Commentary on fraud, scams, scandals, and court cases.

Herbalife’s Fake Business Opportunity

MLM bussines structure.In a video released this week, Pershing Square (the hedge fund that exposed the Herbalife fraud) contrasts Herbalife’s public statements about the “business opportunity” with the statements made behind closed doors.

Herbalife claims to offer “the best business opportunity on the face of the earth.” But the reality is that it is an opportunity in which you are almost guaranteed to fail, with 96% of distributors making less than half of what is earned by employees making minimum wage (per the video). Despite Herbalife executives and high level distributors publicly repeating how lots of money can be made, the numbers really look like this (according to the video):

  • 98% of Herbalife’s 500,000 U.S. distributors earn less than $1.50 per week on average.
  • 90% of new recruits fail within a year.

During a training session for Herbalife representatives, the presenter is caught on camera saying things like:

  • “We sell people on a dream business, that they can make it, yet deep down inside, what do we really know? We know that  the reality is that most of them are not going to make it.”
  • “The Herbalife business model at this point in time is not based on customers purchasing, it’s based on distributors purchasing volume. That is the Herbalife business model.”

See the full video here.

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