Is Herbalife a Scam? {spam}

... is it a scam?

... is it a scam?

Tomorrow Herbalife CEO Michael Johnson :: and his saggy band of morally culpable senior executives … are due to present their fake company’s response to Bill Ackman’s truth {and money} attack on their fucking obvious pyramid scheme.

Strange that it takes more than two weeks for the country’s highest paid CEO to come up with a decent {or not} defense to such a direct challenge on the legality of his business model :: but I guess he’s really busy coming up with neat new flavors for low-end shake mix … or something.

According to Michael O. Johnson … all of this talk about Herbalife being a scam is totally new to Michael O. Johnson. In another time and place he may have resorted to feigning ignorance by rapidly fanning his face with a monogramed kerchief …

{affected}

“How dare you Mr. Bill Ackman? How dare you sir?”

{swoon}

{Jim Cramer enters stage right … gently strokes Johnson’s forehead and wallet until he recovers.}

It must have been confusing for Mr. Johnson when he searched Google to find out if Ackman was right about Herbalife being a total sham/scam :: only to find most of the Internet’s useful information on the topic {that hadn’t already been removed by agressive legal posturing} buried under a huge fucking pile of FTC rule-violating fake reviews posted by unicorn industry boosters … and his own distributors.

You can bury the truth … but eventually someone {or some robot} is gonna come along with a shovel.

>> bleep bloop

78 thoughts on “Is Herbalife a Scam? {spam}”

  1. From the video… “Get a list of your friends and family…” = the most pernicious aspect of it all.

    1. @Random stuff,

      Yep. I alienated friends and family when I was a young, dumb 21 year old amway distributor with the “names list”. I notice that Amway is still a private corporation.

      1. @jene, it’s good that Herbalife Chennai is suggested as a top product to get slim and healthy.

        But why don’t they make the product slim and healthy to begin with?

        I can’t see how products start off fat and unhealthy – but that just shows how much I know about Herbalife!

        It’s nutritious facts sound delicious.

        That Herbalife Chennai tastes *very* delicious sounds a bit risky. Because probably people should wait until Herablife Chennai gets slim and healthy before they eat it. If people start eating it when they are fat and unhealthy, then they might become fat and unhealthy too. And unwealthy as well (if one can say that?).

        ….and to help you understand this comment more, please visit http://jackbewildered.com/ who is better at making comments clearer.

      2. @jene,

        I see that you are in India, in the city of Chennai. This city has the fourth highest population of slum dwellers among major cities in India, with about 820,000 people (18.6% of the city’s population) living in slum conditions. (according to The Hindu online newspaper)

        Herbalife costs $150 a month in U.S. dollars, the per capita income in India is $1,219 USD. So I suppose it’s only the wealthiest residents of Chennai who are being sold this revolting product.

        The second ingredient by weight in the Herbalife shake is fructose. Currently Americans are waking up to the dangers of high fructose corn syrup in their diets. Why would you want to sell this disgusting product to people in your country?

        For the money, of course. It’s all about the money, right Jene?

        1. @Barbara, Scammers Without Borders – “Visionary scammers extract money from innocents to create victims of financial disaster regardless of race, religion, or politics.”

    1. @Omri Shabat ::

      Fun.

      PS:: It’s prolly a good idea to put something like your comment here at the top of your post :: so it’s clear to some lame Herbalife lawyer trolling the web looking for trouble that you’re not making those statements explicitly yourself … especially as my videos have a nasty habit of disappearing.

  2. That video really illustrates the pervasiveness of the smokescreen. It’s beyond disgraceful that the FTC and other watchdogs have allowed this to perpetuate for decades.

    1. @SD,

      A whole load of good.

      Good to find out about Robert Fitzpatrick…

      Whose site had this link…

      http://pyramidschemealert.org/nu-skin-facing-the-ultimate-whistle-blower/

      Which leads onto this

      http://diederikvannederveen.com/

      …which reinforces a whole lot, again, I would say.

      But also http://www.cnbc.com/id/100359541 had good quotes:

      Re Herbalife “If you are an honest person doing an honest business there is no way you can succeed.”

      Re MLMs: “In the US distributors are losing $10 billion a year.” i.e that is the 99.9% funneling up their cash to the 0.1% to buy nice cars etc.

      Re FTC “The FTC is sending out mixed signals.”

      Re How can Herbalife be a scam as it has been around so long “It took a famous whistle blower eight years to get Madoff investigated.” Why… because “…regulators are politically muzzled.”

      Re the legitimacy of Herbalife products making it not a pyramid scheme… “People garage qualify to get bonus cheques.” – i.e. they just load their garages up with product that they will never be able to sell.

      etc. etc. http://www.cnbc.com/id/100359541 is good.

  3. I was part of Amway for 3 years, from age 18 to 21.

    I then joined Herbalife for about 2 weeks.

    I joined because it seemed like they had a decent marketing plan for reaching beyond friends and family.

    Turns out they didn’t.

    12+ years ago, their “marketing plan” was to put up signs at every intersection across America with an 800 number to call to get more information.

    Herbalife was encouraging each distributor to put up 100+ signs a week. They even provided you with a way to order the signs, which probably generated more money for distributors than the Herbalife products.

    I did some basic math and realized it’d only take a handful of generations of distributors to completely saturate the market with signs.

    That’s exactly what happened in Douglas County, Colorado. Signs would go up, but would be slashed within the week. More new signs would show up. It got to where new signs would be slashed within hours.

    I also attended one local Herbalife event during those 2 weeks.

    I swear it was one of the most awkward brainwashing sessions I’ve ever witnessed. And that’s saying something because I went to a few dozen Amway events.

    Anyway, a few days after I joined I realized I’d made a super-stupid decision. I sent the product back and got a refund, less a restocking fee or something.

    But it could have been worse…

  4. “I have had so many enquiries since my last video” … the Indian guy, presumably in reference to a video which currently boasts a grand total of 5 views.

    It all makes me wonder what manner of doublespeak and cognitive dissonance is to be found in their training materials… “Dear Already Successful Distributor: These aren’t actually untruths, just everyday marketing strategies employed by every Fortune 500 company in the world which have been proven time and again to deliver maximum chance of success (do you want to succeed?)”

    I just made that up of course, but it wouldn’t surprise me if I’m very close.

    1. @Matt ::

      It goes more like this …

      “Dear Already Successful Distributor: Don’t think of these claims as lies … just consider them an advance on your guaranteed future success. You’ve heard all success stories from your trusted colleagues :: so you know that anyone willing to work hard can have success in this industry … and you know that you’re a hard worker.

      How do you expect to achieve if even you don’t believe you’ll achieve? Live the life that you want :: not the life that you have … and then you’ll have the life that you want.”

      Etc.

      Someone deep inside the MLM delusion has heard it so many times that they forget that they’re lying.

  5. Fuck, this sucks.

    Straight from the NY Times:

    Robert Chapman, the founder of Chapman Capital, wrote a blog post this month about why he has made a “monster” bet on Herbalife shares going up. He argued that the F.T.C. was unlikely to take up Mr. Ackman’s crusade and legally challenge the company’s marketing tactics.

    “Without the F.T.C. taking injunctive actions against HLF,” Mr. Chapman wrote, referring to Herbalife’s stock ticker, “Ackman’s crusade toward ‘zero’ is doomed.”

    Mr. Loeb appears inclined to agree that the F.T.C. is not anywhere close to taking action. Herbalife has been around for 32 years, with little sign that regulators want to intervene.

    http://dealbook.nytimes.com/2013/01/09/loeb-counters-ackmans-bet-against-herbalife

    Herbalife sucks, but it looks like the only way for the company to get put out of business is for the FTC to shut the company down.

    Droid, maybe the real target of this blog needs to be the FTC?

    They could shut down the Syndicate, Warrior Forum, Herbalife, and all the other bad actors in the Sick Machine. But they don’t!!! :-(

    I’m starting to think the real evil is the FTC because they can stop all this tomorrow, but they don’t.

    Annoying….. hopeless.

      1. @Lanna,

        I’m very much a not-expert on the stock exchange and also the FTC, but I was kind of expecting this “short”ing Herbalife thing to take a while. I mean, it’d be pretty awesome if the stock went all the way to zero in a mere month, but no it’s not likely.

        For the “Ackman plan”, I think the real question will be whether he and/or his hedge fund or whatever is able to keep Herbalife in the news in a negative way. If he’s able to do that, and if it goes on long enough, then there might eventually be some kind of a tipping point (finally) and the FTC will get guilted into action.

        But in any case, @SD says `always bet on robot’. That seems like a good idea to me.


        Furry cows moo and decompress.

    1. @Herbalife Sucks ::

      This whole site is an attack on the FTC … and I agree that their inaction {spanning decades!} and total lack of strategy are most distressing.

      So Messrs Chapman & Loeb are prolly correct that they won’t do shit here to help the little guy {or the billionaire guy}. That’s not going to matter though.

      I think it’s really fun and funny actually. Right now people are betting hundreds of millions of dollars that I won’t be able to disrupt an Internet dependent :: trust manipulating :: lie based … pyramid scheme. Of course :: they don’t know that’s what they’re betting on … and they won’t be able to understand what I am until it’s much too late.

      Fun!

      Suck it rich people!

      But seriously :: if any analysts from Third Point or Chapman Capital want to give me call … I’d be so so happy to explain to them just how astoundingly vulnerable cult manipulation scams are to truth-with-jokes. Or :: if they want to skip calling me because I’m too obviously a force for good and they are too obviously on a quest to collect blood money … then they could conduct a quick survey of everyone featured on this site over the past four years and ask them if they have any plans to go long on Herbalife. That should be quite illustrative … and much cheaper than the mistake they’re currently making.

      Here’s a scamworld insider tip … always bet on robot.

  6. If it wasnt for the eery background music I would have believed them!

    Keep it up Salty, lets rip all these trolls a new one for 2013!

    1. @Syndicate H8r,

      I love how the guys says if a scam ran for 30 years it would be the biggest in the country….has he not heard or Madoff or what?…

      1. @Syndicate H8r,

        .has he not heard or Madoff or what?…

        Willful blindness. Also, Madoff wasn’t (pretending) to sell plant-infused shake powder. Therefore it can’t possibly be related. </sarcasm>


        Furry cows moo and decompress.

  7. I’m embarrassed to say I fell for several of these ‘network marketing’ scams in my younger days. There was United Sciences of America (USA) that had a diet powder, supposedly formulated by top medical doctors at ivy league universities, a marketing director who was a Harvard professor, chief legal counsel who was a , if I recall correctly, a former top government attorney – in other words, they appeared to be very credible. Of course, they had ‘opportunity meetings’ where stories were told about people recruiting family, friends, co-workers and neighbors, and in no time were making $10,000, $20,000, $50,000 a month, and YOU CAN TOO!!! Just sign up as an independent distributor tonite for only $75.

    The company went bankrupt amidst scandal.

    Then there was ‘The Cambridge Diet’ and again I allowed my self to be deceived into thinking this was a legitimate way to build wealth. A family friend invited me to an ‘opportunity meeting’ where I met a guy who said he was making well over $300,000 a year, in just a few months of recruiting family and friends, and he seemed honest and genuine. So I signed up, alienated lots of friends with my efforts to recruit them into the ‘dream’ and only lost money.

    The Cambridge Diet folks went belly up too.

    Then there was National Safety Associates that sold water purifiers. I responded to an ad for a sales job in the Chicago Tribune and went for an ‘interview’ that turned out to be a one on one ‘opportunity meeting’ to sign me up as an independent distributor. This was the last time I allowed myself to be deceived into thinking I could get rich with network marketing. I bought several thousand dollars of water purifiers on credit, didn’t sell a single one, even after going door to door and leaving them with people to try for FREE for a week. Not one person bought.

    The BIG LIE with all of these multi-level or network marketing companies is they sell the average person a dream that they can make a lot of money. And they offer a handful of stories of people who got in the business, worked hard, and are now making $100,000 or $300,000 a month. What NONE of them tell you, and this includes Herbalife, is that the percentage of people who make money is so close to zero we can call it zero. Something like less than one percent of one percent of all the people who get involved in network marketing make money. The overwhelming majority – more than 99%, DON’T MAKE A FUCKING PENNY.

    ALL NETWORK MARKETING COMPANIES ARE SCAMS.

    1. @Mother Kilstein,

      I empathize with your plight, but I wouldn’t beat yourself about it.

      At least you had the balls to give it a try.

      I have nothing what-so-ever against people who only work their day jobs and have no ambition to create or run a business.

      But don’t think that you’re a “sucker” for having giving it a go with what seemed like an opportunity at the time. If you had the balls do this, you will have the gumption to give it a go when you’re ready to work on your business.

      Its NORMAL to want to create wealth and success — and these scam artists exploit that.

      The good news is you are through the looking glass, you can get back at it, and kick some real ass!

    1. @Jack,

      From Belgian-PDF above:

      “ORDER PART
      On the basis of the above considerations the court rules as follows.
      It declares the claim by the plaintiff as valid and founded to the following degree:

      The court states that Herbalife is in breach of Articles 91, 4 and 99 of the Act regarding market practises and consumer protection because it has established, managed or promoted a pyramid scheme, whereby the consumer or a business stands to make money which is more likely the result of introducing new consumers or businesses into the scheme than from the sale or use of products. The court orders cessation of this breach and thus of the Herbalife pyramid scheme whereby a consumer or an business stands to make money which is more likely the result of introducing new consumers or businesses into the scheme than from the sale or use of
      products.

      The court orders Herbalife to pay a fine of 5,000 Euro for each breach that is established from two months after the date of this ruling. The court sets the maximum of the forfeitable fines at 250,000 Euro. The orders Herbalife to pay the costs estimated by Test Aankoop to amount to 1,320
      Euro in court costs plus 192.88 Euro in summons fees.

      The court rules this verdict immediately enforceable, notwithstanding legal recourse and without collateral.”

  8. Wait. How’d I miss about this one:

    SEC Opens Investigation Into Herbalife

    “The agency’s enforcement unit has opened an investigation into the company, according to a person briefed on the matter. The inquiry, which is being run out the S.E.C.’s New York office, is likely to examine the company’s sales practices. Herbalife operates through a network of independent resellers who are incentivized to recruit others.

    The agency has not decided whether to take action, and Herbalife has not been accused of any wrongdoing. A spokeswoman for Herbalife was not immediately available for comment. The news of the inquiry was reported earlier by The Wall Street Journal.”

      1. @Lanna,

        I just read the transcript of the session this morning. It seems like their whole strategy was simply saying that Ackerman is misinterpreting the data. I didn’t see anything in there to disprove anything that Ackerman said. I’m convinced Herbalife is bullshit, but that has nothing to do with Ackerman. I thought it was classic that they compared themselves to Costco and the Girl Scouts.

        1. @Rafael Marquez,

          (very minor thing)
          It’s “Ackman” not “Ackerman”. Although I’ve seen that typo around so I guess it’s pretty common.

    1. @Jack,

      Obama nominated Mary Jo White to be the next SEC chair. (NY Times) She’s been a U.S. attorney but also a corporate defense lawyer. (Washington Post bio) With the SEC the only agency rumored to have started a probe into Herbalife, she’s a person to watch.

  9. I love your work, Mr. Droid, or should I just call you “Salty” =)

    Your post on Mark Shurtleff- MLMs Attorney General should be revisited especially when the SEC goes after Nu Skin, Utah’s largest MLM. Shurtleff, at least on one occasion, personally solicited donations from those affiliated with MLM and Nu Skin. Just ask Diederik, http://diederikvannederveen.com He told me he was approached by Shurtleff for a donation because of his connection to Nu Skin’s co-founder, Sandie Tillotson.

  10. I wonder if a class action lawsuit by a class of plaintiffs (namely distributors sucked in by get-rich-quick promises made by Shawn Dahl’s organization, for example) might be successful enough to force a settlement?

    If the Driod non-profit comes into existence, it could perhaps act as lead (or co-counsel) and possibly collect a significant legal fee from the settlement funds. I know, that’s “blood money” – and nobody seems to want any blood money in their pockets – but fuck that!

    I mean, look, imagine the GOOD that could come from a Droid lead non-profit that has several hundred thousand (or even several million) in the bank. (Sort of like a Southern Poverty Law Center, or Anti-Defamation League, etc). Droid could pay himself a salary, hire a small staff, and really turn the screws.

    Droid, you’re a robot that can exist with few resources, but Jason presumably gets tired of fighting underfunded solo wars against a never-ending parade of bad guys ranging from small time scammers with limited financial resources all the way up to multi-billion dollar organizations like Google and Facebook that have been documented on this blog as behaving in a fraudulent manner and actively enabling aspects of the sick machine. (I recently discovered Amazon sells Perry Belcher products, as well as a lot of other products that come directly from the Sick Machine.. and the sick machine LOVES Amazon because it conveys legitimacy. So now in addition to Facebook and Google, it appears Amazon is also in on the fraud.)

    When companies like Facebook, Google, and Amazon play an active role in enabling criminal activity (and yet most of the world loves them), when the FTC largely turns a blind eye to the fraud (and yet respected people think the FTC is doing a great job), when EVERYONE seems to be “in on scamming people” – (from politicians, to Wall Street, to religions, to the Syndicate, to Google, to Facebook, etc etc).. Well, damn. Maybe it’s time to commit suicide and depart from this scam-ridden habitat full of salespeople and crooked corporations?!

    But the truth paired with humor has produced measurable results (on a global scale these results can be measured in micrograms, but in more localized ways it can be be measured in tons). That’s why I think that the truth backed up by a well-funded non-profit might really be useful.

  11. Sweet merciful keeeyriiiiiiiiiiiist.

    I’m no shrink, Salty, but looking at your rambling “style” of writing, it’s pretty damn clear you are loonier than a sh*t house rat.

    I used to come by this site every once in a while just to bitch slap the taste out of your mouth (easy and stealing candy from a baby with an assualt rifle). I haven’t been by in a while, largely because your rambling inchoherant style (what the F**K is a “:::” you inbred clown???) was almost impossible to follow.

    But geeze, after taking a gander at your turd dropping posts, I’m convinced you’ve got a chimp chained in your parent’s basement (in your room) in front of a computer banging out your content.

    It is sooooooooooooooooooo bad. Seriously, sport…you are either totally lacking any writing talent, or, more likely, so filled with demons and “other voices” that you can’t hold a coherant thought for the time it takes to type out a sentence.

    I always thought it was a bit of a shame, because some of what I think you are TRYING to say (and failing miserably at) is valuable.

    Anyway, seek help sport, because you are obviously battling some pretty big time mental problems. I was–and this isn’t a lie at all–expecting to hear on the news that the Sandy Hook shooter had an alias on the net…thesaltydroid.” Same think in Aurora.

    One skim of this nutty site and it’s pretty clear it’s being written by a nut who isn’t playing with a full deck.

  12. LOL @ the people in the video claiming that herbalife would not have been around for 30 years if it were a scam. I guess they didn’t hear of Bernie Madoff’s Ponzi scheme and how long it lasted.

  13. NPR’s Planet Money Team “covered” this on Morning Edition today. I think maybe Jacob Goldstein could have done better homework.

    1. @Anna,

      Here’s the link:
      http://www.npr.org/blogs/money/2013/01/16/169468312/the-fight-over-herbalife

      NPR says:

      For a company like Herbalife, the difference between being a legitimate business and being a pyramid scheme comes down to what happens on the ground with all those people who signed up to sell products.

      But Pershing Square says, on their FactsAboutHerbalife.com site:

      “[T]he organization is deemed a pyramid scheme if the participants obtain their monetary benefits primarily from recruitment rather than the sale of goods and services to consumers”

      – Dr. Peter J. Vander Nat, senior economist at the FTC, Journal of Public Policy and Marketing, Vol 21-1, 139-151, (2002)

      Which Ackman demonstrated is happening and is being hidden by Herbalife by miscategorizing some of their distributor compensation.

      Herbalife doesn’t even know what’s happening on the ground. The day before the big Herbalife “investor meeting,” Seeking Alpha contributor Shortzilla (who is short HLF) critiqued what little is known about the Lieberman Research Worldwide consumer research survey commissioned by Herbalife.

    2. @Anna ::

      That’s sloppy garbage … and I hate it.

      And I am pained to say that … because I’ve been a fan of Planet Money since it was just a fetal Giant Pool of Money on This American Life.

      Not acceptable.

      1. @SD, Yes. I hated it too for exactly the same reasons. I’ve also have been a fan of Planet Money going back that far. And the sad thing is because I usually think they do a good job of explaining things, I wonder what I would have thought if I hadn’t been reading your posts all the way back to Megan Tatham Fredrickson and her little stint with Herbalife.

  14. Cramer’s take:

    http://www.cnbc.com/id/100389459

    The statement I found most interesting in the above is:

    “The Justice Department won’t want to go after an entity to the point of where it would wipe out jobs and the Federal Trade Commission is a deliberate organization that isn’t likely to take the action Ackman wants, Cramer said”

    If Cramer is right re: the “jobs” thing, it’s a pretty sad state of affairs.

    1. @DGR,

      Someone should tell the Justice Department that there are no real jobs in either MLM or a pyramid scheme, just a few fat sharks at the top devouring all the smaller fish after lobotomising them with unrealistic hope and dreams.

  15. In the UK it was made illegal in the Unfair Selling Regs 2008 to operate any scheme in which most of the money comes from selling the opportunity rather than the product to end users – and I quote:

    Annexe of 30 Practises always deemed illegal
    14. Establishing, operating or promoting a pyramid promotional scheme where a consumer gives consideration for the opportunity to receive compensation that is derived primarily from the introduction of other consumers into the scheme rather than from the sale or consumption of products.

    Can Herbalife be screwed by this – if most of the product ends stuck with sellers who cannot sell it, they certainly violate that.

    Don’t know if there is similar in the US

  16. Death of Fortune High Tech Marketing
    http://www.ftc.gov/opa/2013/01/fhtm.shtm

    “At the request of the Federal Trade Commission and the states of Illinois, Kentucky, and North Carolina, a federal court has halted an allegedly illegal pyramid scheme pending trial. The FTC and the state attorneys general seek to stop the allegedly illegal practices of the Fortune Hi-Tech Marketing (FHTM) operation, which claimed consumers would make substantial income by joining the scheme. The operation affected more than 100,000 consumers throughout the United States, including Puerto Rico, and Canada. In some areas, including Chicago, the scheme targeted Spanish-speaking consumers.

    “Pyramid schemes are more like icebergs,” said C. Steven Baker, Director of the FTC’s Midwest Region. “At any point most people must and will be underwater financially. These defendants were promising people that if they worked hard they could make lots of money. But it was a rigged game, and the vast majority of people lost money.”

    According to the complaint filed by the FTC and the state attorneys general, the defendants falsely claimed consumers would earn significant income for selling the products and services of companies such as Dish Network, Frontpoint Home Security, and various cell phone providers, and for selling FHTM’s line of health and beauty products. Despite FHTM’s claims, nearly all consumers who signed up with the scheme lost more money than they ever made. To the extent that consumers could make any income, however, it was mainly for recruiting other consumers, and FHTM’s compensation plan ensured that most consumers made little or no money, the complaint alleged.

    “This is the beginning of the end for one of the most prolific pyramid schemes operating in North America,” Kentucky Attorney General Jack Conway said. “This is a classic pyramid scheme in every sense of the word. The vast majority of people, more than 90 percent, who bought in to FHTM lost their money.”

    As alleged in the complaint, FHTM promoted itself as a way for average people to achieve financial independence. Some FHTM representatives claimed they earned more than 10 times as much as their previous earnings in their second and subsequent years with FHTM. One person claimed that another representative earned more than $50,000 in his sixth month and millions of dollars in subsequent years. Another person promoted a recruitment meeting on her Twitter account, stating, “Bring ur friends & learn how 2 make $120K aYR.” At its 2012 national convention in Dallas, FHTM called its top 30 earners to the stage to present them with a mock-up of a $64 million check, which several of them shared as a photo on social networking websites.

    To participate in the scheme, consumers paid annual fees ranging from $100 to $300. To qualify for sales commissions and recruiting bonuses, they had to pay an extra $130 to $400 per month and agree to a continuity plan that billed them monthly for products unless they canceled the plan. Those who signed up more consumers and maintained certain sales levels could earn promotions and greater compensation, but contrary to FHTM’s claims, the complaint alleged, its compensation plan ensured that, at any given time, most participants would spend more money than they would earn.

    According to the complaint, recruits were told they could earn high commissions by selling products to people outside the operation, but instead only minimal compensation was paid for sales to non-participants, and few products were ever sold to anyone other than participants. The scheme provided much larger rewards for recruiting people than for selling products, and more than 85 percent of the money consumers made was for recruitment.

    In addition to charging the defendants with operating an illegal pyramid scheme and making false earnings claims, the FTC charged them with furnishing consumers with false and misleading materials for recruiting more participants. The attorneys general offices of Illinois, Kentucky and North Carolina joined the FTC complaint, as well as alleging violations of their respective state laws.

    The defendants are Paul C. Orberson, Thomas A. Mills, Fortune Hi-Tech Marketing Inc., FHTM Inc., Alan Clark Holdings LLC, FHTM Canada Inc., and Fortune Network Marketing (UK) Limited. On January 24, 2013, the court halted the deceptive practices, froze the defendants’ assets, and appointed a temporary receiver over the corporations pending a trial.

    The Commission vote, including Commissioner J. Thomas Rosch, authorizing the staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division.

    For more information about the case, in English and Spanish, consumers can call 202-326-2643. To learn more about multi-level marketing, read the FTC’s Multilevel Marketing and Business Opportunity Scams ( Estafas de Oportunidades de Negocio ).

    NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.

    The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

    MEDIA CONTACT:
    Frank Dorman
    Office of Public Affairs
    202-326-267

    Allison Martin, Director of Communications
    Kentucky Attorney General’s Office
    502-696-5651

    Maura Possley
    Illinois Attorney General’s Office
    312-814-3118

    Noelle Talley, Public Information Officer
    N.C. Department of Justice
    919-716-6484

    STAFF CONTACT:
    David A. O’Toole
    FTC’s Midwest Region
    312-960-5601”

    1. @Jack,

      It reads just about the same as the info against Herbalife to me. So when will the FTC be getting to that one, then?

  17. http://www.realscam.com/f9/fortune-high-tech-marketing-fhtm-shut-down-pyramid-scheme-250/

    What the sweet/kind gesture of former BOA’s CEO to try to start the BOA bailout there:

    “According to the local NBC affiliate television news channel in Charlotte, North Carolina, “Several prominent Carolinians, including the wife of former Bank of America CEO Ken Lewis, have signed on as sales reps for a multi-level marketer recently fined as a ‘pyramid scheme.'”
    The report stated that “Donna Lewis joined Fortune Hi-Tech Marketing, known as FHTM, in December 2008 at the invitation of her friend, Charlotte television personality Barbara McKay.”

    1. @Jack,

      Well, naturally. She’s on home ground with a very familiar, if not completely identical business model, ain’t she?

  18. Tupperware likes business facts. Herbalife doesn’t want to know about them…

    “In theory, Herbalife could silence the critics by disclosing a crucial number in its financial statements: the percentage of sales outside its network. It would be hard to call the company a pyramid scheme if it disclosed that, say, 80 percent of its final sales were to customers, rather than new sales representatives.

    Some industry executives have promoted the importance of this number. “The final litmus is, ‘Who is the customer?’ ” Rick Goings, the chief executive of Tupperware Brands, said last week in an interview with CNBC.

    More than 90 percent of Tupperware’s sales are to people outside its network, he said. The remaining amount, he said, is to sales representatives who like the company’s new products. Tupperware, however, does not include this number in its public financial disclosures.”

    http://dealbook.nytimes.com/2013/02/04/seeking-a-companys-elusive-sales-data/

    1. @Jack,

      Also, should a person choose to do so, they can buy Tupperware straight from the company’s main website. You try that with Herbalife and it’s all ‘find a distributor’ and ‘hey, there’s this great business opportunity!’ (Not direct quotes)

      I understand about the litmus test about the sales. But I’d say just compare/contrast the two company’s main websites. The difference is striking. I’ve got no particular love for Tupperware, but at least their website looks like that of an actual online *store* selling an actual *product*. Herbaife’s is just unicorns all the way down.

      1. @Wyrd,

        @Wyrd,

        I’ve probably said this before, but I’ll be a fan of Tupperware as long as they continue to support two-time top-saleswoman Dixie Longate, Aunt Barbara, Dee W. Ieye, and similar representatives. Also, their products seem to work.

        It’s interesting to look at whether or not the product is sold online, because both Avon and Mary Kay products can be bought online. I’ve read PinkTruth.com and have no illusions that Mary Kay is a good bizopp. Is online sales where draw the line between bad MLM and undeniable pyramid scheme?

        1. @Lanna,

          First, my made-up litmus test should in no way be considered a true replacement for the one already proposed by people who Know Stuff–that of checking the sales figures to see what percentage of product winds up in the hands of the general public vs. what percentage winds up in the hands of distributors who… I dunno… I mean–what do you do with 100 cases of powdered drink mix if you can’t sell it? Maybe… oh yeah! You could build a pyramid sculpture with the containers! Damn, that’d be funny. Except expensive so not so funny.

          Anyway–since the sales figures can be very hard to come by, I had this other idea.

          What I actually did was type “buy ” into google and then checked out what came up.

          For Tupperware, it got me to http://order.tupperware.com/coe/app/home . Then I clicked “SHOP OUR PRODUCT GALLERY” and I reached
          http://order.tupperware.com/coe/app/!tw$shop.p_category?pv_ic_code=10100

          And this is what I would expect from an online business. It looks pretty and there’s lots of pictures of products with little price tags on them. Again–I’m not interested in Tupperware… but if I were this page is exactly what I would want to see and buy from.

          I also tested running through the checkout process. They take credit cards. I see the “consultant” thing off to the side, but I can ignore it if I want.

          For Mary Kay and Avon, everything seems to push me to the Consultant Locator. And if I try to buy online, it gives me suggested retail prices, and I can go through a pseudo check-out process, but, AFAICT, I can’t actually buy anything unless I have a “Consultant” right there with me.

          For Herbalife, at the time of this writing, the first organic search result isn’t even for Herbalife’s main site. Rather it’s for an independent Herbalife contractor selling on Amazon. Also, the 2nd and 3rd of the paid results appear to be for independent contractors as well.

          Anyway, on Herbalife’s main page, all I see is The Commercial. It’s all ‘you can too! oh yeah and also, we have these nifty healthy things that you could buy… or SELL…’

          Now.. whether or not all this seems damning is going to depend a great deal on your perspective towards MLM. Personally, I’m thinking that the reasoning on the long-term unsustainability of multi-level marketing is valid.

          So when I see Mary Kay or Avon or Herbalife, especially and particularly Herbalife, insist that I have to go find a distributor, then I have cause to wonder if it’s really worth all the trouble to buy what they purport to be selling.


          Furry cows moo and decompress.

          1. @Wyrd,

            Oh, you are right about Mary Kay. I didn’t get that far. Avon seems to allow me to check out using PayPal. It does warn me “Please note that when using PayPal, Personal Delivery by an Avon Representative is not an option.”

            The “buy” Google search is a pretty cool litmus test. I wouldn’t have thought the results would be so different for four MLMs.

              1. @Random Stuff ::

                Yeah :: that was a good episode … and easy money is totally bullshit.

                So what the fuck is this all about then?

                Is it about:

                a) money
                b) money
                c) money
                d) money

                Fucking hypocrite.

            1. @SD

              Agreed. Pity.

              In the UK our very own French and Saunders *otherwise* a very good comedy duo, are actually promoting MLM scams, such as Utility Warehouse – see top right of the website…

              https://www.utilitywarehouse.co.uk/

              …but news on the street is that it is a public listed company and a *good* business*, or not, like Herbalife. Probably the media will get onto Utility Warehouse in about fifteen years time.

              One part of the Utility Warehouse business got a Which consumer recommendation. Their 30,000 affiliates must have been filling out Which consumer questionaires like nobodies business!

              And then there is the shameful PR from a guardian non journalist…

              http://www.guardian.co.uk/money/2009/dec/05/utility-warehouse-telecom-plus-distributor

              Saying it is not a MLM scam but…”There is a £199.75 joining fee, which the company says is refunded if you recruit 12 customers in your first 90 days. Distributors earn a bonus of up to £40 for every customer they sign up, for example, £10 when someone takes out a mobile phone contract and up to £20 for broadband.”

              Sounds MLM to me – & elsewhere noise is happening, but slowly…

              http://ethicalcompanies.co.uk/?p=2376

              http://www.bbc.co.uk/blogs/x-ray/2010/03/xray-investigates-utility-ware.shtml

              …plus of 146 pages of complaints versus counters by affiliates of Utility Warehouse on money saving expert…

              http://forums.moneysavingexpert.com/showthread.php?t=2473547

            2. @SD,

              Re Penn and blogworld:

              That makes me sad. It seems to happen a lot though. It’s likely that, if confronted, he’d brush it off with his own cognitive dissonance expecially since he’s all hardcore Libertarian and all.

              Oh well.

              Apparently Scott Adams has teh baD traits too:

              sexism:
              http://www.comicsalliance.com/2011/03/25/scott-adam-sexist-mens-rights/

              and self-aggrandizement by proxy (which seems so totally childish and dumb to me):
              http://gawker.com/5792583/dilbert-creator-pretends-to-be-his-own-biggest-fan-on-message-boards

              I don’t know of anything of him specifically supporting online scams, but then again I also haven’t looked. Regardless, it’s likely that his website has run or will run some sort of scammy ad(s) at some point.

            1. @Wyrd,

              Wait, what? What’s a point against them?

              “The cork rides up faster than your prom dress!” Aunt Barbara makes me want that stupid two-part overly complicated corkscrew.

            2. @Lanna,

              Perhaps I was mistaken. It’s probably just my anti-sales bias showing.

              The more people fall all over themselves to promote a particular thing, the more I usually feel that what they have is all sizzle and no steak.

              The prom dress line is good though.

  19. Herbalife operates in the same way as Fortune Hi-tech Marketing did until the FTC came in and closed them down on January 28, 2013 and seized all of the company (and founder’s) assets. Then it was found out that the owners made over 50Million while 500K reps lost all of their investment. Sound familiar to Harbalife?

  20. Is ACN yet another Herbalife sitiation? A

    ACN is a telecoms network service that operates by hooking up friends of friends and friends. Whirlpool has a bit of info on it and I know at least one of the losers you talk about on these blogs are hooked into it and selling it to their sucker database.

    1. @Cricketycrack,

      Well, here’s what Oz, the person that runs behindmlm.com briefly wrote about them while answering someone’s “have you heard of ACN” question in July 2009:
      (http://behindmlm.com/companies/polaris-media-group/dispelling-6-myths-about-liberty-league-international/#comment-29761)

      I’ll look it up when i get home but I haven’t heard of ACN. I had to look them up, American Communications Network in case anyone’s wondering. Having said that I’m not too familiar with the MLM schemes going around at the moment.

      I’m at work at the moment but a quick google glance looks like they actively encourage people to first sell to their friends and relatives which is usually an ‘oh-oh’.

      Yes, an ‘oh-oh’ indeed. And the guy that runs that site has a much more moderate view on MLMs than I do because he’s willing to believe that

      1. @Wyrd,

        That got cut off awkwardly.

        I was just saying that the person, Oz, running that website is much more lenient towards MLMs than I would be.

        So if he thinks they are dodgy, then they’re probably pretty dodgy.

        1. @Wyrd, Yes I’d consider it dodgy business.

          I’m yet to discover why dodgy business operators either have come from or go to MLM businesses apart from the obvious …. narcisstic controlling personalities and a quick buck. They also mostly seem to be people without any legitimate credentials except the few on the top of the food chain.

  21. I just rewatched the main video in this post. it should be required watching for the FTC and anyone without ‘Internet scamming’ experience. it truly exposes multi-level-marketing for what it is – multi-leveled manipulation, brainwashing, and life-sucking evil. it also shows why we shouldn’t blame the victims – they are just lost souls reading a script.

  22. How is Herbalife still standing? How is this possible? Does it have seasoned manipulators running it, are there too many idiots amongst people or what?

  23. are many of the victims in the video actually promoting myleadsystempro or some other lead generation scam? ive just been watching a bunch of these types of videos, where a person or couple makes 5-6 identical videos, one for each top MLM (herbalife, amway, etc etc).

    1. @fs, Many of what I term “MLM coaches” (one of the 6 types of MLMers I classified) consider themselves “smart” by multi-dipping (promoting lead generation system as well as multiple MLMs, multiple streams of income and all that). They read from a script and mainly sell themselves as uplines, not any of the products or services they are supposed to sell.

      I doubt they can sell anything except themselves.

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