out though because it was one of the best cosmetics I had ever found. Nothing these days compares with it.

I suppose if my little story gets picked up and shared it will just bring more awareness to others. As my original name here in RS was honestme, that is all I know how to be is honest and perhaps it will help others.

Lil Ol' Radical Me
02-26-2012, 06:48 PM
Congratulations to Belgium for this ruling against Herbalife and let us all keep our fingers crossed that it is upheld on appeal. May it be the first of many judgements against these unscrupulous companies who are sellers of overpriced goods and cult like "motivation" practices designed to capture the naive in order to make money for the 3% at the top.

It is rare that the average MLM seller makes any meaningful money from retail sales after the first few months a new product is launched. After that the appalling quality /price ratio causes a high fall out rate, leaving the poor new "independent business operator" with, at best, a load of unshiftable product in their garage and divorced, friendless, penniless and worse at the other end of the scale. Most of us have sad stories about friends or family to tell on this topic.

It is amazing that these companies in the US still have so much influence on legislation in general and the FTC in particular. (or given the extraordinary power wielded by the corporations, perhaps it is not so suprising)

littleroundman
03-05-2012, 11:45 PM
http://i218.photobucket.com/albums/cc153/thelittleroundman/herbalife.jpg

http://opportunity.herbalife.com/Content/en-US/pdf/business-opportunity/statement_of_average_gross_compensation_usen_03041 0.pdf (http://opportunity.herbalife.com/Content/en-US/pdf/business-opportunity/statement_of_average_gross_compensation_usen_03041 0.pdf)

scratchycat
03-06-2012, 10:08 AM
LRM it does not look like much money for any of them but the ones doing the actual buying and selling are not even breaking even while the top earners count their dolllars. It is a shame people use good products to entice people to work for them claiming they really have their own business. In all actuality the products probably cost a fraction of what a buyer pays for them. A trip to your local health food store would be a better investment.

Last year in Facebook a close relative was asking about trying out this program as a way to make money from home. I strongly advised against it and I am sure she was disappointed but it is best to tell someone the truth about these 'opportunities' rather than let them sink precious money into something that is not going to work for them.

notasheeple
01-10-2013, 10:21 AM
Seems like Herbalife may have attracted the attention of the SEC.

scratchycat
01-10-2013, 10:47 AM
Seems like Herbalife may have attracted the attention of the SEC.

http://www.realscam.com/f9/sec-opens-investigation-into-herbalife-1908/

Will be interesting to watch.

kschang
01-10-2013, 11:56 AM
http://i218.photobucket.com/albums/cc153/thelittleroundman/herbalife.jpg

http://opportunity.herbalife.com/Content/en-US/pdf/business-opportunity/statement_of_average_gross_compensation_usen_03041 0.pdf (http://opportunity.herbalife.com/Content/en-US/pdf/business-opportunity/statement_of_average_gross_compensation_usen_03041 0.pdf)

I have to point out that this chart looks MUCH WORSE than it does, because it left out the verbiage on top that only 25% of all distributors get to "supervisor" or above.

CrimeBustersNow
01-14-2013, 11:45 AM
All hell is breaking loose in MLM with the $1 billion short of Herbalife (HLF) by Bill Ackman on December 20, 2012.

Follow the blog quoting Robert FitzPatrick: The blog itself has garnered a lot of attention and the link is even posted on Herbalife real time Stock Quote. Look for “Recognizing Pyramids - Without A Lawyer, An Economist, Or The FTC” …. It is located below the stock quote at Herbalife Ltd., HLF Stock Quote - (NYSE) HLF, Herbalife Ltd. Stock Price (http://www.marketwatch.com/investing/stock/hlf)

Hopefully this one will finally brings down the “House of Cards” of the money-laundering pseudo “corporations” that are the MLM “Industry” masquerading as legitimate business.

dave-CBNow

Home (http://www.crimebustersnow.org)

Exposing Government, Police, & Corporate Corruption
One Fraud at a Time

Whip
01-14-2013, 11:59 AM
poor clem can't be happy...........again.

Soapboxmom
01-20-2013, 11:09 PM
More sharp investment gurus exposing MLM as a fraud that hurts millions:

Hedge fund manager Whitney Tilson also shorts Herbalife - latimes.com (http://www.latimes.com/business/money/la-fi-mo-whitney-tilson-herbalife-20121226,0,7163008.story)

Luzer
01-22-2013, 01:33 PM
Thanks for that, SC.

I just revived an old post at scam to piss off some Scamway jerk currently blowing about what a wonderful opportunity Scamway is.

Here's this one lady's insights - insert Herbalife or any other MLM and the same thing applies:

Good post. I think that comment about Quixtar is more common than the pro mlm camp will admit.

Lil Ol' Radical Me
01-22-2013, 08:06 PM
More sharp investment gurus exposing MLM as a fraud that hurts millions:

Hedge fund manager Whitney Tilson also shorts Herbalife - latimes.com (http://www.latimes.com/business/money/la-fi-mo-whitney-tilson-herbalife-20121226,0,7163008.story)

This quote from Whitney Tilson is excellent reading and maybe legislators will finally take note of what many people have been saying for years



Pershing Square’s analysis of Herbalife is the most remarkable piece of investment analysis I have ever seen. Simply astonishing. And kudos to Pershing Square for making all of it public – not just the 300+ page slide presentation, but all the supporting materials. For the many young people on this email list who are looking for a job in this industry, study this carefully – if you can do analysis even a tiny fraction this comprehensive, there will always be a job for you…

Hopefully it results in massive reform of this whole sector, which has preyed upon MILLIONS of vulnerable people all over the world for decades. This has been blindingly obvious to anyone who’s done even cursory analysis, but for some reason regulators at the state and local level have done almost nothing to rein in the widespread abuses – it’s just like subprime mortgages and student lending. This is one area in which China is WAY ahead of us: it’s simply outlawed ALL multi-level marketing – a very good idea in my opinion…

Lil Ol' Radical Me
01-22-2013, 08:15 PM
All hell is breaking loose in MLM with the $1 billion short of Herbalife (HLF) by Bill Ackman on December 20, 2012.

Follow the blog quoting Robert FitzPatrick: The blog itself has garnered a lot of attention and the link is even posted on Herbalife real time Stock Quote. Look for “Recognizing Pyramids - Without A Lawyer, An Economist, Or The FTC” …. It is located below the stock quote at Herbalife Ltd., HLF Stock Quote - (NYSE) HLF, Herbalife Ltd. Stock Price (http://www.marketwatch.com/investing/stock/hlf)

Hopefully this one will finally brings down the “House of Cards” of the money-laundering pseudo “corporations” that are the MLM “Industry” masquerading as legitimate business.

dave-CBNow

Home (http://www.crimebustersnow.org)

Exposing Government, Police, & Corporate Corruption
One Fraud at a Time

Heres the link the article “Recognizing Pyramids - Without A Lawyer, An Economist, Or The FTC” (it's way down the list now as new items have been added) Thanks for bringing to our attention.

Recognizing Pyramids - Without A Lawyer, An Economist, Or The FTC - Seeking Alpha (http://seekingalpha.com/article/1107821-recognizing-pyramids-without-a-lawyer-an-economist-or-the-ftc?source=marketwatch)

It is good reading and easy to follow. Well worth passing onto anyone you know who is involved in or thinking of joining any MLM (and that is just those with real products. lol)

scratchycat
01-28-2013, 09:20 AM
Billionaire investors go head-to-head over Herbalife - CBS News (http://www.cbsnews.com/8301-505268_162-57566110/billionaire-investors-go-head-to-head-over-herbalife/)

(CBS News) Investors will be watching the weight loss product company Herbalife closely Monday.


Its stock price went on a roller-coaster ride after two billionaire investors argued about the company -- and each other -- on live television.


Icahn vs. Ackman: Investors take squabble to TV


The names Bill Ackman or Carl Icahn may not ring a bell, but on Wall Street, they're legendary investor activists. On Friday, the two titans of finance revived a decade-old feud that went viral and raised big questions surrounding the weight loss supplement maker.


As the founder of Pershing Square Capital Management, Ackman controls about $12 billion in assets, and he has his sights set on Herbalife. Ackman said in one broadcast, "How is it possible that Herbalife sells six times more nutrition powder than Abbott Labs, Unilever, and GNC?"

The answer? Ackman says Herbalife is a pyramid scheme. He's so sure of it, he's shorting Herbalife stock and betting $1 billion it will plummet to zero.

When the hedge fund manager went on CNBC Friday, the share price dropped to its lowest point of the day. Ackman said, "We believe this is a company causing enormous harm to millions of people and has done so over a very long period of time."

But minutes later, the price soared when another activist investor, Carl Icahn -- who won't say whether he owns Herbalife stock -- called in and accused Ackman of trying to manipulate the markets.

Icahn said, "He got a bunch of innocent investors, retirees, they are going to lose their money so Ackman can show a good record at the end of the year."

At times, the insults turned very personal, as the two traded blows over Herbalife and a long-simmering feud -- a business deal that ended up in court, where Icahn lost.

Icahn said, "Ackman is a liar. ... The guy is a major loser."

Ackman said, "This is not an honest guy, and this is not a guy who keeps his word."

Brian S. Sozzi, NBG Productions chief equities analyst, said, "The issue seems to be dating back many many years, and maybe it was festering beneath the surface. There is serious bad blood."

Herbalife has called Ackman's allegations "a malicious attack on Herbalife's business model, based largely on outdated, distorted and inaccurate information."

But all that took a back seat as Wall Street was riveted by the theater of two powerful billionaires airing their grievances, laced with Icahn's expletives.

Sozzi said, "They are what I call 'market movers.' When these guys talk, as an analyst or an investor, you tend to listen."

CBS News' Rebecca Jarvis spoke with Ackman Sunday night. He called the exchange with Icahn on CNBC a sideshow. But said he doesn't regret it. He believes it brought attention to what he calls the fraud taking place at Herbalife. Herbalife has yet to respond to the exchange. We're certain to hear more from company executives by the Feb. 19 earnings call.

The Securities and Exchange Commission is now investigating Herbalife, but has not yet decided whether to take action.
Ackman has been and will continue to visit with federal and state regulators. He told CBS News he's compiling a list of questions for Herbalife. Herbalife says ask anything, and we'll answer it on the record. Ackman said he's planning to make those answers public.

scratchycat
01-28-2013, 09:28 AM
Over 25% of Distributors reach the rank of Supervisor and above (“Leader”), qualifying them for additional compensation which is paid by Herbalife based upon their activities and those they have sponsored directly and indirectly. The annual gross compensation paid by Herbalife to all Leaders during 2011 averaged $2,900 (with a median level of $741). Over 39% of Supervisors are “Active” (defined as those who generated at least 2,500 points of volume in 2011 after becoming Supervisor). The annual gross compensation paid by Herbalife to Active Leaders during 2011 averaged $7,354 (with a median level of $637).

http://opportunity.herbalife.com/Content/en-US/pdf/business-opportunity/StatementAverageCompensation2011EN.pdf

Those Distributors are helping make the top players rich, isn't that how a Pyramid works??

kschang
01-31-2013, 04:11 AM
Technically every low-level serf in a big corp is helping make the executives rich... so that in itself is not a sign of foul play.

JustTooMuchTime
02-04-2013, 03:26 PM
Herbalife stock falls 6% on report of law-enforcement investigation.


According to the Post, the FTC cited "pending law-enforcement action" and withheld some information the Post requested about Herbalife. The newspaper said the FTC released 729 pages of complaints against Herbalife.

Herbalife shares fall 6% - latimes.com (http://www.latimes.com/business/money/la-fi-mo-herbalife-stock-falls-6-on-report-of-lawenforcement-investigation-20130204,0,2687411.story)

scratchycat
02-04-2013, 04:30 PM
Technically every low-level serf in a big corp is helping make the executives rich... so that in itself is not a sign of foul play.

So, are you saying pyramids fall into the "not a sign of foul play"? You don't have to take my OPINIONS as realistic, I only asked the question. However, it seems to me a lot of other people are asking a lot of questions about Herbalife.

kschang
02-05-2013, 01:35 PM
No, I'm saying "presence of low-level serfs making the cream of the crop rich" is not in itself 'sign of foul play'. Legitimate businesses can do that too. Jeff Bezos have thousands of Amazon serfs, for example.

kschang
02-05-2013, 01:35 PM
FTC now says the redactions are due to privacy and foreign investigations, not their own investigations.

scratchycat
02-06-2013, 10:09 AM
Over 25% of Distributors reach the rank of Supervisor and above (“Leader”), qualifying them for additional compensation which is paid by Herbalife based upon their activities and those they have sponsored directly and indirectly. The annual gross compensation paid by Herbalife to all Leaders during 2011 averaged $2,900 (with a median level of $741). Over 39% of Supervisors are “Active” (defined as those who generated at least 2,500 points of volume in 2011 after becoming Supervisor). The annual gross compensation paid by Herbalife to Active Leaders during 2011 averaged $7,354 (with a median level of $637).

http://opportunity.herbalife.com/Content/en-US/pdf/business-opportunity/StatementAverageCompensation2011EN.pdf

Those Distributors are helping make the top players rich, isn't that how a Pyramid works??

Okay, so some of you don't look at Herbalife as a pyramid. Fine, however if it is not a MLM then I don't suppose I know what Multi-Level Marketing is. At least for now some countries like Belgium have ruled it out. This was reported about 2 hours ago:

Shares of the nutritional supplement company are down 20 percent since the hedge fund managers duked it out by telephone on cable television station CNBC on Jan 25., exchanging barbs about Ackman's bold $1 billion bet that Herbalife is an unsustainable pyramid scheme destined to collapse.

But a big concern for investors in Ackman's $12 billion Pershing Square Capital Management is whether Icahn, who boldly predicted Ackman will get caught in the "mother of all short squeezes," will have the last laugh in this battle of hedge fund titans.


Analysis: Ackman can withstand a short squeeze rally in Herbalife | Reuters (http://www.reuters.com/article/2013/02/06/us-hedgefunds-herbalife-shortsqueeze-idUSBRE9150HC20130206)

Joanne Clare The 38-year-old Staten Island mother of three has been selling the company's weight-loss products and supplements since 2004, when she says they helped her drop from 210 to 160 pounds in four months. She now sells as much as $3,500 a month of Herbalife products to her 30 clients and the two distributors in her "down line."

"People have always said it's a pyramid scheme, but it's not," Ms. Clare said, adding that the bulk of her earnings come from sales to clients, not her cut of her recruits' take.

Herbalife Proponents Stick by the Company - WSJ.com (http://online.wsj.com/article/SB10001424127887323689604578221430526328400.html)

Does anyone have any proof that this statement is a real statement from a person named Joanne Clare? I found a Joanne Clare in Staten Island, NY and she is a realtor.

https://www.facebook.com/pages/Joanne-ClareReal-Estate-Agent/133507953368977?sk=info

There must be many others but has anyone actually found this person and get a live statement from her? Now, they mention another name Chad Hacker who supposedly has a business by the name of HealthNutz (quote from same link)
Chad Hacker has been an Herbalife distributor since 2000. The 35-year-old said he first started selling the product in college by holding Herbalife parties. In 2008, he went retail and opened a storefront called HealthNutz in Owatonna, Minn.

He gets 35 to 40 visitors a day at the store, which sells a daily pass for $6.50 that gives buyers access to Wi-Fi, a workout room and three free Herbalife products, like the company's Formula 1 meal-replacement shake, an energy tea or an aloe drink. He also uses the store to persuade dabblers to start ordering Herbalife products more regularly and to recruit people into his network of sellers.

Mr. Hacker's "down line" is now 1,000 people deep and accounts for about half of his $10,000- to $13,000-a-month in profit, he said. He acknowledges most of his recruits make no sales of their own.

"Of the people with distributorships, only a small fraction of them sell the product," he said. But echoing a common Herbalife assertion, he said 80% of the people in his down line became distributors only to get discounts on the products they consume themselves.

Mr. Hacker said he glanced through the slides in Mr. Ackman's presentation, but doesn't think they reflect the reality at the company.

"When companies are growing and having success, people try and take them down," he said. "It's business as usual."

I found it also strange by searching the name Chad Hacker, Owatonna, MN, I found this link:

Chad Hacker | Owatonna Real Estate Agent | Coldwell Banker (http://www.coldwellbanker.com/agent?action=detail&agentId=220337&mode=detail)

These were just short searches and I am sure some of you have much more knowledge about the authenticity of Herbalife than I do. I am just a person who once sold the product. While I do think some of the products are healthy, there are many flaws in the system. I wonder if the FDA or Medical Association were to get in on research of the products what would happen. If customers of these products are on other prescription medications, they should always check with their doctor before taking the supplements. The Herbalife system is prescribing medication and their sales reps are practicing medicine without a license. As I have stated in here earlier, this happened in my case and a good friend wound up in the hospital after taking some of the pills. At that point, I could no longer feel comfortable with selling the products and I would only do so by STRONGLY advising they consult their doctor before taking any of the pills.

As with many testimonials made by companies in regards to their products, it is best to question if these are in actuality, real statements made by real people.

kschang
02-07-2013, 12:48 PM
I had multiple entries on Herbalife on my blog. Basically, the company don't WANT to know how much retail it really does. According to them (in the 10-K statements) they are "not pertinent".

Gregg
02-08-2013, 07:37 PM
No, I'm saying "presence of low-level serfs making the cream of the crop rich" is not in itself 'sign of foul play'. Legitimate businesses can do that too. Jeff Bezos have thousands of Amazon serfs, for example.

The "serfs" at Amazon aren't paying Bezos to go to work every day. It's not the same as them having to buy a shelf full of books and only getting paid when they sell them.

laidback
02-08-2013, 07:51 PM
The "serfs" at Amazon aren't paying Bezos to go to work every day. It's not the same as them having to buy a shelf full of books and only getting paid when they sell them.

The structure of Amazon doesn't even remotely resemble an MLM. The have affiliates, yes, but they also have private sellers, (of which I am one) that list their products for sale and pay a small commission when sold.Then there are "pro" sellers, that pay a $39.99 a months fee. This makes sense if you make more than 40 sales per month. There is also the case where if I have a web site, I can have Amazon products listed on it and I would get a commission if the products sell through my link.

scratchycat
02-09-2013, 09:40 AM
I agree with both of you. Amazon is definitely a different structure than Herbalife and I can say this having been involved in both. It does not cost me anything to list a product for sale on Amazon but yes they get a percentage of what is sold. The same with all the other shops I have that sell my products. After all there is a production expense and as middle person my fee is very low. However, they are products I am proud to sell not some high-priced vitamin pills that have not been proven safe.

Herbalife is all about making money for top players and using the serfs to do it for them. That is my opinion and I am entitled to my opinion.

scratchycat
02-09-2013, 09:52 AM
Herbalife (http://www.rickross.com/groups/herbalife.html)

I found this story fascinating.
Death and Denial at Herbalife (http://www.rickross.com/reference/herbalife/herbalife9.html)


We have discussed before how a MLM can cultivate multiple cults of personality through its structure of giving "sales leaders" a lot of power and recognition, mainly through his or her group of downlines. And once the cult started, it is self-reinforcing and self-perpetuating.

A MLM Skeptic: Who's Rick Ross and What Does He Have to Say About Herbalife? (http://amlmskeptic.blogspot.com/2013/02/whos-rick-ross-and-what-does-he-have-to.html#more)

What I cannot understand is the defense of this company. Maybe I am missing something here.

GlimDropper
04-09-2013, 10:17 AM
Interesting:




April 9, 2013, 9:50 AM

Herbalife Shares Halted; Report Points to KPMG Resignation


By Steven Russolillo

Herbalife (http://online.wsj.com/public/quotes/main.html?type=djn&symbol=HLF) HLF 0.00% (http://blogs.wsj.com/public/quotes/main.html?type=djn&symbol=HLF?mod=inlineTicker) shares are halted minutes after the opening bell due to news pending. It’s unclear exactly what is prompting the halt at the moment.


The nutritional-supplements maker has been embroiled in a bitter fight among hedge-fund manager Bill Ackman — who is shorting the stock, has called the company an illegal pyramid scheme and has said the stock should go to zero — and Daniel Loeb and Carl Icahn (http://topics.wsj.com/person/I/carl,-icahn/65), who have taken big bets that Herbalife will prevail and the stock will rise.


Representatives for Los-Angeles-based Herbalife weren’t immediately available for comment.


[Link to the rest of the article] (http://blogs.wsj.com/marketbeat/2013/04/09/herbalife-shares-halted-news-pending/)

Looks like some shenanigans with their accounting firm. Not sure why that would cause a halt in trading, I suppose we'll find out soon.


On Edit:


Herbalife has issued a statement:



LOS ANGELES–(BUSINESS WIRE)–Herbalife (NYSE: HLF) today announced that KPMG LLP notified Herbalife on April 8, 2013 that KPMG was resigning, effective immediately, as Herbalife’s independent accountant. KPMG stated it had concluded it was not independent because of alleged insider trading in Herbalife’s securities by one of KPMG’s former partners who, until April 5, 2013, was the KPMG engagement partner on Herbalife’s audit. KPMG advised the Company it resigned as Herbalife’s independent accountant solely due to the impairment of KPMG’s independence resulting from its now former partner’s alleged unlawful activities and not for any reason related to Herbalife’s financial statements, its accounting practices, the integrity of Herbalife’s management or for any other reason.


None of KPMG’s audit reports on Herbalife’s financial statements for the fiscal years ended December 31, 2010, 2011 and 2012 or KPMG’s audit reports on the effectiveness of internal control over financial reporting as of December 31, 2010, 2011 and 2012 contained an adverse opinion or a disclaimer of opinion, nor was any such report qualified or modified as to uncertainty, audit scope or accounting principles. In addition, at no point during the three fiscal years ended December 31, 2012 and the subsequent interim period through April 8, 2013 were there any (1) disagreements with KPMG on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures, which disagreement(s), if not resolved to the satisfaction of KPMG, would have caused it to make reference to the subject matter of the disagreement(s) in connection with its reports, or (2) “reportable events” as such term is defined in Item 304(a)(1)(v) of Regulation S-K.


As a result of the alleged insider trading activity by its now former partner and KPMG’s resulting resignation on April 8, 2013, KPMG notified Herbalife that KPMG’s independence had been impaired and it had no option but to withdraw its audit reports on Herbalife’s financial statements for the fiscal years ended December 31, 2010, 2011 and 2012 and the effectiveness of internal control over financial reporting as of December 31, 2010, 2011 and 2012 and that such reports should no longer be relied upon as a result of KPMG’s lack of independence created by the circumstances described above. Herbalife’s Audit Committee and management continue to believe that the Company’s financial statements covering the referenced periods fairly present, in all material respects, the financial condition and results of operations of the Company as of the end of and for the referenced periods and may continue to be relied upon and that the Company’s internal control over financial reporting was effective during these periods.


As a result of the matters described above, Herbalife will be withdrawing the proposal to ratify the appointment of KPMG as Herbalife’s independent registered public accountants for fiscal 2013 originally planned to be submitted to Herbalife’s shareholders at Herbalife’s Annual General Meeting of Shareholders to be held on April 25, 2013.

ribshaw
04-09-2013, 03:40 PM
"LOS ANGELES–(BUSINESS WIRE)–Herbalife (NYSE: HLF) today announced that KPMG LLP notified Herbalife on April 8, 2013 that KPMG was resigning, effective immediately, as Herbalife’s independent accountant. KPMG stated it had concluded it was not independent"

I am not sure what the function of the big "independent" audit firms truly is. I know what it is supposed to be, but I can't ever remember one that uncovered a major fraud before it had grown out of control. From The Salad Oil Scandal, and ZZZZBest, to Crazy Eddie and Enron these firms seem more concerned with billable hours than actual auditing. By the time they step down it is usually too late, and the reason never seems to be "our audit technique" uncovered a massive fraud.

From the news the KPMG auditor stepped down due to leaks that led to insider trading, he should be in congress. I doubt there are many accounting shenanigans going on at Herbalife unless they are exceptionally greedy and stupid. They have a cash cow just recruiting folks and having them stock their woodsheds with protein shakes, why mess that up playing games with the financials? But if they are not able to get a new auditor to review and issue an Unqualified Opinion on the books, look out below.

GlimDropper
04-09-2013, 05:32 PM
Let's start with an important truth, it very much looks like none of the news leading to today's 3.75% drop in stock price was Herbalife's fault.

OK, KPMG, one of the "big four" accounting firms fires the accountant who was in charge of the auditing the financial data for both Herbalife and the shoe company Skechers because he's accused of passing inside information to at least one investor. The Chicago Tribune is reporting that this person (elsewhere identified as Scott London) is being investigated by the FBI (http://www.chicagotribune.com/sns-rt-kpmg-trading--wrapup-1l2n0cw1ff-20130409,0,3915993.story?page=1). KPMG goes one step farther by retracting their endorsment for the last three years of Herbalife's financial statements. It could be that KPMG, who has faced regulatory issues in the recent past is going above and beyond in distancing themselves from any apparent lack of independence in those audits. This doesn't necessarily mean they distrust the information in those statements.

KPMG's actions here are going to cost them and potentially Herbalife a lot of money. First of all they will almost certainly be the ones paying for another firm to reaudit the financials for the last three years but they could quite possibly be facing suit from Herbalife for damages. What damages? Even while acknowledging this situation is not of Herbalife's making, one formerly bullish stock annalist has sharply lowered his price target for HLF (http://blogs.wsj.com/marketbeat/2013/04/09/herbalife-downgraded-after-kpmgs-scandal/):


DA Davidson analyst Timothy Ramey said he downgraded Herbalife shares to neutral from buy and slashed his price target to $38 from $78 after the accounting firm resigned as Herbalife’s auditor following allegations of insider trading. His cautious views stem from concerns related to the company’s compliance with NYSE requirements and a potential breach of their loan covenants, which could sway the stock, rather than a fundamental shift in how he views the company.

[Snip]

Ramey makes three assumptions about Herbalife in wake of the KPMG resignation:


Herbalife could get an NYSE de-listing notice, although Ramey says it’s “highly unlikely” Herbalife would actually be de-listed.
Herbalife could violate its loan covenants, although the company may get a covenant waiver due to the unusual circumstances.
Herbalife may be unable to buy back stock during this period, Ramey said. “Doing so would be imprudent given the potential lack of financial liquidity,” he said.



Elsewhere the Wall Street Journal comments that HLF's next auditing firm will be "walking into a warzone" (http://blogs.wsj.com/marketbeat/2013/04/09/for-herbalife-new-auditor-will-be-walking-into-a-war-zone/):


MarketBeat: What’s your broad takeaway of the situation?


(James) Angel: ”What I find interesting is the stock price reaction. Skechers has gone up and Herbalife has gone down. Two companies in a very similar situation where they basically have just been screwed by their accountants and yet their stock prices react in two different ways. It could have something to do with the mood of the market, that with a stock as volatile as Herbalife where you have huge differences of opinion, it doesn’t take much to move the dial one way or another. With a company like Skechers, you’re more than likely to take their press release at face value and say, ‘hey, it really is all the auditor’s fault, there’s nothing wrong with the company and oh by the way, sales are going to be great,’ which is kind of what they said in their press release. On the other hand with Herbalife, given that there’s this sort of aura of sleaziness around the company, having the auditors not only quit, but withdraw their signatures from the last two years of statements, woah. You wonder what has not yet been revealed.”



CNBC weighed in on the original insider trading angle (which HLF is blameless in) by calling it "The Dumbest Insider Trading Scheme yet Alleged" (http://www.cnbc.com/id/100628391):


Is any company traded on U.S. markets more likely to be scrutinized by regulators?Herbalife has been accused of being a Ponzi scheme by Bill Ackman. Billionaire investors Dan Loeb and Carl Icahn have been publicly criticizing Ackman's trade. Federal authorities are watching this fight and Herbalife (http://data.cnbc.com/quotes/HLF) very closely.


Which means that anyone engaging in insider trading in Herbalife would be attempting to illegally profit right under the noses of the authorities. It's a bit like trying to rob the cash register of a bodega being raided by the police for being a drug-running front. It should at least occur to you to maybe pick another target.

It's been a bizarre day indeed, and perhaps the only day in the last 15 to 20 years that Mark Seyforth doesn't regret leaving Herbalife.

Gregg
04-09-2013, 05:35 PM
I am not sure what the function of the big "independent" audit firms truly is. I know what it is supposed to be, but I can't ever remember one that uncovered a major fraud before it had grown out of control. From The Salad Oil Scandal, and ZZZZBest, to Crazy Eddie and Enron these firms seem more concerned with billable hours than actual auditing. By the time they step down it is usually too late, and the reason never seems to be "our audit technique" uncovered a massive fraud.

Yes, those are glaring examples, but in fairness to my old profession, the "scandals" don't happen in the first place at places where the audit work is good (and usually where the consulting work is another firm).
I am most familiar with Enron, where they played way too loose with standards to begin with and as Enron evolved in to less accounting tricks and more outright fraud, Enron bullied Andersen into opinions farther and farther from economic reality over a period of years. Their "legitimate" accounting was shaky enough but when the adventures of Andy Fastow (the real villain in that company) became too obvious to hide, they had a run on the bank and whaddaya know, the bank was full of "accounting profits" but no "cash".

ribshaw
04-09-2013, 06:03 PM
Yes, those are glaring examples, but in fairness to my old profession, the "scandals" don't happen in the first place at places where the audit work is good (and usually where the consulting work is another firm).
I am most familiar with Enron, where they played way too loose with standards to begin with and as Enron evolved in to less accounting tricks and more outright fraud, Enron bullied Andersen into opinions farther and farther from economic reality over a period of years. Their "legitimate" accounting was shaky enough but when the adventures of Andy Fastow (the real villain in that company) became too obvious to hide, they had a run on the bank and whaddaya know, the bank was full of "accounting profits" but no "cash".

You bring up a valid point in that a good audit can detect and even scare away potential fraudsters. And certainly in today's world if someone is caught red handed the company may have them "spend more time with family" than make a big production if they were anywhere near the C Suite. Most of my time was on the consulting side, but I have been on a few audits back when it was Big 6. My observation and would even say criticism of that world is that many firms use staff right out of college to do a lot of the work. Irregularities could get missed that a more experienced auditor might have detected. But they still charge as if the client is getting an auditor with years under their belt.

laidback
04-09-2013, 08:08 PM
Yes, those are glaring examples, but in fairness to my old profession, the "scandals" don't happen in the first place at places where the audit work is good (and usually where the consulting work is another firm).
I am most familiar with Enron, where they played way too loose with standards to begin with and as Enron evolved in to less accounting tricks and more outright fraud, Enron bullied Andersen into opinions farther and farther from economic reality over a period of years. Their "legitimate" accounting was shaky enough but when the adventures of Andy Fastow (the real villain in that company) became too obvious to hide, they had a run on the bank and whaddaya know, the bank was full of "accounting profits" but no "cash". Is there any truth to the rumor that there is only one question on the Anderson auditors final exam? Q: What is 1+1? Ans: What would you like it to be?

Luzer
05-10-2013, 12:32 PM
Quatloos! • View topic - Herbalife Convicted For Pyramid Selling In Belgium (http://www.quatloos.com/Q-Forum/viewtopic.php?f=5&t=8065)

The most amusing part of this whole sordid saga is Clements rant about it:
Lenny is obviously confused at to how a customer should be defined. A customer / end user buys a product for personal use and not because it is required to participate in the pyramid pay scheme.

His comparison to franchises like McDlonald's is glaringly ignorant. Those that purchase a franchise have a restaurant that sells only to customers. They do not endlessly recruit other franchisees into the mix. Perhaps Lenny would like to give us the customer to franchisee ratio for McDonald's. I would bet there is more than a fraction of a customer or a handful of customers per franchisee.

Kudos to Belgium for chasing these MLM varmits out!

Soapboxmom

Most of the hardcore MLMer's seem to think that a retail sale is to someone who uses the product. Thus if an IBO buys and consumes the product, then that is a retail sale. From my understanding on pyramid laws, that is not okay as the only way to profit in an MLM then is to continually recruit, which eventually becomes unsustainable. I know some Amway folks used to (probably still do) teach buy from yourself, selling is optional.

And to add to the McDonald's comparison, McDonald's employees don't pay to eat. They get freebies as a benefit for working there.

kschang
05-10-2013, 03:09 PM
Webster vs. Omnitrition already clarified that: ultimate consumer cannot be inside the company and eligible for the comp plan.



The court stated that sales to persons who are participants in the company's compensation program do not qualify as "retail sales" for purposes of satisfying the Koscot test. This interpretation of the Koscot test precludes companies from paying commissions on products sold to distributors for personal consumption.


The Personal Consumption Dilemma - MLM Attorney Newsletter from Lawyer Grimes & Reese - MLM Attorney Specializing in Multilevel Marketing Law (http://www.mlmlaw.com/saleswatch/omnitrition.html)

DSA managed to get a couple states to legalize this "personal consumption" in MLM, but it's "mostly illegal".

littleroundman
07-13-2013, 12:23 AM
http://i1301.photobucket.com/albums/ag116/Little_Roundman/scams/nyp1_zps9bf86e12.jpg

New York Post (http://www.nypost.com/p/news/business/groups_ftc_to_talk_herbalife_probe_keVtZm0e8x3EPhO ZHgT4aJ)

NikSam
07-17-2013, 08:07 AM
If someone is looking into an answer if herbalife is a scam or not, please watch this 3 hours of bitch-slapping by Bill Ackman

CLICK on "Watch Webcast Now" at Facts About Herbalife: The Truth About the HLF Pyramid Scheme (http://factsaboutherbalife.com/)

First 20 mins convinced even my cat.

justlogicnohate
09-23-2013, 05:00 PM
If someone is looking into an answer if herbalife is a scam or not, please watch this 3 hours of bitch-slapping by Bill Ackman

CLICK on "Watch Webcast Now" at Facts About Herbalife: The Truth About the HLF Pyramid Scheme (http://factsaboutherbalife.com/)

First 20 mins convinced even my cat.

I have 2 friends that started with Herbalife in the last 3 years and they are both making more than $4,000 a month and one of them is making around $30,000 a month. Ask yourself if that is possible for my friends to do and they did it fair and square. How is Herbalife a scam?

Soapboxmom
09-23-2013, 05:04 PM
I have 2 friends that started with Herbalife in the last 3 years and they are both making more than $4,000 a month and one of them is making around $30,000 a month. Ask yourself if that is possible for my friends to do and they did it fair and square. How is Herbalife a scam?
If it is so fabulous are you in it???

NikSam
09-23-2013, 05:07 PM
I have 2 friends that started with Herbalife in the last 3 years and they are both making more than $4,000 a month and one of them is making around $30,000 a month. Ask yourself if that is possible for my friends to do and they did it fair and square. How is Herbalife a scam?


They not making money , but ripping off others. big difference.

Herbalife has no retail sales, but fakes financial reports that they do. It is too much to hope for, but when this scam is shutdown,
there should be a receivership to collect ill gotten gains and distribute to victims.

Soapboxmom
09-23-2013, 05:19 PM
They not making money , but ripping off others. big difference.

Herbalife has no retail sales, but fakes financial reports that they do. It is too much to hope for, but when this scam is shutdown,
there should be a receivership to collect ill gotten gains and distribute to victims.
Amen.

Since only the 194 reps at the top of the pyramid made $250,000 + a year your friend has to be one of those top 194 earners since they are pulling in $360,000.00 a year. Let's have the name. Someone that successful must have quite a presence online and shouldn't mind you sharing their incredible success story.

And, again are you in their downline raking it in?

6003

kschang
09-23-2013, 05:33 PM
I have 2 friends that started with Herbalife in the last 3 years and they are both making more than $4,000 a month and one of them is making around $30,000 a month. Ask yourself if that is possible for my friends to do and they did it fair and square. How is Herbalife a scam?

Make $4000... or making $4000 in sales? HUGE difference. One's profit, one's revenue (which is very misleading as in MLM you have to pay all of your own expenses, esp. promotions).

Right now, I wonder if you equivocated intentionally, or merely had a Freudian slip. Your next post should tell me if you're sincere or trolling. Mark your words very carefully. :)

kschang
09-23-2013, 05:40 PM
People need to read my little essay: What is a Product Based Pyramid Scheme? Is Herbalife a Product Based Pyramid Scheme?

A MLM Skeptic: What is a Product Based Pyramid Scheme? Is Herbalife a Product Based Pyramid Scheme? (http://amlmskeptic.blogspot.com/2013/09/what-is-product-based-pyramid-scheme-is.html)

The MLM industry basically is refused to see the elephant in the room: product based pyramid scheme, which on the surface is indistinguishable from MLM (and indeed, many of established MLMs are effectively PBPSs)

Yes, I'm probably "splitting hair", but that's not really important, is it? The fact is herbalife CANNOT (and WILL NOT) prove it is NOT a PBPS. Is it afraid of what it will find?

Soapboxmom
09-24-2013, 09:37 AM
justlogicnohate (http://www.realscam.com/members/justlogicnohate/) or us that justbsnofacts, has not responded to our questions. If his friend is in fact in the top echelon, the elite top 194 reps, why is that name a secret? Why is this clown not affirming he is in the downline of his brilliant pocket-emptying friend. Who would pass up the chance to come in under a top earner if MLM is so great???

Luzer
09-24-2013, 02:56 PM
justlogicnohate (http://www.realscam.com/members/justlogicnohate/) or us that justbsnofacts, has not responded to our questions. If his friend is in fact in the top echelon, the elite top 194 reps, why is that name a secret? Why is this clown not affirming he is in the downline of his brilliant pocket-emptying friend. Who would pass up the chance to come in under a top earner if MLM is so great???

Maybe he made it up? Even if his friend made big money, that says nothing for the thousands and thousands of downline being scammed of their hard earned money. I wish the FTC had taken a good look at Herbalife after Ackman went on the offensive. Instead, Ackman is losing big money now.

I also hate that Herbalife and others get a pass because they created their system based on the 1979 Amway FTC ruling. That ruling should be re-examined thoroughly but due to lobbying and key politician's protections, it looks like it will never happen.

kschang
10-02-2013, 03:07 AM
I personally don't think the Amway ruling needs to be reexamined. It needs to be ENFORCED, much like the Omnitrition clarification.

AFAIK, NONE of the major MLM companies actually pay commission on retail. They actually pay on WHOLESALE (ie. purchases by the affiliate), not purchases made by the consumer i.e. retail. As a result, they are indistinguishable from product-based pyramid schemes. And enforcement of Amway Safeguard Rule subset: Ten Retail Customer Rule, as well as periodic audits (also established in Omnitrition case) would have clearly separated the two. But no, DSA and FTC basically pretended that Omnitrition decision never happened.

ribshaw
01-20-2015, 01:55 PM
Just stumbled upon this dare I say shocking research.

Analysis Of IRS Statistics Suggests A 98.94% Financial Failure Rate For Herbalife Sales Leaders

Their analysis suggested that the combination of Herbalife, NuSkin, and Amway participants who netted less than a living income in 2012 was 99.6% of all participants. While MLM proponents have been quick to criticize Messrs. Taylor, FitzPatrick, Brooks and Craig's work, none have published any research that refutes their findings.


Summary

While Herbalife does not disclose the business expenses incurred by its distributors, IRS statistics provide a reasonable basis for estimating these expenses.
Analysis of the IRS statistics and Herbalife’s “Statement of Average Gross Compensation” suggests a financial failure rate of 98.94% for distributors Herbalife categorizes as “Leaders”.
This finding is consistent with other estimates of financial failure rates among Herbalife distributors using different methodologies.
The pending FTC and other governmental investigations of Herbalife should not be limited to whether Herbalife constitutes a pyramid scheme, but also whether Herbalife is deceptively representing its business opportunity.



Analysis Of IRS Statistics Suggests A 98.94% Financial Failure Rate For Herbalife Sales Leaders - Herbalife Ltd. (NYSE:HLF) | Seeking Alpha (http://seekingalpha.com/article/2828286-analysis-of-irs-statistics-suggests-a-98_94-percent-financial-failure-rate-for-herbalife-sales-leaders)

Luzer
01-29-2015, 07:47 PM
I personally don't think the Amway ruling needs to be reexamined. It needs to be ENFORCED, much like the Omnitrition clarification.

AFAIK, NONE of the major MLM companies actually pay commission on retail. They actually pay on WHOLESALE (ie. purchases by the affiliate), not purchases made by the consumer i.e. retail. As a result, they are indistinguishable from product-based pyramid schemes. And enforcement of Amway Safeguard Rule subset: Ten Retail Customer Rule, as well as periodic audits (also established in Omnitrition case) would have clearly separated the two. But no, DSA and FTC basically pretended that Omnitrition decision never happened.

There isn't much difference between Amway and Herbalife. While I doubt that the FTC will have the fortitude to shut down Herbalife, I hope justice prevails and the MLM industry gets cleaned up.

Luzer
03-17-2015, 07:20 PM
I'm not too well versed with how the FTC works but how long do investigations normally take? I hope they don't let Herbalife off the hook.

littleroundman
03-17-2015, 07:37 PM
Just stumbled upon this dare I say shocking research.

Analysis Of IRS Statistics Suggests A 98.94% Financial Failure Rate For Herbalife Sales Leaders

Their analysis suggested that the combination of Herbalife, NuSkin, and Amway participants who netted less than a living income in 2012 was 99.6% of all participants. While MLM proponents have been quick to criticize Messrs. Taylor, FitzPatrick, Brooks and Craig's work, none have published any research that refutes their findings.


Summary

While Herbalife does not disclose the business expenses incurred by its distributors, IRS statistics provide a reasonable basis for estimating these expenses.
Analysis of the IRS statistics and Herbalife’s “Statement of Average Gross Compensation” suggests a financial failure rate of 98.94% for distributors Herbalife categorizes as “Leaders”.
This finding is consistent with other estimates of financial failure rates among Herbalife distributors using different methodologies.
The pending FTC and other governmental investigations of Herbalife should not be limited to whether Herbalife constitutes a pyramid scheme, but also whether Herbalife is deceptively representing its business opportunity.



Analysis Of IRS Statistics Suggests A 98.94% Financial Failure Rate For Herbalife Sales Leaders - Herbalife Ltd. (NYSE:HLF) | Seeking Alpha (http://seekingalpha.com/article/2828286-analysis-of-irs-statistics-suggests-a-98_94-percent-financial-failure-rate-for-herbalife-sales-leaders)

Without any spin doctoring, ifs, buts, rationalization or justification, from Herbalifes' own 2013 Statement of Average Gross Compensation (http://opportunity.herbalife.com/Content/en-US/pdf/business-opportunity/StatementAverageCompensation2011EN.pdf)

http://imageshack.com/a/img538/4961/vLxecx.jpg

* 91.8% of Herbalife sales leaders with a downline received average GROSS payments from Herbalife of less than $2218

Luzer
03-18-2015, 01:42 PM
Some folks on seeking alpha seem to think that the FTC ruling Herbalife will be forthcoming by early April, based on some of the things they've observed, in particular, the way HLF is handling their available cash.

ribshaw
03-18-2015, 03:31 PM
Without any spin doctoring, ifs, buts, rationalization or justification, from Herbalifes' own 2013 Statement of Average Gross Compensation (http://opportunity.herbalife.com/Content/en-US/pdf/business-opportunity/StatementAverageCompensation2011EN.pdf)

http://imageshack.com/a/img538/4961/vLxecx.jpg

* 91.8% of Herbalife sales leaders with a downline received average GROSS payments from Herbalife of less than $2218


I don't know about "no spin doctoring" LRM. The actual number of "distributors" is 434,125, using "sales leaders" makes any income much worse than the chart depicts.

The compensation chart below indicates that 434,125 Distributors (88%) received no payments from Herbalife
during 2012

The majority of Herbalife’s independent Distributors (71%) have not sponsored another Distributor and
are therefore “single-level” Distributors.

Some Distributors (29%) have decided to sponsor others to become Herbalife Distributors

51.0% of all sales leaders as of February 1st, 2011, requalified by February 1st, 2012


================================================== ===============

If 49% of sales leaders fail to requalify from 2011-2012 this be pitched as building residual income seems a tad misleading as well.

Luzer
03-18-2015, 07:16 PM
I personally don't think the Amway ruling needs to be reexamined. It needs to be ENFORCED, much like the Omnitrition clarification.

AFAIK, NONE of the major MLM companies actually pay commission on retail. They actually pay on WHOLESALE (ie. purchases by the affiliate), not purchases made by the consumer i.e. retail. As a result, they are indistinguishable from product-based pyramid schemes. And enforcement of Amway Safeguard Rule subset: Ten Retail Customer Rule, as well as periodic audits (also established in Omnitrition case) would have clearly separated the two. But no, DSA and FTC basically pretended that Omnitrition decision never happened.

I agree with you. For some reason the FTC has no clear cut rules on certain issues. For this reason, I could see them allowing Herbalife to slide by without shutting them down. That would lead to hoards on MLMs copying Herbalife's comp plan and then bragging that the FTC endorses Herbalife or some bunk like that.

Char
03-18-2015, 09:00 PM
I personally don't think the Amway ruling needs to be reexamined. It needs to be ENFORCED, much like the Omnitrition clarification.

AFAIK, NONE of the major MLM companies actually pay commission on retail. They actually pay on WHOLESALE (ie. purchases by the affiliate), not purchases made by the consumer i.e. retail. As a result, they are indistinguishable from product-based pyramid schemes. And enforcement of Amway Safeguard Rule subset: Ten Retail Customer Rule, as well as periodic audits (also established in Omnitrition case) would have clearly separated the two. But no, DSA and FTC basically pretended that Omnitrition decision never happened.

IMHO,

There is a caveat about enforcement of retail sales - the MLM system isn't set up that way. Herbalife doesn't do it because they can't!!!

MLMs snare people with their business owner spiel.

They don't get affiliates by telling them that half of their time, they are to be commission only sales people with no territories.

Anyone can join. There goes your retail customer and your retail markup income although a few might buy odds and ends. That's not enough to make a profit. Anyone buying larger amounts will/should join to save on the price; they are stupid if they don't.

MLM doesn't want retail because it ends the chain. The MLM sytem relies on word of mouth.

The fact that retail sales are practically non-existent only supports my above statements.

We were told to make up names and fake the ten customers in Amway. No way all IBOs have ten legitimate retail customers every month. Why? See above. The system isn't set up that way.

NikSam
03-18-2015, 10:38 PM
So, the shareholder's lawsuit against Herbalife was killed.

Supplement company Herbalife sees pyramid-scheme suit tossed (http://news.yahoo.com/supplement-company-herbalife-sees-pyramid-scheme-suit-tossed-193441790--finance.html)


Stock went up, Headlines (most incorrectly sound as total victory) made a lot of people happy, and some even said that US prosecution of HLF is over.

Dumb, it was just a single lawsuit of several shareholders, judge threw it out and said HLF is not yet ruled as a pyramid and they have no grounds to demand compensation of stock price losses.

Luzer
03-24-2015, 06:10 PM
So, the shareholder's lawsuit against Herbalife was killed.

Supplement company Herbalife sees pyramid-scheme suit tossed (http://news.yahoo.com/supplement-company-herbalife-sees-pyramid-scheme-suit-tossed-193441790--finance.html)


Stock went up, Headlines (most incorrectly sound as total victory) made a lot of people happy, and some even said that US prosecution of HLF is over.

Dumb, it was just a single lawsuit of several shareholders, judge threw it out and said HLF is not yet ruled as a pyramid and they have no grounds to demand compensation of stock price losses.

I hope the FTC shuts down this decades old scam.

kath
03-24-2015, 09:11 PM
such a damn shame! So just who paid off this judge eh????

Luzer
03-25-2015, 03:10 PM
such a damn shame! So just who paid off this judge eh????

That judge's ruling was nothing. What we want is the FTC to let down the hammer.

kath
03-25-2015, 09:34 PM
That judge's ruling was nothing. What we want is the FTC to let down the hammer.
one can only hope, problem is some have been hoping for an awfully long time!

Luzer
04-07-2015, 04:22 PM
one can only hope, problem is some have been hoping for an awfully long time!

http://finance.yahoo.com/news/top-herbalife-members-contacted-law-enforcement-agencies-cnbc-045613858--sector.html

Law enforcement agencies are contacting top Herbalife reps. I hope this is the beginning of the end..........

kath
04-07-2015, 09:26 PM
good to hear and thanks for the link Luzer

Luzer
04-14-2015, 07:14 PM
good to hear and thanks for the link Luzer

I read some news today that Herbalife executives are getting lawyers. Bill Ackman thinks it's because one of them may turn and blow the whistle and the others might be preparing for criminal charges.

I wonder if the FTC will have the stones to shut down Herbalife?

Ackman: HLF execs hiring own lawyers an ominous sign (http://www.cnbc.com/id/102582531)

Realname
04-23-2015, 08:51 AM
I read some news today that Herbalife executives are getting lawyers. Bill Ackman thinks it's because one of them may turn and blow the whistle and the others might be preparing for criminal charges.

I wonder if the FTC will have the stones to shut down Herbalife?

Ackman: HLF execs hiring own lawyers an ominous sign (http://www.cnbc.com/id/102582531)

Maybe the main reason is to defend him against fast food protesters who want $15 hour wage:


"The agitators walked around the stage with signs and shouted slogans demanding higher wages for workers at restaurants including McDonald's, Burger King and Darden-owned Olive Garden.

They called out well-known activist investors like Bill Ackman of Pershing Square Capital Management and Jeff Smith of Starboard Value, both slated to speak at the event later Monday, urging $15 an hour for low-level workers. "

ribshaw
09-24-2015, 07:44 AM
Good read.


The siege of Herbalife - Fortune (http://fortune.com/2015/09/09/the-siege-of-herbalife/)