Herbalife: Sells but Weeds and Illusions

The Belgian consumer protection magazine: "Test-Achats" sues the company for multi-level-sales practices forbidden by the law.

Test-Achats/November 1, 2004

Herbalife, a well-known multinational specialised in the sale of slimming products and food supplements, benefits mainly from its far reaching network of hierarchically organised independent salesmen. As in the past, Test Achats draws the attention of consumers to the ineffectiveness of the slimming products of the Herbalife range. What is new, however, is that Test Achats has decided to sue this company for its practice of multi-level-sales which is illegal.

The diet products of Herbalife: expensive and not good - For various reasons (not enough proteins, low energy value, too expensive), "Test- Achats" was always very critical with regard to the diet products of the Herbalife range. Their usefulness in weight control is far from proven.

The reasons for the ineffectiveness of Herbalife's diet treatment are the following: no education to better food practices, products are systematically hypocaloric with health risks, a medicalisation of the way of life by the absorption of special products, disproportionate price compared to results obtained. All the indices of an inadequate approach of the diet coincide to create doubt as to the effectiveness of these supposedly miracle products.

Herbalife, a multi-level-sales network

These last months, "Test-Achats" has scrupulously analysed the techniques used by the firm. The principal objective of the Herbalife system is to recruit new distributors who must work with a statute of independent. No direct sales to the consumer occur. The methods of recruitment and distribution are varied. However, lately, and in a very aggressive way, disguised "offers of employment" (insofar as Herbalife does not appear as such) flower on the Internet and in the "employment" columns and in free for all letter box distribution. "Budget et Droits" recently carried out a fully fledged investigation (B&D 175, July 2004).

Once attracted, the interested people must take part in training courses which are real brain washing operations. During these courses a distribution contract and a basic parcel (Business pack) are proposed for a sum of 100¬. However, at this stage, the sale of these products is not of primary importance. The supervisors and other members of the "PRESIDENT'S TEAM" are quick to make the trainees understand that in order to rise within the hierarchy they may find it very beneficial to purchase large volumes of products and resell them to other new distributors whom they will have had the good taste to recruit. The higher the level one reaches in the hierarchy, the higher the commissions and the no-claims bonus and the cheaper the purchase price of the products. Regularly, consumers approached to buy products are in fact pushed to become distributors themselves, for example, to obtain reductions on the price of the products for themselves or their family. But obviously the market soon becomes saturated, and the promotion and recruitment campaigns then become increasingly aggressive.

"Test-Achats" wants to put an end to these dangerous and illegal practices! "Test-Achats" reckons that the sales system founded by Herbalife is an infringement of article 84 of the law on trade practices.

All the signs of pyramidal sales are cumulated: each member of the network grows rich primarily thanks to the purchases made by the new recruit in a completely closed sales circuit. The most important benefits are obtained not by the sale to the ultimate consumer or by the royalties obtained on the sales of the hierarchically low distributors but by the sales being carried out in a closed circuit. The benefit is mainly due to the extension of the system and this is expressly forbidden by the law. The consumers' organisation has therefore recently instituted Court proceedings against Herbalife, in the form of an action in ceasing of trading under the terms of the law on trading practices.

"Test Achats" thus wants the law to be respected in the interest of consumers. These latter are too often exposed to such harmful practices. They are unfortunately influenced by unrealisable promises, and this in a precarious economic context where more and more consumers are the faced with financial difficulties and unemployment.