Speaking of schemes, what about all those so-called anti-aging products that feature Ellen DeGeneres and promote "free" trials? After which, they charge a person's credit card for auto payments that are over a hundred bucks a month? Why are these allowed to a) use and abuse a celebrity's reputation and 2) swindle uneducated people? Isn't this against the law?
10
Seems that the FTC would have trouble finding a beer in Dublin. Of course Herbalife is a pyramid scheme. Maybe they borrowed their staff from the SEC, which couldn't figure out the Madoff ponzi scheme for over 20 years. Or maybe this is just one more tiresome case of corruption.
62
The FTC should also investigate Mary Kay cosmetics.
12
The riddle here is no tougher than "who's buried in Grant's tomb". Isn't it pretty obvious what Herbalife is.
10
A jaw-dropping response. Clearly, something is very wrong at the FTC, too.
15
Ah, the classical dilemma – corporate raider vs. pyramid scheme company – who is the lesser of the two evils? In Herbalife’s case, Ackman was trying to take on the top of the pyramid, while Icahn and Loeb were trying to support it. Now, if the FTC can truly determine whether Herbalife is indeed a pyramid scheme company, we might be able to actually choose between the lesser of the two evils? After all, in a pyramid scheme, the top of the pyramid always exploits the levels below it. So Ackman could either turn out to be a hero or an evil corporate raider trying to manipulate Herbalife for personal gain? Icahn and Loeb will remain corporate raiders, regardless.
16
The confusion at the FTC (and SEC) over what makes a pyramid scheme is rooted in Amway '79. It rests on the attempt to apply circumstantial issues based on jurisprudence, rather than the simple economics, that make any MLM a recruiting scheme, and therefore ultimately an illegal pyramid, prosecutable or otherwise. The point was argued with brilliant simplicity by Prof. William K. Black (the former S&L regulator - see his book "The best way to rob a bank is to own one."), in a recent editorial in Al Jazeera, part of a 5 part series on the topic. He said: 'Any “investment” program that requires you to recruit other “investors” in order to be successful is a form of pyramid scheme. Whether the scheme meets the legal test for fraud need not concern you. That’s what Rule No. 2 is all about. You should never agree to “invest” in such a scheme. I stress the word “never.”' It is really simple economics: If recruiting drives the bus, retail is thrown under the bus.
The recent whistleblower novel, "Downline... an intolerable potential to deceive," by E. Robert Smith, tells the whole sordid history in novel form. The title is based on a ruling from a former FTC Commisioner, Rand Paul Dixon, who had a firm grasp of the obvious, which was lost in the Amway '79 case.
The confusion at the agencies (FTC/SEC), rests on the same issues as Amway '79. Instead of arguing the economic drivers of the scam, they get side-tracked, discussing the conditions that make the scam not a scam.
The recent whistleblower novel, "Downline... an intolerable potential to deceive," by E. Robert Smith, tells the whole sordid history in novel form. The title is based on a ruling from a former FTC Commisioner, Rand Paul Dixon, who had a firm grasp of the obvious, which was lost in the Amway '79 case.
The confusion at the agencies (FTC/SEC), rests on the same issues as Amway '79. Instead of arguing the economic drivers of the scam, they get side-tracked, discussing the conditions that make the scam not a scam.
17
Try applying the RICO Statutes to these organized, highly sophisticated thieves.
10
It seem the Federal Trade Commission had been captured by the likes of Amway and Herbalife. Just like the treasury department has been co-opted by Wall Street and the NY Fed pays homage to Goldman Sachs. Shameful. Where does it stop?
14
What is Herbalife, indeed. Why does this guy [Ackman] get so much press? There were days when there were more pictures of him in the NYT than people who do important and difficult work; or who make a concrete contribution to our economic well-being. Who cares about all this? It's smoke and mirrors.
1
Of course they are pyramid schemes preying on ill informed hopesters and their families that purchase these useless things at exorbitant markups.
3
The sad fact is that people without much money are the most common victims of efforts to start businesses that really have no prospects.
I, among many others, missed figuring out what was going on with the housing market in the run up to disaster, 2007 and 08. But I knew something was seriously wrong when I heard radio talk shows dealing with buying condos in Florida. Then, I saw a television report about people buying houses on spec over the Internet, sight unseen. I should have put 2 and 2 together and gotten 5. (We all should have read or re-read Thomas Wolfe's novel, "You Can't Go Home Again" to remind what a speculative bubble looks like up close.)
Here's one rule: if you hear an "opportunity" advertised on radio or television or in magazines, it is already way too late. It also is usually too late by the time your uncle tells you about it. Likewise, if you are hearing common talk among co-workers and friends: too late. I remember a few yrs. ago they were advertising "own your own pay phone" (dodo birds, anyone?)
All over Texas, there were farms with Emoos (big birds) running around about 10 yrs. ago. Why? If they were so expensive to buy, just think what you can sell them for! Or maybe not sell them at all
There are often a lot of faked IPOs out there, too, but the guys who are allocated the first day shares usually make money, because they sell the stock very quickly, before it tanks.
So many legal practices are, in fact, wrong and flat out immoral.
Doug Terry
I, among many others, missed figuring out what was going on with the housing market in the run up to disaster, 2007 and 08. But I knew something was seriously wrong when I heard radio talk shows dealing with buying condos in Florida. Then, I saw a television report about people buying houses on spec over the Internet, sight unseen. I should have put 2 and 2 together and gotten 5. (We all should have read or re-read Thomas Wolfe's novel, "You Can't Go Home Again" to remind what a speculative bubble looks like up close.)
Here's one rule: if you hear an "opportunity" advertised on radio or television or in magazines, it is already way too late. It also is usually too late by the time your uncle tells you about it. Likewise, if you are hearing common talk among co-workers and friends: too late. I remember a few yrs. ago they were advertising "own your own pay phone" (dodo birds, anyone?)
All over Texas, there were farms with Emoos (big birds) running around about 10 yrs. ago. Why? If they were so expensive to buy, just think what you can sell them for! Or maybe not sell them at all
There are often a lot of faked IPOs out there, too, but the guys who are allocated the first day shares usually make money, because they sell the stock very quickly, before it tanks.
So many legal practices are, in fact, wrong and flat out immoral.
Doug Terry
10
Of course it is: an exercise in common sense. Perhaps another 'loophole' in the scheme of things that needs to be tightened.
I wrote extensively about Market America, and how they financially destroyed my wife:
http://newyorkleftist.blogspot.com/2012/03/market-america-market-artific...
http://newyorkleftist.blogspot.com/2012/03/market-america-market-artific...
1
In a letter to me the FTC wrote that their (few and far between) successful pyramid scheme cases "can provide guidance to the public to help identify illegal pyramid schemes." In the very next sentence, as with the 2010 doc you quote, they wrote that distinguishing a pyramid scheme from legal multilevel marketing involved "a fact-specific inquiry." In other words, the FTC's notion of consumer protection in this regard is to let consumers read court cases. Shameful and irresponsible. -William Keep-
9
I have to chuckle about a hedge fund manager, or any "player" on Wall St. for that matter, going on about pyramid/ponzi schemes. For my money, that's what all of it really is.
5
Just another way the 1% get richer by conning the rest of us from the Koch brothers to Republican politicians.
2
Crooks, pure and simple with government approval.
4
The alleged Herbalife pyramid scheme has been reported on for several years now. It seems as though if it were truly a pyramid scheme it would have collapsed by now. That being said, I'll let Ackman and Icann battle it out to see who is right. I don't really care.
There's a sucker born every minute....
5
Personally, I want to get in on this new product that makes wrinkles and lines disappear without expensive creams or surgery; I've seen hundreds of photos of how amazingly it works. I think it's called 'Photoshop.' Anyone know anything about this?
21
Marketing to suckers is the name of the game in America. We haven't progressed very far from the days of the traveling huckster who sold snake oil in vials and quick left town before his potions either made you sick or didn't make you better.
We have inherited the dream of a promised land where magical thinking, or the placebo effect, will cure our ills. Just reach out to my hand reaching out to pocket your meager resources.
On TV it's the commercials for cheaper (read less) insurance, a Big Pharma pill that will allow you to attend your daughter's wedding before you die, a reverse mortgage that will hand you your home equity TODAY! minus a big chunk siphoned away, a breakfast cereal that will make you slim and trim, or the preposterous claim that sugar is natural so go for it.
In my ideal school, there would be a large part of the curriculum dedicated to seeing through the phoney baloney that constitutes our national narrative, from the fudged "truths" uttered by sidestepping politicians to that insistent guy in the car lot offering a low interest loan on a car with a fluctuating price tag depending on how much he can take you for.
We are always been had in this culture and the trick is never to believe the Good Fairy from Too Good to Be True Land. Ever.
For every sucker born every minute there's a glad handing con artist and he's coming for you. Don't let him get you at hello.
We have inherited the dream of a promised land where magical thinking, or the placebo effect, will cure our ills. Just reach out to my hand reaching out to pocket your meager resources.
On TV it's the commercials for cheaper (read less) insurance, a Big Pharma pill that will allow you to attend your daughter's wedding before you die, a reverse mortgage that will hand you your home equity TODAY! minus a big chunk siphoned away, a breakfast cereal that will make you slim and trim, or the preposterous claim that sugar is natural so go for it.
In my ideal school, there would be a large part of the curriculum dedicated to seeing through the phoney baloney that constitutes our national narrative, from the fudged "truths" uttered by sidestepping politicians to that insistent guy in the car lot offering a low interest loan on a car with a fluctuating price tag depending on how much he can take you for.
We are always been had in this culture and the trick is never to believe the Good Fairy from Too Good to Be True Land. Ever.
For every sucker born every minute there's a glad handing con artist and he's coming for you. Don't let him get you at hello.
14
Out here in Illinois where I live we have cows, and cows produce Herbalife, and you can find it everywhere in the pasture.
19
All MLM's are pyramid schemes. Just look at the % of those who earn their investment back vs those who don't. It's staggering.
9
And, what is the difference between Herbalife and our government?
1
I don't know which is more infuriating, pyramid schemes and their preying on the desperate, or that a few rich guys can play with these companies with their pocket change.
3
What's worse that Herbalife's pyramid scheme is its products don't actually make anyone lose weight!
6
In the early 1950s there was a television show called Racket Squad. It can still be found on the internet and each episode takes apart some kind of scheme to separate everyday folks from their money. There are so much creative energy devoted to that idea that the script writers had an easy time I expect. Anyway, this show served as a kind of mass warning for people to be on the look out and read the fine print because, in their immortal tag line: "There is always someone out there who will slap you on the back with one hand while picking your pocket with the other."
15
This scenario where Ackerman's hedge fund positioned itself to be the #1 hedge fund with record gains for 2014, while gaining money by shortselling Herbalife by exposing it as a pyramid scheme (which it might be) is a soap opera from life in the shark tank. The FTC claims not to have a definition of pyramid schemes on the books yet is charged with overseeing the financial behavior of the stock market just underscores the need for politicians like Elizabeth Warren to be in a position to reform the regulatory capacity of both the SEC and CFTC.
As it stands, the market is like the wild, wild West with the financial future of millions of American's 401Ks left hanging in the wind. When the foxes are left in charge of protecting the hen house without any farmers in plain sight, the American people should get ready for a life without any KFC or scrambled eggs.
As it stands, the market is like the wild, wild West with the financial future of millions of American's 401Ks left hanging in the wind. When the foxes are left in charge of protecting the hen house without any farmers in plain sight, the American people should get ready for a life without any KFC or scrambled eggs.
9
Multilevel marketing companies play mind tricks on the poor and the desperate. They hold cult like mass meetings working people up into a frenzy thinking they have finally found a magical way of making easy money. In reality, they are being asked to pay the company to work as sales associates for the company to sell overpriced products. Years ago, I recall Herbalife required their potential distributors to pay for a starter kit to have the "privilege" of selling Herbalife vitamins for the company. It is the equivalent of Sears require job applicants to pay $100 for its catalog and buy bunch of washers and dryers as a pre-requisite to working as an sales associate there. On top of that, they won't even pay you a wage. It is the worst deal ever.
7
The major "protection" for multi-level marketing schemes is the Mormon Church. The church strongly encourages families to have their own home business in addition to the husband's job. Usually this ends up being the wife pressured to join a MLM pyramid, run by top members of the church (see Mitt Romney's top donors). Resisters get calls and meetings with their elders. Fellow Mormons, friends, and co-workers of Mormon women are familiar with the constant pitches for these scams. In western states many companies need to have explicit, strong policies against "MLM"ing the workplace.
Any attempt in congress to regulate pyramid schemes ( or even labeling nutritional supplement ingredients) is blocked by the Utah & Idaho delegations, with hand from the rest of the Republican party and Harry Reid. Other religions and states are involved in MLMs, but the backbone is Utah and the Mormon church.
Any attempt in congress to regulate pyramid schemes ( or even labeling nutritional supplement ingredients) is blocked by the Utah & Idaho delegations, with hand from the rest of the Republican party and Harry Reid. Other religions and states are involved in MLMs, but the backbone is Utah and the Mormon church.
16
America is full of marketing schemes; false advertising, even the news media sells false stories. The fact Herbalife has been around for so long says something- a cover up. Their products are all hype. Think about all the "new" products that suddenly appear claiming weight loss, or energy, or "ionizing" harmful air falling upon us. Goes on and on. Americans need to be educated, research the claims first. If something is so good, then why hasn't it been known before now, a question I ask when someone tells me of a perfect remedy. Even the names of some of these products are laughable. America's marketing tactics are successful - preying upon the ignorant masses.
7
Increasingly these schemes and Ponzi investment schemes are successfully targeting the retired and even more elderly senior citizens. A relative of mine fell prey to one and lost tens of thousands of dollars of hard-earned savings. He is a retired military officer and teacher. He was desperate to earn more income on his savings, as interest rates have been so low for many years and his wife's medical expenses kept going up. Although he doesn't have dementia, his faculties have declined since he turned 80. My own father was close to being ripped off by a so-called "respectable" stock brokerage, whose client he had been for decades. It was only when our family lawyer wrote to them that he had been diagnosed with Alzheimer's, and he became unable to talk on the phone, that they stopped calling him with high-risk "investment opportunities." This is going to become a bigger and bigger problem as the baby boomers age, with the prospect of long lives. When are we going to insist on effective regulation and enforcement with regard to investments and sales of financial products? When did we let the sociopaths take over? Why do we continue to tolerate these frauds?
17
Let's ne honest. We have a health supplement company running a purported pyramid scheme while producing overpriced products of questionable health benefit. We have a manager working overtime to profit from the destruction of said company and corporate titans acting like spoiled children in broad daylight on television, just a common situation. Meanwhile, the government watchdog agency responsible for policing this mess turns a blind eye to the situation, no longer able to even define the problem. I see, that with the complicity of a government regulator that is in the pocket of the thieves, because countless desperate poor people lose all money they have and their hopes turn to despair. Their misery is the fuel that makes it all work. This is bad.
18
Mr Nocera writes that the issue is whether Herbalife is a pyramid scheme. Isn't the more interesting point the demonstration of the power of wealthy "activist" investors? It seems that if you're a billionaire you can short a stock and then spend money undermining the company- a sort of self-fulfilling investment strategy. How can this be a good thing? Everyday we are bombarded with more examples of how the rich can rig the game and yet the political party in power thinks the division of wealth is not an issue.
4
NO. that is not the issue at hand. the issue is indeed whether Herbalife is a pyramid scheme. If it is, Ackmans thorough research and massive bet will have served to bring down one of the biggest, most harmful frauds of all time.
Wall Street has its own problems for sure. but countless articles about Herbalife only talk about the Hedge Fund Wars - and never ask "What is Herbalife really?" as this article thankfully has.
I have followed MLMs for a few years now, and Herbalife IS a massive fraud by the way. Lies upon lies, preying on the vulnerable and poor. Herbalife and all other MLMs are a cancer on our society.
Wall Street has its own problems for sure. but countless articles about Herbalife only talk about the Hedge Fund Wars - and never ask "What is Herbalife really?" as this article thankfully has.
I have followed MLMs for a few years now, and Herbalife IS a massive fraud by the way. Lies upon lies, preying on the vulnerable and poor. Herbalife and all other MLMs are a cancer on our society.
5
I'm no fan of Ackman or any of the billionaires playing this game, but Herbalife needs to be seriously investigated as a pyramid scheme.
I fear it won't, as most on the bottom rung of Herbalife are poorer and blame themselves for not doing better at what they're told is their path to riches. They've been around long enough to have left a trail, get on it FTC.
I fear it won't, as most on the bottom rung of Herbalife are poorer and blame themselves for not doing better at what they're told is their path to riches. They've been around long enough to have left a trail, get on it FTC.
6
A frustrating piece by Joe. I don't come away knowing much more than I already did - other than the FTC is even more clueless than I suspected.
I was also disappointed that Joe didn't mention Orren Hatch who has single-handedly ensured over many years that supplements are not regulated as drugs by the FDC. Can you guess why he has so staunchly lobbied against such regulations? (Hint: follow the money: http://www.nytimes.com/2011/06/21/us/politics/21hatch.html)
I was also disappointed that Joe didn't mention Orren Hatch who has single-handedly ensured over many years that supplements are not regulated as drugs by the FDC. Can you guess why he has so staunchly lobbied against such regulations? (Hint: follow the money: http://www.nytimes.com/2011/06/21/us/politics/21hatch.html)
16
Wouldn't that have been a little off-topic? The nutritional-supplement industry may be a racket (or it may not be), but such companies don't have to operate as pyramid schemes.
2
Key point? Government has rolled over for the industry. Which means, while I appreciate Mr. Nocera's effort to bring this into the limelight, absolutely nothing will be done to stop or change this. Riddles, scams, pyramids, ponzis, it makes no difference in America. Wall Street and billionaires control the United States, both in government and with politicians. They can and will do whatever they want.
15
Don't forget Marykay. I have found the best method is as follows: as soon as a friend or family member gets sucked into an Amway, etc. Have the whole family make it clear that no one will buy any of the items because the products are poor quality and unhealthy to use, and get them to return everything as soon as possible to the ponzi company.
13
The DeVos family, founders of Amway, are long-time big donors to the GOP. Anyone who thinks the FTC will risk facing the wrath of a GOP Congress by going after such companies is naive.
2Big2Prosecute. It isn't just for banks.
2Big2Prosecute. It isn't just for banks.
26
Bill Ackman was one of the smartest guys during what I'd like to call Ratingsgate, the capture of the ratings agencies by culpable companies.
"Confidence Game," by Christine Richard, details Mr. Ackman's forays against MBIA, a bond insurer that Mr. Ackman maintained was actually severely under-capitalized. The government agencies to whom Mr. Ackman appealed seemed loath to lift a finger on behalf of the general public.
The same agencies, with a little detective work, probably could have discovered that AIG was also selling coverage it couldn't provide and that millions of deals would have to be unwound should the markets contract suddenly and lack the liquidity that everyone assumed AIG would provide.
How hard is it to figure out that a company is making money by selling product in bulk to schmendricks?
Affinity marketing is a good idea that bypasses the surly aggressiveness and cut-throat capitalism of shareholder-led corporations. You buy from me wholesale, and then you sell to your friends retail. What could be better?
And all of this works great if you're willing to turn your friends into customers. Many people balk at that step. So, companies like Amway and Herbalife take advantage of people's inaccurate projections to unload large quantities of product.
Republicans always want to cut government. My suggestion is to start with the CIA and the SEC. Then we can ask Elizabeth Warren to design a new agency that protects customers rather than future employers.
"Confidence Game," by Christine Richard, details Mr. Ackman's forays against MBIA, a bond insurer that Mr. Ackman maintained was actually severely under-capitalized. The government agencies to whom Mr. Ackman appealed seemed loath to lift a finger on behalf of the general public.
The same agencies, with a little detective work, probably could have discovered that AIG was also selling coverage it couldn't provide and that millions of deals would have to be unwound should the markets contract suddenly and lack the liquidity that everyone assumed AIG would provide.
How hard is it to figure out that a company is making money by selling product in bulk to schmendricks?
Affinity marketing is a good idea that bypasses the surly aggressiveness and cut-throat capitalism of shareholder-led corporations. You buy from me wholesale, and then you sell to your friends retail. What could be better?
And all of this works great if you're willing to turn your friends into customers. Many people balk at that step. So, companies like Amway and Herbalife take advantage of people's inaccurate projections to unload large quantities of product.
Republicans always want to cut government. My suggestion is to start with the CIA and the SEC. Then we can ask Elizabeth Warren to design a new agency that protects customers rather than future employers.
13
Talkin' 'bout Ponzi schemes and such, would someone (NYT) please take a look at the oil market where prices have dropped 50% within a space of only 6 mos! Was it rigged all along by speculators (like what happened with the Enron traders and CA electricity in the early 2000's) while regulators were either willfully ignorant or just looked the other way?
6
A relative of mine outside the US got involved with this company for a few years. She is now so deeply in debt she has to work three jobs to get back on her feet. She had to sell her car, and rent a room out in her apartment to survive, at that point, she decided it was time to quit! What a racket!
9
Of all the thoughtful writing I have read on Herbalife, this one has the distinction of adding absolutely nothing to the debate. I hope no one wasted their money paying for this work!
1
I am surprised there is no mention of accounting. Can't the true source of cash flow be in the books? If this is a public company and there are big hedge fund's betting both ways who has done the accounting?
7
With the right accountants, any company can be profitable; there are many gaps in GAAP.
4
Herbalife and Amyway are both contributors to political parties, especially Amyway. Their money helped Michigan Governor Snyder get elected.
11
We still have plenty of witch doctors aka traditional healers in our midst because we are scientifically illiterate, gullible, greedy and fearfully mortal to a fault.
There is no life in herbs. Any more than there is any health or science in chiropractic. We have magical bracelets with healing ray power and medicines to make" our nature rise" and aid our memory. There are super belts with super powers.
The all-seeing eye at the pinnacle of this pyramid knows that you can fool enough of the people most of the time to make a fortune. By nature we all want to go to Heaven without the inconvenience of living either a morally accountable life or dying.
That is why there have been three massive pyramids standing on the Giza Plateau for 4500 years. We want it easy here in life and we want to take it with us after our days are done.
That "There's a sucker born every minute" is the basis for pyramids then and now.
Get a life! Or get yourself a mojo hand and some high john the conqueror root and bat wing and newt skin.
There is no life in herbs. Any more than there is any health or science in chiropractic. We have magical bracelets with healing ray power and medicines to make" our nature rise" and aid our memory. There are super belts with super powers.
The all-seeing eye at the pinnacle of this pyramid knows that you can fool enough of the people most of the time to make a fortune. By nature we all want to go to Heaven without the inconvenience of living either a morally accountable life or dying.
That is why there have been three massive pyramids standing on the Giza Plateau for 4500 years. We want it easy here in life and we want to take it with us after our days are done.
That "There's a sucker born every minute" is the basis for pyramids then and now.
Get a life! Or get yourself a mojo hand and some high john the conqueror root and bat wing and newt skin.
9
A recent This American Life episode dealt with another pyramid scheme (sorry, "network marketing") company that is presently ruining the finances of the poorest Americans.
The part that stood out for me is their interview with a person sucked into the con. The company clearly published that only 4% of the participants will ever make any kind profit; only 1% will ever make a living. But they go out of their way to make it sound like *effort* and *hard work* are what distinguishes them from the rest who will lose money.
But the reality is that what matters is *when* you join, not how hard you work. The 1% is exclusively populated by early entrants. And *that* is what distinguishes a pyramid scheme from any legitimate business. Only the first 2 levels make money, the 3rd breaks even, the rest struggle to sell into a saturated market, paying for motivational seminars and "educational" sales programs and products to sell to their friends that they end up using themselves.
Why doesn't the government care? Maybe they gave up for the same reason they stopped trying to get Scientology to pay their taxes? Behind the company stands huge, dedicated horde who, even though they are the victims, will aggressively defend the one victimizing them.
The part that stood out for me is their interview with a person sucked into the con. The company clearly published that only 4% of the participants will ever make any kind profit; only 1% will ever make a living. But they go out of their way to make it sound like *effort* and *hard work* are what distinguishes them from the rest who will lose money.
But the reality is that what matters is *when* you join, not how hard you work. The 1% is exclusively populated by early entrants. And *that* is what distinguishes a pyramid scheme from any legitimate business. Only the first 2 levels make money, the 3rd breaks even, the rest struggle to sell into a saturated market, paying for motivational seminars and "educational" sales programs and products to sell to their friends that they end up using themselves.
Why doesn't the government care? Maybe they gave up for the same reason they stopped trying to get Scientology to pay their taxes? Behind the company stands huge, dedicated horde who, even though they are the victims, will aggressively defend the one victimizing them.
17
And That is why we just got the Government we deserve
2
In my opinion, multi-level marketing and pyramid scheme are the same thing. The products they produce, if anybody sells them, are grossly overpriced. Amway and Herbalife are pyramid schemes. Stay away.
12
Why would anybody take a chance on a company of questionable legitimacy? Apparently even the feds can't decide about this one.
5
There is no moral imperative in this country. Neither the FTC nor the politician has any interest except their own, foremost in mind. The Mafia at least showed "honor" among thieves. The hypocrisy which we allow to guide us makes us all guilty. Drunk on Saturday night and to church on Sunday morning. The American way.
13
In my view, Herbalife is worse than a pyramid scheme - it's a cult. My 20 year old son got tangled up with Herbalife months ago. We've watched him drop out of school, lose all his non-Herbalife friends from high school & college (they quickly tired of his constant pushing product on them), and give up his future career ambitions as he's wrapped his life entire around Herbalife. Herbalife sponsors huge rallies to get young kids fired up and hooked on the program - corporate leadership tells the kids how they can have marvelous and fit bodies and provides testimonials about how sufficiently motivated folks can make over $5000/month selling product. They have a phony 'promotion' system where kids are named 'health coaches' and 'supervisors' after participating in some meeting or rally - giving a false sense of advancement. Its utter nonsense, but to the kids they prey on, its golden and there's no way to convince them that they're being used (and in my experience, its mostly kids in high school or college that are targeted for recruitment). It's been devastating to watch a bright kid with tons of potential put his life on complete hold. He's lost weight and is now very trim and fit - but he gives all credit to Herbalife and no credit to his own hard work and discipline. I'm happy for his health benefit, but the collateral damage to all the other areas of his life and our family is not worth it.
70
Way back in 1986 a college friend who had "joined" Herbalife in its very early days, practiced some very aggressive recruiting tactics to get me to join including the promise of untold wealth, sermons about the guilt and punishment I would face by turning down an opportunity sent by God, and more.
I told her that I found her approach alarmingly forceful, and that I was uncomfortable making money on the backs of other I would recruit. She told her Herbalife training had taught her that you don't get rich being weak, that everyone is only responsible to himself and if people she recruited didn't get rich it was their own fault.
I passed and went on to other less lucrative things while she became a multi-millionaire, but I sleep very well at night. I like to think she doesn't.
Years later I ran into another friend she had recently recruited (therefore much further down the pyramid). He told me he had knocked himself out for a year before realizing that there was no way for him to make money since it all flowed to the top.
Herbalife IS a pyramid scheme thinly disguised as MLM. It is also a microcosm of the pyramid scheme of today's America, where the system is rigged to ensure that money flows only upward. Perhaps that is why the FTC is so uninterested in doing the not-so-hard work of exposing these craven schemes.
I told her that I found her approach alarmingly forceful, and that I was uncomfortable making money on the backs of other I would recruit. She told her Herbalife training had taught her that you don't get rich being weak, that everyone is only responsible to himself and if people she recruited didn't get rich it was their own fault.
I passed and went on to other less lucrative things while she became a multi-millionaire, but I sleep very well at night. I like to think she doesn't.
Years later I ran into another friend she had recently recruited (therefore much further down the pyramid). He told me he had knocked himself out for a year before realizing that there was no way for him to make money since it all flowed to the top.
Herbalife IS a pyramid scheme thinly disguised as MLM. It is also a microcosm of the pyramid scheme of today's America, where the system is rigged to ensure that money flows only upward. Perhaps that is why the FTC is so uninterested in doing the not-so-hard work of exposing these craven schemes.
88
As a member of Herbalife. I can tell you that most of you are far off base. The start up cost is under $100 and gives u almost as much in product as you paid. From there, if you are not succeeding up the ladder, it is $15/year. Hardly eating into anyone's savings. The training cost money though, but those are 100% voluntary and are essentially just motivational speeches mixed with product knowledge and success stories. One of those motivational speeches changed my life and the way I think making me a happier person. It has nothing to do with the product or the business, Im just thinking better.
As for the product. Whether or not the product is proven to work, it has worked for me. It has worked for my coaches, it has worked for many others. Will it work for you? Who knows. You could try or you could find another way to get the same results.
Herbalife is a simple thing. More protein and fiber makes you full and you eat less. Add in vitamins and nutrients and you're healthier (which I can show you many examples of being true, just look at the skin and hair of anyone using this product regularly). But you are over paying for the product, you are paying for a system. These products have similar products sold at GNC, Walmart and other places. But this program includes a metric system and coaching to help achieve results.
And lastly, as someone else pointed out in another comment. People in this (and many other) Multi Level Marketing programs actually learn business practices.
As for the product. Whether or not the product is proven to work, it has worked for me. It has worked for my coaches, it has worked for many others. Will it work for you? Who knows. You could try or you could find another way to get the same results.
Herbalife is a simple thing. More protein and fiber makes you full and you eat less. Add in vitamins and nutrients and you're healthier (which I can show you many examples of being true, just look at the skin and hair of anyone using this product regularly). But you are over paying for the product, you are paying for a system. These products have similar products sold at GNC, Walmart and other places. But this program includes a metric system and coaching to help achieve results.
And lastly, as someone else pointed out in another comment. People in this (and many other) Multi Level Marketing programs actually learn business practices.
6
Having watched/endured 2 employees get involved with Amway, I have real concerns about the personal effect that pyramid schemes have on those least able to afford it - the drug-like euphoria/hysteria of 'meetings'; being told you are special and entitled lots of money; that you are being taken advantage of/abused by your regular job; that its OK to ridicule those others who work at jobs, to ridicule your boss; that you are justified in exploiting and annoying your friends; that you should avoid friends and family who are not believers; that God wants you to be successful selling soap; that this is God's work, just look at our Leaders who are so religious. This mindset does not teach or encourage diligence, responsibility, humility, patience, tolerance - instead it teaches arrogance, kick-down exploitation and entitlement. And usually leads to losing big on money and friends. Regardless of the questionable legalities and moralities of pyramid schemes, it is the long-term damage to vulnerable real people, usually poor people, on their personalities, expectations and friendships, that is the worst effect.
78
As a consumer with no legal training and no particular expertise in marketing, I am amazed at the number of simple and common sense suggestions I could make to agencies like the FTC to help consumers. Hotels don't list extra "resort" fees in their rates, but you can't refuse them. Airlines again want to advertise ticket prices without including taxes. Buying junk through TV incurs steep shipping and handling charges which are the same for every buyer. Why aren't they included in the price? How many common sense changes could easily be made to provide truth in advertising and aid Joe Consumer?
Is there some part of the FTC that is supposed to look out for the consumer, or is it just a self-perpetuating government bureaucracy whose main task is to stay in business?
Is there some part of the FTC that is supposed to look out for the consumer, or is it just a self-perpetuating government bureaucracy whose main task is to stay in business?
74
This comment is somewhat tangential, but in reading this I was reminded of the MLM company Nu Skin. Way back in the late 1980s, when that company was young, I was roped into sitting through a presentation by a Nu Skin representative. This meeting took place in a law office (the rep was the witless girlfriend of one of the attorneys), and those getting the pitch were a few well-educated professionals. I mention that detail about education because after showing a mind numbing film about the Nu Skin company and products, and giving her own pitch, this rep requested that we all provide her with our social security numbers. Yes, you read that correctly -- our social security numbers. And one person actually did so! Of course, Nu Skin has since been outed for the pyramid scheme it always was, but I read that it has been relaunched in China. Just the place for it, I'd say.
36
I did Herbalife. I got into it, learned about it, drank of the KoolAid, sold product, recruited others... the works.
What I saw was:
A system riddled with myths and cultish behavior, and a cult of personality system that was active at the international, national, regional, even local level - each with it's own little shining stars for the rest of us to look up to.
A saw people selling middle quality goods - decent enough in their way, but not really worth the money, the hard sell, and even myth-making about the incredible attributes of the food, pill, shake, soap, cosmetic, or gadget in question. They were just... products. The world is filled with some better, some worse. However, most goods were way overpriced for the quality of the product as compared to equivalent product bought on the open market.
I saw people strong arming others to buy product they did not need, or to fill quotas.
I saw people selling advanced products they did not understand, including items that needed home installation by reasonably competent people... that did not exist.
And always: more People to sell to, more people under you... more, more, more!
I saw people struggling to turn the system into something for themselves and their families. Most made little to no money. Even those making any money likely worked harder at it than they would stocking shelves, for about the same money.
Verdict: it seemed to be a pyramid scheme. Most definitely! Lot's of promise. Little delivery.
What I saw was:
A system riddled with myths and cultish behavior, and a cult of personality system that was active at the international, national, regional, even local level - each with it's own little shining stars for the rest of us to look up to.
A saw people selling middle quality goods - decent enough in their way, but not really worth the money, the hard sell, and even myth-making about the incredible attributes of the food, pill, shake, soap, cosmetic, or gadget in question. They were just... products. The world is filled with some better, some worse. However, most goods were way overpriced for the quality of the product as compared to equivalent product bought on the open market.
I saw people strong arming others to buy product they did not need, or to fill quotas.
I saw people selling advanced products they did not understand, including items that needed home installation by reasonably competent people... that did not exist.
And always: more People to sell to, more people under you... more, more, more!
I saw people struggling to turn the system into something for themselves and their families. Most made little to no money. Even those making any money likely worked harder at it than they would stocking shelves, for about the same money.
Verdict: it seemed to be a pyramid scheme. Most definitely! Lot's of promise. Little delivery.
85
You know what else is a pyramid scheme? Most professional graduate programs these days. Ask a veterinarian who is $200k in debt, working a job at $80k a year if they were recruited, sucked in, and paid exorbitant fees for something they can never hope to repay. Ask a lawyer the same question. Those at the very top do well, the rest? Not so much.
2
Companies like Herbalife hurt many people. When dementia just began to take hold of my parents, they became involved with Herbalife. The Herbalife rep moved into their home with them and drained off all of their assets and belongings, including the money from the sale of their home. It all went to this person and Hebalife and there was no stopping it since they had the right to spend their money as they pleased It is a company that hurts vulnerable people.
In the end my parents had to be supported by the government through Medicaid in a nursing home for 10 years each instead of paying for their own care with their considerable assets. This is on top of the fact that they were left penniless to survive in a brutal healthcare system. Yes they were greedy, but they were also not thinking clearly. They wanted to become rich again and were vulnerable enough to believe it.
This company and others like it prey on people who can least afford it and should be investigated, but since the government only seems to care about the wealthy and business owners, I doubt that will ever happen.
In the end my parents had to be supported by the government through Medicaid in a nursing home for 10 years each instead of paying for their own care with their considerable assets. This is on top of the fact that they were left penniless to survive in a brutal healthcare system. Yes they were greedy, but they were also not thinking clearly. They wanted to become rich again and were vulnerable enough to believe it.
This company and others like it prey on people who can least afford it and should be investigated, but since the government only seems to care about the wealthy and business owners, I doubt that will ever happen.
17
The non-response you got from the F.T.C. rankled me in a way it shouldn't when a Democrat is in the White House. Time and time again, over the past six years, I have noticed just how close President Obama's administration resembles that of George W. Bush. Had we gotten that sort of pandering reply during his term in office, we would have lit up like a Christmas tree with rightful indignation and we would have blamed it on GOP intransigence and their "business friendly" bent. Yet here we have supposedly liberal Harvard prof President who clearly only responds (like most pols) when the pressure gets too high, like he did with the VA. It was utterly ignored -- until it no longer could be.
5
While I sympathize with your outrage, I don't think it's fair to join the chorus blaming Obama for what he can't do. He has enough wolves baying at his heels for the stuff he can affect that expecting him to manage the rulemaking of the FTC. He is doing what he can by executive fiat, and still seems to be the most effective actor in the room.
I also sympathize with the irritation that the office of president only appears to be occupied by people who seem to have to knuckle down to the conventions, and are too much in the pocket of too big to fail finance and marketing. But I shudder to think how much worse Romney would have been. I think we have no idea how bad it could have been.
I also sympathize with the irritation that the office of president only appears to be occupied by people who seem to have to knuckle down to the conventions, and are too much in the pocket of too big to fail finance and marketing. But I shudder to think how much worse Romney would have been. I think we have no idea how bad it could have been.
9
People want the pyramid-scheme decision to be binary - it is not - many businesses adopt the basic elements of the scheme as part of their regular practices.
They prey on folks who want to buy a piece of a magical enterprise that will reward them regardless of their abilities.
See - many franchises; real-estate licenses; community/professional college courses among thousand of others - including Herbalife.
They prey on folks who want to buy a piece of a magical enterprise that will reward them regardless of their abilities.
See - many franchises; real-estate licenses; community/professional college courses among thousand of others - including Herbalife.
7
When I worked in the Attorney General's Offices in Pennsylvania and then New Mexico, beginning more than 30 years ago I did a number of lawsuits against pyramid schemes. The term "multilevel marketing" was just coming into use back then. It was used by pyramid schemes to give themselves a veneer of respectability but it had no substantive meaning. The thing that struck me about these schemes was that they worked and people signed up in droves, even if the "product" they were supposedly selling didn't exist and the promoters were simply stealing their money.
Virtually everyone who participated lost their money, but many people were angry when we shut the schemes down because they believed the government was taking away their chance to get rich. In hard times, pyramid schemes can have a seductive allure to the desperate and gullible, but they are and always have been a scam.
Virtually everyone who participated lost their money, but many people were angry when we shut the schemes down because they believed the government was taking away their chance to get rich. In hard times, pyramid schemes can have a seductive allure to the desperate and gullible, but they are and always have been a scam.
71
The additional glaring problem with companies like Herbalife is that their products are not proven to be either safe or effective before marketing. This is a scam. These companies operate using FDA "structure function claims" which do not require scrutiny before marketing. Most of these products are waste of money.
24
The reason for the FTC's existence, and the reason its p.r. employee has his or her job, is to serve the best interests of the American public. Instead, the response of the person to whom Mr. Nocera spoke, and the other FTC employees with whom he or may have consulted, demonstrates contempt for the interests of the citizens who employ them. If the FTC Commissioners take their duties seriously, they should act to prevent the recurrence of this kind of nonsense in the future.
39
The FTC, like the rest of our government, no longer represents the people of the USA (as an adjunct of Congress, which passes laws, the Executive which suggests and enforces, and the Judiciary which supposedly upholds those), but rather like the rest of "our" government, represents the interests of Big Business, and nothing else. We live in an All-American Fascist state where, surprise surprise, the government and business are fused together as a single entity. It is a very old American saw: "The business of America is business." Or as our recent illustrious former President, Yale edu(ma)cated said it, "bidness." Perhaps he was right - government to the highest bidder. Bidness Is US(A)!
www.jonjost.wordpress.com
www.jonjost.wordpress.com
38
Since corporations are people too my friend, how can you say that the FTC doesn't serve the American people? (sarcasm off now)
2
Why not just tell us what % of Herbalifes profits come from selling its protein powder and other real products, and how much come from fees and other upfront costs charged to people who aspire to sell the products and who are thought to have been exploited in a Pyramid scheme?
I buy 3 of Herbalife's products ( chocolate, vanilla, and plain protein powder) from time to time, and like them so they actually do make a good product, unlike a Ponzi scheme, but not knowing the financial,side of the story I have no idea whether a pyramid was built on top of this otherwise good base.
I buy 3 of Herbalife's products ( chocolate, vanilla, and plain protein powder) from time to time, and like them so they actually do make a good product, unlike a Ponzi scheme, but not knowing the financial,side of the story I have no idea whether a pyramid was built on top of this otherwise good base.
11
Separate the question of Herbalife [Ponzi?, Pyramid?, legitimate business?] from the question of the medical value of nutritional supplements.
For some [not all but some] people nutritional supplements can be beneficial.
Different supplements can be effective for different people.
To claim the same supplement is effective for everyone and for every ailment is wrong.
Taking supplements especially in large doses should be only taken under the advice of a MEDICAL doctor.
There are certain inborn errors of metabolism [IEM] that can be controlled with large does of certain vitamins.
These large amounts should only be used under the advice of a MEDICAL doctor.
While individually rare, there are many IEM so collectively they are not that rare.
For a person with a vitamin responsive IEM the proper supplement can be vital.
For that person lying on a Freudian shrink's couch and psychobabbling about how they were toilet trained or wanting to have sex with their mother is useless.
Yes the effectiveness or lack thereof of supplements should be studied but so should certain forms of psychoanalysis.
For those who want to investigate the use of certain supplements you might look at
The Metabolic and Molecular Bases of Inherited Disease Scriver et. al. eds.
and
Inborn Metabolic Diseases Saudubray et. al. eds.
For some [not all but some] people nutritional supplements can be beneficial.
Different supplements can be effective for different people.
To claim the same supplement is effective for everyone and for every ailment is wrong.
Taking supplements especially in large doses should be only taken under the advice of a MEDICAL doctor.
There are certain inborn errors of metabolism [IEM] that can be controlled with large does of certain vitamins.
These large amounts should only be used under the advice of a MEDICAL doctor.
While individually rare, there are many IEM so collectively they are not that rare.
For a person with a vitamin responsive IEM the proper supplement can be vital.
For that person lying on a Freudian shrink's couch and psychobabbling about how they were toilet trained or wanting to have sex with their mother is useless.
Yes the effectiveness or lack thereof of supplements should be studied but so should certain forms of psychoanalysis.
For those who want to investigate the use of certain supplements you might look at
The Metabolic and Molecular Bases of Inherited Disease Scriver et. al. eds.
and
Inborn Metabolic Diseases Saudubray et. al. eds.
2
Pyramid scheme or legitimate business model? The answer is buried in legal pettifoggery that mystifies the agency in charge of interpreting it. Meanwhile, wealthy speculators place bets on the outcome of an argument that will not end until one side or the other stops paying its lawyers.
So, while well-paid lawyers endlessly argue about what it all means, countless desperate poor people lose what little money they have and their hopes turn to despair. Their misery is the fuel that makes it all work. Legal or not, that is evil.
So, while well-paid lawyers endlessly argue about what it all means, countless desperate poor people lose what little money they have and their hopes turn to despair. Their misery is the fuel that makes it all work. Legal or not, that is evil.
76
And the "winners" are the successful "betters" and the lawyers, who get paid regardless of which better wins.
Remember the scene from Trading Places where Eddie Murphy hears the Duke brothers experimental bet of one dollar? The winners always seem to be in it just to see if they can win, they don't need any more money.
I took an Herbal Life product once way back in the early 1990's. It was for appetite control. It made me jumpy and get a rash, I stopped taking it after a few days. Turns out it was killing some people with an herb called Ma Wong, which can cause cardiac arrhythmias in some people.
Remember the scene from Trading Places where Eddie Murphy hears the Duke brothers experimental bet of one dollar? The winners always seem to be in it just to see if they can win, they don't need any more money.
I took an Herbal Life product once way back in the early 1990's. It was for appetite control. It made me jumpy and get a rash, I stopped taking it after a few days. Turns out it was killing some people with an herb called Ma Wong, which can cause cardiac arrhythmias in some people.
3
My wife tried one for a month. She quit. She got calls two or three times each day. When she changed her number, they called my mother looking for her. They started calling me twice a day or more.
Such intense selling implies a crime in progress.
Such intense selling implies a crime in progress.
11
I know a few people selling Rodan and Fields skin care products. They constantly post before and after photos on Facebook, and other consultants make endless robotic comments on each other's posts. Rodan and Fields has their consultants use Facebook to pester their friends to become consultants. I've gotten a pitch or two (*shudder*). The thing is, these people don't really know anything about Rodan and Fields' products, like what the active ingredients are. They mention that two dermatologists behind the company also made ProActiv, but of course that product is just extremely overpriced benzoyl peroxide. I can't stand when people solicit their friends and family on Facebook. Rodan and Fields is a pyramid scheme and the worst Facebook offender.
34
Once you're signed up with a company like ProActiv, in my wife's experience with the company it was extremely difficult not only to get off the program, but to stop the incessant emails and high-pressure phone calls from the company. As for getting money bsck, well, good luck. She made the mistake of falling for the promotions and decided to try the products to see if they worked. One of two seemed to, but not enough to keep shelling out all the money required. ProActiv, Itworks and other such schemes are, to my mind, scams. Buyer beware.
7
Let me get this straight. We have a health supplement company running a purported pyramid scheme while producing overpriced products of questionable health benefit. We have a hedgefund manager working overtime to profit from the destruction of said company and corporate titans acting like spoiled children in broad daylight on television (nothing new or surprising here). Meanwhile, the government watchdog agency responsible for policing this mess turns a blind eye to the situation, no longer able to even define the problem.
Are there any adults in the room anymore?
Are there any adults in the room anymore?
232
The government watchdog agency can only do what Congress allows (and funds) them to do.
8
KHL -- It's certainly worth noting that Ackerman has pledged all profits from short sales of Herbalife to charity. To omit this fact is misleading. Also, Ackerman was one of the few good guys featured in the documentary "Inside Job". Sounds like he is on the side of the angels in this case.
4
So the billionaires are playing games with the stock of a company that many desperate, poor people bought into in the hope of making a few dollars to pay rent and put food on the table?
This is the ugly, even vicious, face of unbridled capitalism, and we're seeing it all too often these days.
The dictionary defines sociopath as "a person with a psychopathic personality whose behavior is antisocial and who lacks a sense of moral responsibility or social conscience."
Let's start calling these heartless manipulators of the economy what they are.
This is the ugly, even vicious, face of unbridled capitalism, and we're seeing it all too often these days.
The dictionary defines sociopath as "a person with a psychopathic personality whose behavior is antisocial and who lacks a sense of moral responsibility or social conscience."
Let's start calling these heartless manipulators of the economy what they are.
99
The bad guys here are, hard to believe, not so much the rapacious capitalists taking advantage of the company stock prices via their hedge funds but rather the individuals who set up the pyramid schemes in the first place and gulled poor, needy and/or gullible people into investing money in their products in the hopes of solving their financial problems.
It's another case of the wealthy preying on the poor and needy, taking a bizarre twist on the tale of Robin Hood by taking from the poor to give to the rich.
It's another case of the wealthy preying on the poor and needy, taking a bizarre twist on the tale of Robin Hood by taking from the poor to give to the rich.
8
I find it vexing that capitalism is so frequently modified by the adjective "unbridled" and deemed evil as a result. Capitalism is not inherently malevolent, human nature is.
All human endeavor that can "potentially" exploit another and is not regulated for the common good of all and with meaningful enforcement, is inevitably going to do just that—exploit and abuse people. That's what Power yields but it isn't inherent in the system itself, just the nature of humans.
Consider the many "charity" organizations with most of the money going to pay the huge salaries of its administration. Any large corporation (even where a legitimate product is concerned) will cut corners, fabricate "studies", destroy the environment, risk the safety of its employees and the health of its consumers when not regulated and appropriately punished when transgressions are revealed. Even then, they may consider their "punishment and fines" just a cost of doing business. That is humanity for you.
Blaming capitalism for human greed is like blaming a republic system of government for political corruption.
All human endeavor that can "potentially" exploit another and is not regulated for the common good of all and with meaningful enforcement, is inevitably going to do just that—exploit and abuse people. That's what Power yields but it isn't inherent in the system itself, just the nature of humans.
Consider the many "charity" organizations with most of the money going to pay the huge salaries of its administration. Any large corporation (even where a legitimate product is concerned) will cut corners, fabricate "studies", destroy the environment, risk the safety of its employees and the health of its consumers when not regulated and appropriately punished when transgressions are revealed. Even then, they may consider their "punishment and fines" just a cost of doing business. That is humanity for you.
Blaming capitalism for human greed is like blaming a republic system of government for political corruption.
12
Ackman claims that he will donate up to $200 million dollars from any profits he makes from his Herbalife campaign. Anyway, Herbalife is a giant con game, so putting them out of business would be a huge benefit to everyone caught in its jaws.
4
Here's hoping that Ackman can bring Herbalife down, not because he's on God's side, but it should crash. The fact that this is a listed stock is crazy, and is one reason some think this is not a pyramid scheme - because why would it be allowed not just to operate but to go public? There will always be a market for shysters - for what they sell and their generous offers of including you in the game.
61
During the mid-90s recession I was unemployed and desperate. I wanted to work and make money. I gave in to the endless infomercials about making money through "a system" and sent some of my dwindling savings to the TV scam artist. I placed ads in newspapers, set up an 800 #, and waited for the calls to roll in. They did not. I cold-called businesses. It did not work.
I was willing to work. I was not greedy. What I was, was desperate to earn money. I did not know how to go about starting a business and making money so I believed the testimonials and tried to bootstrap my way to success. Do not blame the victims of pyramid schemes. They are not looking for easy money or something for nothing. They have bought into a system that says it will reward their hard work. 1% of them actually make money. MLM is mostly a scam and should be regulated.
postscript - today I have a successful business that sells real products and employs people who receive real benefits like healthcare, dental, retirement, and paid vacation.
I was willing to work. I was not greedy. What I was, was desperate to earn money. I did not know how to go about starting a business and making money so I believed the testimonials and tried to bootstrap my way to success. Do not blame the victims of pyramid schemes. They are not looking for easy money or something for nothing. They have bought into a system that says it will reward their hard work. 1% of them actually make money. MLM is mostly a scam and should be regulated.
postscript - today I have a successful business that sells real products and employs people who receive real benefits like healthcare, dental, retirement, and paid vacation.
191
Bruce, you are admirable and straightforward. Thank you! I hope you continue to thrive.
7
Congratulations to you for coming through a time of desperation and building a successful business. I'm sure you manage your company and your employees with integrity and compassion. Your story is powerful.
2
Nocera should explore how much of the favorable, hands off/look away governmental-regulatory inattention which so benefits Herbalife (and, by related extension, multi-level marketing schemes in general) might be related to the highly questionable protections afforded the more conventionally marketed but often dubious to false nutritional supplement industry as a whole - and to that industry’s most prominent benevolent bloviator, Senator Orin Hatch?
128
Yes, Hatch, absolutely. But, in this case, also and equally former Dem. Sen. Tom Harkin. http://www.dailyiowan.com/2014/07/14/Opinions/38324.html
1
Well, i joined Herbalife for the Nutritional Shakes, Deluxe Protein Bars and energy drink tabs, as well as, so much more and bought enough within a month to have 35% off now. Its less expensive but still overpriced and then they tack on service charges and handling fees and Taxes but don't mention that in the price.
I like the products but laugh at the lies and wackos.
I like the products but laugh at the lies and wackos.
7
I'm confused. Where are you charged service charges? If you mean shipping and handling, then you're totally off base. They don't have an exaggerated shipping charge. Their minimum sized box cost maybe $6-8 to ship regardless of what is in it. Plus they need to pay people to pick and pack. The tax isnt up to them, it's state sales tax. Don't know why you would complain here about that. For Minnesota residents for example, they only tax supplements and skin care. MN State law doesn't require them to tax meal replacements.
But if you're having issue with those charges, you can always stop being a member and go back to being a full priced customer (assuming you know a member that isn't charging you the tax/shipping).
But if you're having issue with those charges, you can always stop being a member and go back to being a full priced customer (assuming you know a member that isn't charging you the tax/shipping).
99% loose money. Some hit it big. Preys on the downtrodden. ... What is the difference between these multi-level marketing companies and lotteries (with much smaller chances of winning)? People engaged in multi-level schemes are at least learning about business and marketing. Transparency and education is all that one can do, people have the right and the freedom to behave stupidly.
9
Lotteries are a voluntary form of taxation. They produce revenues for things that might otherwise go unfunded.
14
long memory, lotteries (and casino gambling) are a way for the state to evade its obligations to pay for public goods that need to be funded. In our state, we are told the lottery supports (this is from the state website, though for some reason my browser won't copy the link): 'to programs that benefit millions of New Jersey residents. Community Colleges, Universities, the Department of Human Services, the Department of Military and Veterans Affairs, the School Nutrition Program, and the Marie Katzenbach School for the Deaf are just a few of the organizations and programs whose constituencies benefit from Lottery proceeds.'
Is there anyone who is not disturbed by the notion that we care so little for these necessary activities that we will not pay taxes for them, but instead depend on the impulse purchase of convenience and liquor store shoppers indulging their dreams of greed? Not to mention that I see people all the time buying literally hundreds of dollars of tickets at a clip. (A disproportionate number are black and Hispanic, though there's no shortage of whites; what they have in common is that they are all clearly lower-income - some are paying for groceries with SNAP - and I don't really blame them, because in our rigged system a lucky ticket is the only way they will ever get out from under, much less move forward. Superficially, they seem ridiculous, but they already know they'll never win, so might as well dream - what's to lose?
Is there anyone who is not disturbed by the notion that we care so little for these necessary activities that we will not pay taxes for them, but instead depend on the impulse purchase of convenience and liquor store shoppers indulging their dreams of greed? Not to mention that I see people all the time buying literally hundreds of dollars of tickets at a clip. (A disproportionate number are black and Hispanic, though there's no shortage of whites; what they have in common is that they are all clearly lower-income - some are paying for groceries with SNAP - and I don't really blame them, because in our rigged system a lucky ticket is the only way they will ever get out from under, much less move forward. Superficially, they seem ridiculous, but they already know they'll never win, so might as well dream - what's to lose?
56
The differences are that with lotteries the government gets the money, whereas with multilevel marketing schemes a private business does. They are both equally repugnant, which may be a lesson for those who think it's only business that takes advantage of the poor.
12
Say it ain't so Joe.
Thieving scheming slime getting rich off the poor and ignorant...with the complicity of a government regulator that is in the pocket of the thieves.
Next you'll be telling us mom's famous apple pie is made in China.
Thieving scheming slime getting rich off the poor and ignorant...with the complicity of a government regulator that is in the pocket of the thieves.
Next you'll be telling us mom's famous apple pie is made in China.
74
Interesting, but it does not address the question of whether the snake oil Herbalife sells has any beneficial health effects whatsoever. The answer is that there no, none, zip scientific evidence that it does. Apparently, however, it does not harm, so the FDA can't shut them down. Regardless of whether or not Herbalife is a pyramid scheme, they are perpetrating a fraud on consumers.
87
Is that one of the diet aids that received Dr. Oz's fulsome praise?
16
The FDA can’t shut them down because they and all the other supplement makers are protected by a bunch of nonsense called the Dietary Supplement Health and Education Act of 1994 (DSHEA). Thank you Senators Hatch and Harkin--both sides are guilty on this one. All the purveyors of nutritional mumbo-jumbo have to do is include the quack miranda warning:
“These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure or prevent any disease.”
For a detailed and referenced takedown of Herbalife and its connections to Harkin and pseudoscientific-based legislation see:
http://www.sciencebasedmedicine.org/congress-will-soon-lose-its-foremost...
“These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure or prevent any disease.”
For a detailed and referenced takedown of Herbalife and its connections to Harkin and pseudoscientific-based legislation see:
http://www.sciencebasedmedicine.org/congress-will-soon-lose-its-foremost...
19
So many people, liberals, conservatives, and especially libertarians, were in favor of this legislation.
1
Most scams are based on offering something for nothing where the scammer preys on his/her victim's imagination. Multilevel marketing epitomizes this.
19
Here's a summary of the now forgotten but quite remarkable "pyramid power" pyramid scheme that swept middle class Los Angeles in May 1980: you literally sat under a wire pyramid while giving money to somebody higher up in the pyramid:
http://isteve.blogspot.com/2009/03/great-california-pyramid-scheme-mania...
http://isteve.blogspot.com/2009/03/great-california-pyramid-scheme-mania...
15
It's interesting that this craze swept LA. Perhaps Hrebalife knew what they were doing when they paid to sponsor the LA Galaxy soccer team.
So, ulitmately what are you saying? Is Herbalife (and other mulit-level marketing companies) a pyramid scheme or not? The fact that 2 ego driven hedge fund managers have a lt of money staked on the outcome is irrelevant. Where you could offer a serivce to readers who have been temtped to take part in mulit level marketing deals by stating an informed opinion of the subject, you dont. Please follow up with a column thats more conclusive; it actually could help a lot of people make good decsions about whether or not to get involved with companies like these.
41
There is plenty in this column--and elsewhere--to put up a huge red flag. What do you want, a nanny to hold you by the hand. Hopefully the nanny teaches you to stop at the curb, look left, look right, look left again, and only cross if it’s all clear.
19
Of course it's a pyramid scheme. Having been desperate myself, I joined Amway at one point. I wanted to work hard but there were no jobs. I sunk $5,000 into products and conventions, making others rich. At those conventions, the confluence of right-wing political rhetoric and conservative Christianity was frightening. There was literally at one point an image of a cross with the American flag fluttering behind it. Look into Amway's connection to Blackwater (aka Z). Remember that Amway got away with not being shut down by only one vote. One vote. Still doesn't make it right.
11
"99 percent of the people who participate wind up losing money, sometimes a lot of money"
Seems to me that's pretty conclusive, regardless of whether the company is legally defined as a pyramid scheme or not.
Seems to me that's pretty conclusive, regardless of whether the company is legally defined as a pyramid scheme or not.
11
I don't know if Herbalife is a pyramid or Ponzi scheme.
But short selling should be outlawed.
How can you sell something you do not own.
Short selling is just gambling.
But short selling should be outlawed.
How can you sell something you do not own.
Short selling is just gambling.
41
When you short a stock, you have to borrow the shares in order to deliver them for settlement. Securities lending is a big business with strict rules. You have to put up sufficient collateral in cash to cover what you borrow, and if the stock was paying a dividend, you have to pay it.
When done properly, short selling provides a useful correction for the market. Of course, people who think that all stocks should go up no matter what are against it.
When done properly, short selling provides a useful correction for the market. Of course, people who think that all stocks should go up no matter what are against it.
18
You are not selling something you don't own. You are borrowing shares of a company and selling them at market price. Later, you buy shares at market price to return the shares to the people you borrowed from. To ban short selling, you have to explain why you think it should be illegal for one person to borrow shares from another.
2
David:
Short selling plays an important role in maintaining equilibrium in the stock market.
Daniel Drew in the 19th Century penned the short-seller's creed:
"He who sells what isn't his'n
Must buy it back or go to pris'n!"
Doc
Short selling plays an important role in maintaining equilibrium in the stock market.
Daniel Drew in the 19th Century penned the short-seller's creed:
"He who sells what isn't his'n
Must buy it back or go to pris'n!"
Doc
2
Ponzis and pyramids are the ugly underbelly of predatory selling dreams to suckers. Of course they should do their research--there is no such thing as a free lunch--but they don't.
While ponzis, with no product selling attached, except the selling of unrealistic dreams that huge profits can be made, prey on the already wealthy (at least wealthy enough to invest), pyramids sell dreams of entrepreneurship and riches.
Both cause intense financial and psychic damage to those enticed by their promotions. I suppose some will have more sympathy for the unemployed desperate to buy into any kind of income scheme to keep creditors at bay, the betrayal of ponzis does just as much damage, if on a larger scale.
The SEC and other regulatory agencies have their hands full these day, just following the violations by the famous. That the Herblife pyramid could fly under the radar for as long as it has, says more about the defunding of vital regulatory personnel than it does about the ethics of it all.
So, thanks, Joe, for exposing just one more way the rich are soaking the poor, through quasi legal dreams that go bust, end up in court, and defraud countless. I somehow don't suspect these defrauded care if Herbalife is a pyramid or a Ponzi--they just want their money back.
While ponzis, with no product selling attached, except the selling of unrealistic dreams that huge profits can be made, prey on the already wealthy (at least wealthy enough to invest), pyramids sell dreams of entrepreneurship and riches.
Both cause intense financial and psychic damage to those enticed by their promotions. I suppose some will have more sympathy for the unemployed desperate to buy into any kind of income scheme to keep creditors at bay, the betrayal of ponzis does just as much damage, if on a larger scale.
The SEC and other regulatory agencies have their hands full these day, just following the violations by the famous. That the Herblife pyramid could fly under the radar for as long as it has, says more about the defunding of vital regulatory personnel than it does about the ethics of it all.
So, thanks, Joe, for exposing just one more way the rich are soaking the poor, through quasi legal dreams that go bust, end up in court, and defraud countless. I somehow don't suspect these defrauded care if Herbalife is a pyramid or a Ponzi--they just want their money back.
105
The defunding of vital regulatory personnel has everything to do with the ethics of it all. It's part of the reason for Mr. Craig's frustration with "the way the government has, in his view, largely rolled over for the industry."
9
Herbalife does have a refund policy.
One wonders how much more money is wasted in buying products which are not tested and rely on "fine print" statements that "the FTC does not ...".
Of course, in terms of medical value Herbalife is no worse than the worthless pills and powders sold in so-called "health food" stores.
In fact, those companies who produce and market valueless and at the same potentially dangerous products are ethically speaking no worse than the self-named Ethical pharmaceutical corporations.
Perhaps with the 8000% increase on some generics these companies may qualify as the lowest of the low.
It would be nice if Herbalife's value went to zero because the market would, for once, solve a problem and not create one.
Of course, in terms of medical value Herbalife is no worse than the worthless pills and powders sold in so-called "health food" stores.
In fact, those companies who produce and market valueless and at the same potentially dangerous products are ethically speaking no worse than the self-named Ethical pharmaceutical corporations.
Perhaps with the 8000% increase on some generics these companies may qualify as the lowest of the low.
It would be nice if Herbalife's value went to zero because the market would, for once, solve a problem and not create one.
19
"Worthless pills and powders" sold in so called health food stores…is up for grabs..no worse than the worthless pills and powders sold by so called "ethical" big pharma, no doubt as you eventually point out. No one points the finger as well as Mark Bittman at the biggest scam going on now..industrial food sold in industrial grocery stores, causing more physical harm and mayhem in the public health, than all of the above.
34
There is one huge difference--the “worthless” pills and powders sold by pharmaceutical companies have actually been tested, and when that testing isn’t thorough enough and problems appear, a system is in place to detect those problems and withdraw the product. Supplement purveyors on the other hand, hide behine the Quack Miranda Warning and go about their business. It is nearly impossible for the FDA to get involved until grievous harm is done
16
A related "P" scheme is the Ponzi scheme. This has started to infest the capital markets. Share distributions are called dividends when they really are not. A new company might pay a dividend not out of free cash flow (which mature companies can easily do) but from borrowed money or from issuing secondaries. This is a tactic designed to support the share price- as a result, the company is put unavoidably in a weaker position. If the owner has a large percentage of the stock, however, he will benefit.
20