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Postby Peter Arnold on Sat Jul 16, 2016 10:21 am

Hello Partners:

I haven't been in here in a while, but I feel this affects ALL of us.

I hate to throw COLD WATER on this - especially at the beginning of a weekend - but - - -

I think this attack by the FTC may be the beginning of a CRISIS for Herbalife (in the US) - one of our long time, "publically owned" MEGA GIANTS -- as well as our entire INDUSTRY.

As a 30-year (part time) participant in this industry (whose "business model" I personally respect, as a Business & Financial Consultant) - and having had the priviledge of serving on the Board Of Directors of its professional association for 4-years, representing Canada - the Association of Network Marketing Professionals (ANMP - formerly, the DRA) - I see this action by the FTC, not only a terrible "slam" at Herbalife - but another "hammer" against our great industry - ((and one which will [should] put all other MLM companies on RED ALERT - especially "publically owned" MLMs)).

I see their attack as very similar to ("worse" than) what happened to VEMMA (except that Herbalife was not "shut down" initially, and is putting a "positive spin" on it).

Here's what I mean - - -

COMP PLAN RESTRUCTURE - The two primary aspects of their new Compensation Structure are:

1)- Members, current and new, will be categorized as either a "preferred" member - or "distributor". The former will be eligible to purchase products at a discount, and the latter are those who choose to build a business and directly sell products.

2) Distributors will be compensated based on their RETAIL SALES (and "receipts" will be required, to verify), including purchases for personal use (within allowable limits).

OTHER agreed-to terms (by Herbalife) include -- enhanced distributor TRAINING (a good thing) -- the requirement of a BUSINESS PLAN -- a one-year waiting period before opening a Nutrition Club -- extending the amount of time a distributor may return an initial membership pack & paying all shipping costs associated with any returned products) -- PROHIBITING AUTO-SHIPS of products -- having an independent, third-party AUDITOR - for "SEVEN (7)YEARS! (as with Vemma, they'll have a policeman 'looking over their shoulder' all the time) -- extending the protections on INCOME CLAIMS, including greater specificity around LIFESTYLE claims.

As I see it - - -

Herbalife has agreed to restructure its business, transforming it from an organization that pays its distributors based on "their own wholesale purchases, and those of their downlines" -- to one where compensation is calculated based upon "verifiable retail sales".

Significantly, in order to pay compensation to distributors at current levels, the order requires Herbalife to verify, through receipts and other reliable methods, that its business is DRIVEN By RETAIL SALES - and that => AT LEAST "80%" of its sales are made to legitimate end-users.

EIGHTY PERCENT (80% ) of its sales come from legitimate END USERS - that is, not just selling to OTHER REPS.

Again -- 80% -- not 30% - not 50% (like Vemma's requirement) -- "80% "of their total sales!

I don't know about you, but I see that as "massive" (and totally ridiculous, in my opinion).

It's hard to understand how Herbalife CEO, Michael Johnson, claims there will be "no material change" to their business practices after settlement.

Obviously, Herbalife is highlighting the fact that the FTC did "not" call it a PYRAMID, which is good - but if you listen closely to what the FTC's Chief Spokesperson said in yesterday's announcement [as I did, in a video], you'll quickly see they DO believe Herbalife is a Pyramid, sadly.

The FTC has demanded a "complete overhaul" of their Business Model (at least in the US - where about 20% of their current sales come from) -- it could really "hurt" the way their business operates in the US, as I see it - much like it's hurting Vemma..

It's going to be quite an adjustment for their TOP-TIER REPS too, who make the majority of their income from Reps they recruit -- to have to start selling to RETAIL CUSTOMERS.

IS it possible that our magnificant (and unique) Business Model could end up "losing" one of its most powerful advantages - the force of L-E-V-E-R-A-G-E - because of a huge shift being demanded by the regulators, from "recruiting BUSINESS BUILDERS" -to- "gathering CUSTOMERS [at a 50%-75% of sales requirement]? -- Only time will tell.

My concern is - how will such a shift in focus continue to attract "ambitious entrepreneur" types to our companies (unless companies begin to switch their Comp Plans and requirements -- gigantically)?

Frankly, I am all for bringing in more CUSTOMERS - I think a healthy ratio should be about 75%-to25% (Customers-to-Reps) - but having to "prove" that 50%-75% of all sales go to 'them' - with actual "receipt" verifications?

Here's a quick reaction from one of the top MLM Attorneys in the US ...
-- ... alife-omg/

I have many more links I could share on this, but we're only allowed to post (1) "live" link in any post here, I think.


I'm sure we'll see more and more (reactions from industry leaders shortly - Eric Worre [I just wrote to Eric ], Todd Falcone, Richard Brooke, etc.

QUESTION - I believe each of us need to ask ourselves ... "How does MY OWN COMPANY stack up" on all this?

IF we see it 'failing' in some of the areas the FTC is targeting (most "are)" - I believe each one of us ought to openly express our concerns to top management - to (hopefully) head off a similar attack by these regulators - and thus, not be pushed into a situation where we have to "defend" the resulting negative publicity.

More importantly, let's hope that MLM company owners and CEOs themselves, are taking a sober look at what's happened to Herbalife (and Vemma, recently), and reflecting on how "they" can AVOID such targeting by the FTC, next.

Personally, I think this (Herbalife) story is far from over.

I happen to agree with at least three (3) parts of this outcome:


2)- Far more emphasis on gathering CUSTOMERS than on recruiting DISTRIBUTORS

3)- No more PAY-TO-PLAY, in order to "qualify" for higher financial rewards (including the high cost of many Starter Packs).

I think this breaking news is only "tip of the iceberg" for our industry (where hopefully, GOOD things will come from it, over time).

Here's wishing you much success, as we witness transformational (and needed) changes coming for our industry (my opinion).

Peter A.

Peter Arnold, CLU, CFC / Canada
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Postby Melvin Goodrum on Wed Jul 27, 2016 9:22 am

They settled for 200 million without any mention of wrongdoing....a huge victory for Herbalife actually as its a billion dollar company. They drop a check and business continues
Getting Rowdy Since 1993 In Network Marketing

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