If you’ve ever used Herbalife then you may find yourself shocked by the fact that this large health and wellness promoting company is currently under investigation by the United States Federal Trade Commission (FTC). Why is it that they are currently under fire and what does it mean to you?
Understanding the FTC
To even begin to understand the investigation, you must first understand what the FTC does. According to its website, their mission is “To prevent business practices that are anticompetitive or deceptive or unfair to consumers; to enhance informed consumer choice and public understanding of the competitive process; and to accomplish this without unduly burdening legitimate business activity.”
So, essentially, the FTC is accusing Herbalife of having questionable business practices by offering a pyramid type of scheme where each person who joins tries to get others to do the same, creating an upside down funnel in which money flows upwards. This has resulted in people at the top amassing great wealth, whereas those at the bottom are struggling to bring any money in. This type of practice has been determined fraudulent by the U.S. government, and is the main push by this most recent probe.
What This Means to You, the Consumer
Although Herbalife would like you to believe that their way of selling involves people who are passionate about the company and product convincing others to be the same, the FTC warns that pyramid schemes are intended only to create a huge paycheck for whoever is at the top. (Perhaps the best known pyramid scheme was conducted by Bernie Maddoff, a man who squandered more than $50 billion U.S. dollars of investors’ funds.)
This means that you may be buying a product that doesn’t really do what it says solely to help someone else get rich. Is this the case with Herbalife? We’ll find out soon enough – when the FTC posts their results.