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Herbalife is a pyramid scheme that harms millions of people around the world.
Those who do, make money primarily from recruiting new Herbalife distributors, convincing them to buy product, and getting them to recruit even more distributors. Simply put, because Herbalife’s incentive structure rewards recruiting as opposed to retail product sales, Herbalife is a pyramid scheme. It lures in new distributors by promising riches and preying on entrepreneurial dreams but the truth is that 89% of Herbalife distributors will never earn a penny from the company.
Herbalife is a pyramid scheme that preys on would-be entrepreneurs around the world.
Claim: Recruiting isn’t the fundamental part of the growth of Herbalife
Truth: Herbalife CEO Michael Johnson has said that “recruiting is the fundamental part of the growth of this company” and “We’re still a recruiting company, and we’ve got to never not be”
Claim: If the company has been around for many years, it can’t be a pyramid scheme, it would have collapsed by now.
Truth: Pyramid schemes eventually implode when they run out of new victims to recruit. For large multi-national pyramid schemes, like Herbalife, which operates in more than 90 countries, the scheme continues as the company expands to new markets. As a result, it can take some time for the company to implode. Right now, Herbalife needs roughly 2 million new recruits per year to sustain its growth since so many people quit each year.
Claim: Distributors join Herbalife primarily for discounts on the products.
Truth: Herbalife has provided wildly different statistics when asked what percentage of distributors join to pursue the business opportunity or for a discount on the products.
Claim: Herbalife has changed its harmful practices.
Truth: The company has:
1. Banned lead generation
2. Changed its buyback policy
3. Modified the qualification thresholds for different positions in the plan
None of these changes address Herbalife’s compensation system or the business fundamentals that make it a pyramid scheme. To read more about this, click here
Claim: If there is a real product, it’s not a pyramid scheme.
Truth: Pyramid schemes often use products. Ponzi schemes don’t. The product is typically an overpriced commodity and is often incidental to the business opportunity, but the product itself exists.
Claim: Pyramid schemes pay for recruiting but Herbalife doesn’t.
Truth: Upline distributors get paid as soon as the distributor beneath them buys product from the company. That clearly incentivizes distributors to recruit and in turn, ‘pays them’ to recruit.
Claim: Third party surveys prove that Herbalife has retail customers.
Truth: Herbalife has the ability to track retail sales but it deliberately doesn’t do so. Instead, it has provided vastly different answers when asked what percentage of its sales are to retail customers outside the network.”
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