Herbalife Manipulates Distributor Earnings Numbers

When Herbalife settled the case brought against it by the FTC, it appeared the company may change how it was doing business. It was said that the company was going to start making truthful claims about earnings. But the most recent earnings disclosure from Herbalife does anything but that.

Until 2017, Herbalife published statements of average gross compensation that covered an entire year. Like all other MLMs, they provided selected information that ended up being misleading in various ways, but ultimately it still showed a pretty dismal picture and showed that few people made much money as a distributor.

But with the 2017 statement, Herbalife made a curious change. An in-depth analysis was written up by Christine Richard at Seeking Alpha. Here is the short story. In a November 2107 conference call, Herbalife president Des Walsh said the company had about 215,000 distributors. In this earnings disclosure statement published in November 2017, Herbalife said:

“In a typical month from June to September 2017, about 45,000 U.S. Distributors ordered products for resale from Herbalife and about 40,000 of them earned money from their sales and the sales of those they sponsored. Here is what they earned in a typical month, before expenses.”

Do you see the fancy footwork? Herbalife just ignored 170,000 distributors. Those distributors apparently ordered no products and made no money, so Herbalife pretended they didn’t exist. By pretending they don’t exist, the numbers look much better. 15,000 of distributors earned more than $305. That’s 33% of the 45,000 distributors they want us to pay attention to (not so bad), but it’s only 7% of the 215,000 total distributors who actually exist.

Oops! I guess Herbalife wasn’t all that interested in providing full disclosure like they promised the FTC they were going to do. Who could have predicted that????


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