Herbalife Nutrition for decades has been a company known for its weight-loss and protein shakes and other health-related products.
It’s been synonymous with the term ‘pyramid scheme’ almost as long.
An Herbalife Nutrition club called Game Day Nutrition recently opened in Columbia’s Five Points. Its operator, Amanda Murray, says she is open about her products and about what brought her to Five Points.
“We’re transparent about the product that we offer,” Murray said. “Just like Burger King doesn’t serve McChickens, we don’t serve fruits and vegetables. We just have our preference on what our products should be and how they’re made.”
Though Murray recently opened, she’s faced backlash from people accusing her business of being part of a pyramid scheme — an illegal business model that typically involves recruiting members with the promise of payments or services for getting other people to join the endeavor, rather than supplying a sale of products or investments.
The Herbalife company has faced a host of allegations and lawsuits over the years, some of which are still ongoing. Here is a brief history of the legal issues the company has endured and how it’s been required to change as a result.
- In 2004 Herbalife settled with 8,700 former and current distributors in a class-action lawsuit that accused the company and other distributors of “essentially running a pyramid scheme,” according to The New York Times. The company did not admit guilt, but paid out a total $6 million.
- Years later the company got into trouble oversees. The Commercial Court in Brussels, Belgium in November 2011 ruled that Herbalife was an illegal pyramid scheme. However, Herbalife filed an appeal and another Belgian court reversed the ruling on Dec. 3, 2013, according to the Los Angeles Times.
- Also in 2013, the New York Post reported that Herbalife was the subject of a Federal Trade Commission probe. In March the next year, the FTC opened an investigation into Herbalife following calls from members of Congress and consumer groups. By July 2016, Herbalife agreed to change its business model and pay $200 million in an FTC settlement, according to The New York Times. In a press release, the FTC stated that, “it’s virtually impossible to make money selling Herbalife products.”
- An FTC order required Herbalife to drop its system of rewarding distributors mainly through recruiting people to buy the product at wholesale without knowing if there were customers around who wanted the merchandise. Under the new structure, success with Herbalife must depend on if members can sell products.
- The U.S. Securities and Exchange Commission on Sept. 27, 2019 announced that Herbalife had agreed to pay $20 million to settle charges of making misleading and false statements about its business model in China, according to an SEC press release. The company did not admit or deny the charges.
- Also in 2019, the U.S. Justice Department charged two Herbalife employees with conspiracy in violation of the Foreign Corrupt Practices Act, according to the Wall Street Journal. The employees were accused of bribing Chinese officials to get sales permits and influence media coverage. Herbalife agreed to pay $123 million to the Department of Justice and the SEC to resolve the issue.
- Most recently, a settlement appears to have been reached in federal court in regards to a potential $1 billion class-action lawsuit filed against Herbalife in September 2017, according to the Winston-Salem Journal. Several Herbalife distributors made claims under the federal Racketeer Influenced and Corrupt Organizations law (RICO), related to Herbalife live sales events. Florida U.S. Southern District Court Judge Marcia Cooke in January granted a stay in the lawsuit in Florida. The ruling listed that the plaintiffs and Herbalife requested the stay “pending final approval” of the settlement of a related class-action lawsuit in the U.S. Central District of California.
Morgan Hughes contributed reporting.
This story was originally published March 29, 2022 1:13 PM.
