Is Herbalife a Pyramid Scheme?

No ScamsHerbalife is a supplement company that specializes in weight management and nutritional supplements. It’s sold in over 80 countries and is the #1 supplement company in the world!! They offer a wide variety of products ranging from meal replacement shakes, vitamins, protein snacks, a line of products for athletes, and even beauty products. Herbalife is a publicly traded company on the NYSE under the symbol HLF.

Business Structure

Herbalife is a Multi-Level Marketing Business in which the product is sold through independent distributors. Distributors are able to sign new distributors to work under them in their “downline.” There are two ways in which Herbalife products are sold. The first is through direct marketing and referrals. The other way is through a Nutrition Club. A Nutrition Club is an independently owned business where consumers may sample products and gain insight on the best path to reach their goals.

Accusations

Herbalife has recently been accused of being a pyramid scheme by billionaire investor Bill Ackman. He claims the business model targets financially unsophisticated people and is more about recruiting distributors than selling the products themselves.

Facts

      1. Bill Ackman shorted $1 Billion worth of HLF stock and then made the accusation the company was illegitimate. When he made the claim the company was a pyramid scheme, the stock price was roughly $46. He shorted 22 million shares and when the stock dropped to $26, guess who made $444 Million? Do you think his beliefs come from an ulterior motive?

      2. Herbalife was started in 1980. You’re telling me the #1 supplement company in the world has been running a pyramid scheme for 33 years?

      3. Herbalife sold $6.4 Billion worth of product in 2012. It is sold by a network of over 2 million distributors who love the products and help millions more lose weight and improve their lives everyday.

      4. People who take Herbalife love Herbalife because it offers more than just a meal replacement, it comes with a coach and team of distributors who help guide you to achieve your results through group exercise, motivation, and a pool of information to ensure proper use of product. This is why it is the best MLM company in the world.

      5. Nobody becomes rich from signing up a few people underneath of them. It takes a down line selling over $20,000 a month to put an extra $1,000 in your pocket. Don’t get me wrong, everyone could use an extra $1,000 a month, but do you realize how much it takes to sell $20,000 worth of product?

Conclusion

Herbalife is not a scam or a pyramid scheme or a ponzi scheme. It is a strong company that has huge growth through offering a healthy, positive change in someones lifestyle. Selling Herbalife is just like any other business. If you work hard at it, you can be successful. If you sign up as an independent distributor and just expect the money to come flooding in, you will fail. And you’ll probably call it a scam. There are tons of success stories, but they all have one common thread – the independent distributor worked hard. The products are healthy, and the business works. It all depends on how much you work.

More information can be found on Herbalife’s website.

Photo Courtesy of Widjaya Ivan

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