HerbaLife is a Big MLM Scam

HerbaLife: Pyramid Scheme

The publication of my HubPages article “The HerbaLife Scam,” has left many people quite steamed. As of this article’s publication, I’ve received a grand total of 512 comments. Some of the comments are good, some are bad, and some are just plain ugly. Many of the people making the comments are under the assumption that I am a burned out and jaded HerbaLife distributor. Others assume that I used to be a HerbaLife customer and the company’s products did not work for me. In fact, I am neither. Rather, thanks to what I've been reading and researching about HerbaLife, I am convinced that the company is nothing more than an elaborate pyramid scheme.

I wrote the original HubPages article “The HerbaLife Scam” after carefully reading and studying its business model. What I found out was shocking. First of all, HerbaLife’s 2009 corporate annual report boasts that the company has 2.1 million distributors in 72 countries, with annual sales of about $3.7 billion. At first glance, this would appear to be good news: $3.7 billion divided by 2.1 million distributors equals $1,761,904 per distributor. Unfortunately, such a number assumes that every distributor is paid equally from that $3.7 billion pot. The company’s own Statement of Average Gross Compensation of U.S. Supervisors for 2009 states otherwise.

To begin with, the Statement starts off with the sentence “Over 25% of Distributors reach the rank of Supervisor and above (“Leader”), qualifying them for additional compensation which is paid by Herbalife based upon the sales production of those they have sponsored directly and indirectly.” This means that a large percentage of the HerbaLife Supervisor’s annual salary is based not on how much product he or she sells, but rather on the number of individuals that are recruited to become Distributors themselves.

Reading further, I found the following statement: “The annual gross compensation paid by Herbalife to all Leaders during 2009 averaged $2,400. Over 46% of Supervisors are “Active” (defined as those who generated at least 2,500 points of volume in 2009 after becoming Supervisor). The annual gross compensation paid by Herbalife to Active Leaders during 2009 averaged approximately $5,100.”

When I first read this statement, I was dumfounded. $2,400?!? $5,100?!? If active “Leaders” were making such a pittance, then where was all the big money going?

The answer was provided in the next few calculations:

Active Leaders

Earning Level % of Total Leaders % of Active Leaders Average Earnings (USD)

President’s Team 0.2% 0.5% $ 449,261

Millionaire Team 0.7% 1.4% $ 85,515

GET 2.4% 5.2% $ 19,470

World Team 2.6% 5.6% $ 5,064

Supervisor 40.9% 87.3% $ 478

Total 46.8% 100.0% $ 5,120

Apparently, life is pretty good if you find yourself on the President’s or even the Millionaire’s Team. However, if you are starting out as a newbie distributor, you’ll be lucky to make even the Supervisor’s compensation level. And even the number of distributors who make it to the Supervisor level is not that large: for 2009, out of 2.1 million distributors, the company’s annual report estimates that about half a million were “sales leaders.” So, not only do you have only a 25% chance of making it to Supervisor (or above) level, once you do “make it”, you have only a 0.9% chance of making a decent living wage on the President’s or Millionaire’s Team. However, your chances jump to 1.9% if you go about recruiting others. Let me ask you the following question: would you go to work every day, and work an average of 40 hours per week, if there was only a less than 2% chance of you making a real wage?

Taking a look at the numbers stated above, it does appear that the majority of HerbaLife distributors work for a pittance of what they could be making. Meanwhile, a small upper echelon that is able to recruit others to work below them makes a good sized chunk of the company’s earnings. I think there is a word for this type of arrangement: pyramid scheme.

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Comments 32 comments

BenjaminB 5 years ago

Yes it is most definitely a pyramid scheme Hally. I tried to sell it many years ago and quickly learned no one wanted to buy it and the thing the support always tried to push on you was signing new sales people up and teaching them to do the same thing.

I've tried many of these same programs in different genres through the years and they are all a waste of time.I guess I just could not get excited about talking someone into buying into a scam is the reason I failed.


Wondra 5 years ago

All I have to say is you can read and read and read, but you will never understand how to be successful in the Herbalife business. We promote nutrition, and make large amounts of money from it. I don't know why I'm blogging, but I find it quite funny that some of you people who bash it just read some little things once. lol


Stephanie 5 years ago

Herbalife is NOT a scam. By very definition a scam is a fraudulent or deceptive act or operation. In no way are you deceived by this company. You go in knowing it is commission based. Commission based positions are the most difficult to work and a lot of people have trouble with it. Herbalife produces nutritional items and the distributors sell them. When you buy a product you are given that product - no scam there and the price is listed for you. If you do not like the product return it for a full refund. How many stores will do that for you? Go to GNC with an empty bottle and tell them you did not like the product see if they exchange it. Open a DVD from Walmart tell them you hated the movie see if they exchange it.

You do not have to be a distributer to buy the products, granted if you become a distributer you get a 25% discount but you do not have to be to purchase. They do not sell their products in the store so you need to go through a distributer to purchase, but same goes for Avon.

You also do NOT need to give your list of friends and family as long as you advertise your business in some way to get your clientel you are fine, but that is the same for any business. You open a storefront and sell clothes, food, or anything else - you need to advertise. Some people will just randomly stop but you cannot rely on that type of advertising.

It is not a pyramid scheme either - these are illegal and pyramid schemes you cannot make more than your upline - in Herbalife you can make more than your upline as long as you put the effort into it. Corporate is a pyramid scheme - how many people make more than their manager? Their CEO? We can make as much or more. And of course the higher you get in the ranks the more you make that is COMMISSION. Means you are selling more and having more people under your management. In corporate you could have 5, 10, 15, 20 people under you and you will make the same amount with any of them unless your boss has mercy on you and gives you a raise. I have managed companies, had 5-20 people under me depending where I was located at the time, been given loads of responsibilities, been a personal assistant to the president (and all of this at once might I add), even procured a $520,000 production job with the promise of a commission on it. My boss gave me an envelope with $100, kept me at my $12 per hour, and said nice job. Long days, weekend work, no raises, stupid bonuses, and I was tired of being taken advantage. How about we blog on that company?

People in corporate do not question their salary because that is the norm. Go to work get minimum wage and then go home. Commission is work. If people wish to get paid minimum wage and are happy with it - that is up to them and all the power to them. They want to go to their deskjob, do little to no work, have small talk at the water fountain, have their paycheck and go home. Herbalife is a constant business. It takes effort. You take your days off and manage your own time. You are your own boss and while you are in business for yourself you are never in business by yourself - you just have to let your team know what you need. You will get people that want to buy the products because they are good products and you will get people that want to start their own business. You will also get people who do not - same with any company. I do not purchase every time I walk into a store not many people do.

You wrote that the man who created Herbalife died from a drug overdose - what does that have to do with the business? That was a tragedy but his personal choice. If you dwell on the bad parts of a business then of course it sounds bad. If you tell me all the mistakes you have made in your life and all your achievements and I dwell on your mistakes - wouldn't that make you look like a bad person? You have not been objective in your articles and you are anonymous. You even titled your first article scam and this one scheme. Both have bad connotations. I wish people would do their own research and not just google herbalife scam - of course they will get the bad overviews.

Here are some links to Herbalife http://www.bbb.org/southern-colorado/business-revi...

Herbalife First Quarter Results: (May 2010)

http://maddmoney.net/jim-cramers-ceo-interview-vid...

Herbalife Second Quarter Results: (August 2010)

www.cnbc.com/id/15840232?video=1558673260&play=1

Use your own mind. If you want to join then join if you do not then please do not badmouth the company, be objective. We have a freedom of speech but some people really abuse it.


Visly 5 years ago

This is the same question I doubt when reading Herbalife annual report. Only rasionable person would analyse things in logical way, unfortunately truth and facts had been pointed out, yet still many people can not accept it.


Michael 5 years ago

Stephanie gave a nice summary of why Herbalife is not a pyramid scheme from a human perspective. She is also quite articulate.

To the original blogger, you need to look up the definition of a pyramid scheme so that you will see that Herbalife is not one from a legal perspective either. Next, you need to stop defaming Herbalife which has a legal business model.


luke 5 years ago

hey guys... this guy doesn't understand the marketting plan. so if an active supervisor produces 2500 VP himself that really a retail busines... So in australian terms he is making around 2000 to 2500 dollars profit per month by turning over that product. then what ever he stated on top of that is royalty income or $2100 per year. so that's $32 100 profit per year for a part time small busines... not bad... lets see if the guy who wrote the article can earn a extra $32 100 per year around his full time job...


ben 5 years ago

I make 100 times that selling a more effective herb> pyramid scheme. When you guys supporting this make as much money as the president guest speaker whose dick your sucking I'll believe its legit> the fact is you guys are going to work/embarriss yourselves to make someone else money then youl just give up


Dumbledore profile image

Dumbledore 5 years ago from Somewhere in Ohio

From what I have learned, supervisors are not paid a royalty on recruiting distributors but on the volume generated by those distributors.

You need to learn the definition of a pyramid scheme.

Your hub is, however, well written, interresting, and a good read.


Fabius 5 years ago

Hi Hally

what you write is the Proof that you understand Nothing about Network marketing.

All your Blogs have to do with scams are you sure that also your live is a scam ??


Jack Darrington 5 years ago

I had a friend in Ecuador who was a distributor for Herbalife. I remember when she told me about how much money she was going to make because she was going to recruit all her friends and make money off of what they sold I remember thinking this is a pyramid scheme. One that takes advantage of people who sincerely want to experience some weight loss but instead pay good money for expensive vitamins.


fabius is brainwashed well all herbalife users are!! 4 years ago

Incomeathome scam PPL please read.

If anyone out there has been scammed by herballife to create an income (not the product itself) please email me with your story. I promise one thing I will NOT use your name or email address or what you wrote in your email unless I contact you first and you agree and I get a signature or something from you- I too am a real human with real feelings and a real life, I do respect you and myself. My goal is NOT to get money or any personal info but information from ppl who have paid money to start working at home and have been given all these false hopes and dreams and made nothing. Ppl who have been scammed, its usually the women or men who want to be with their children all day as well as make money online, just like myself. We are comfortable but wanted a little more (we are happy with what we have now, I was being greedy) The ppl who have paid for information they never actually get.. well unless they pay 325.00 first and then what???

Anyone with info please PLEASE email, I was scammed and I want something to happen and I know im not the only one so,… well I need your help. I too am very embarrassed but I do believe that we can stop this. Not herballife but full disclosure all the info before we pay any money. This does not help you make money unless your willing to recruit others to pay the 325 required to earn money and even then only 0.5% do. NOT once was that mentioned to me until I had forked out this much. And yes many will say its my fault and I agree, to begin with it is but after all the bullshit they thrust apon you no wonder these ppl are making so much money.

Please help me by sending your stories and I will answer each and every one, from what I gather its going to be a few ill try and reply to everyone even if it’s an attachment of what im telling everyone. AGAIN I will not use your name wmail addy or any info you give me until I clear it (if I can) with you, I seriously need to know how many ppl were scammed and what we can do, as a group, to stop this.

Email scammedppl@y7mail.com

Thank you

PB


Chuck 4 years ago

I recently tried herbalife sales it is a joke.Before they explain any thing they ask for a creidt card number if anyone falls for this I feel sorry for them.


Adam 4 years ago

Been distributor for two years in Australia. Started part time, now full time, earning $5000 month , and happy with results. Why do u say it's a scam??? I sell weight loss products and give support to my customers. Distributor makes the profits instead of some big corporation. That's what network marketing is about. selling health products is hardly a scam. Ridiculous .


kschang profile image

kschang 4 years ago from San Francisco, CA, USA

@Adam -- you may be earning $5000 a month, what about your downlines? How much are THEY making? How much of your $5000 is from your own sales and how much as "commission" of sales from your downline?

Selling health products in itself is not a scam. Selling products with promise of making great income when it's anything but would be a scam.


Rene 4 years ago

All activities require a learning curve. Herbalife is a fantastic company with a mission: to improve ppl nutrition. Ask what are you buying for $3 in the restaurants? Fast food places? supermarket? Do you know, what you are buying?? Do you know what you are giving to your ONLY BODY? See the facts on the rise of overweight ppl, diabetes, cardio problems, etc my friend...who are you going to turn to - your doctor? Your pharmacist? Wake up my friend, chose your friends wisely. Have you seen the results ppl are getting with Herbalife Complete Balanced Nutrition? We get paid by improving ppl LIVES! This is not rocket science, it easy, practical and extremely VALUABLE!

Go to the Herbalife events - grow your vision, share your heart, build relationships, improve ppl lives and make ROYALTIES! Check out story, if can do it can too - http://reneporcile.blogspot.com/


Ruby Guerra 4 years ago

Herbalife is no scam. If you have not been a distributor nor tasted the products first hand, how can you assume by reading articles written by people (such as yourself) that they are the truth? I am an herbalife distributor and I can gladly say that I earn $45,000 a month. It is no pyramid because several of my distributors are earning much more than I am. The products work wonders as well, only if you are dedicated. Just like anything else. So don't make assumptions over things you have not tried yourself and feeding people these false accusations.


Ryan weaver 4 years ago

What cracks me up is ppl automatically think *pyramid scam* have you not looked at the work pyramid? Same concept, your a worker who has to work his/her way up to a higher position! No ones going to give you a silver spoon and say here you go, have fun! Me and my wife joined April 12 -2012 it's now April 27 2012. Not only have we lost weight, feel better about our selves, but have sold 2506 volume points within 2 weeks! She's a stay at home mom and I work full time! I havnt even had a chance to promote at work. Good things don't come to those who wait, good things come to those who bust there asses and earn there living. I enjoy Herbalife and support anyone who wants a healthier lifestyle!

Ryan weaver

Choctaw Oklahoma


swentworth 4 years ago

Its ironic how so many focus on Herbalife as a "pyramid scam" trying to deface a world leader in nutritional supplements with direct marketing. Why arent these same people doing the same for Avon, Amway or Tupperware. Pretty much the same business model or why else would these companies want to do recruiting as well. Or even writing about McDonalds when they open a new franchise. Isn't that more of a "pyramid scam" than anything else. Must be fear of the unknown or ignorance. I would like to think we are smarter than that, so it must be fear.


Harry A. Hole 4 years ago

I make $25000 per month part time too. Of course I'm not going to show you any proof.


Internetwiz-guy profile image

Internetwiz-guy 4 years ago from Kigali, Rwanda

Oh my God! I can't believe what i am reading..well, i cannot judge what your reasons with Herbalife are but network marketing is pretty different from those scams. It is always good to have a first hand experience with a product to be able to substantially write about it. But the information you provided can be good for many people who would like to delve into pyramid schemes. For us internet marketers, we stick to our principles. Top quality stuff. http://website.ws/adnan77


Chantelle 4 years ago

I just don't get it, how people will go through so much trouble and sound so intelligent trying to put doubt in others mind. So what if its a "pyramid scheme" its not a scam, its a MLM. You know from just an average person who had ill health and nearly gave up on life to now,I have been on Herbalife for a year and my Doctor was the one that told me to keep taking Herbalife I have never been healthier, no scheme no scam all facts. what Herbalife does for this world is truly amazing we have top athletes taking it to amazing sponsorships not to mention the youth foundation that we all contribute to. I started selling Herbalife cause I was amazed, my kids are healthy Ive even converted my husband who was the biggest critic, to him realizing this is top top top of the range. I run an actual business , just like what I would do if I had a beauty salon, I provide products a service and make up adverts to advertise. I do Demos etc etc etc, I am actually very busy but all around my family, I was over the moon when I bought my own Mobile with my earnings and I worked for it!! We have ladders to climb that reward us the higher we go, Im nearly to my next level Im so excited. If Herbalife don't work for you then it don't work for YOU but it does not mean that the millions of others it has helped is a SCAM!!!! Honestly the lengths some people go to spoil things grinds me!


Grateful Soul 4 years ago

You can "make" a certain amount of money a month, but how much of it is really PROFIT if you have to keep buying product to sell to others. Subtract the cost of buying Herbalife products from your monthly "earnings" and this is called NET income. It is much lower than your monthly sales. This is a scam and just because you fell for it doesn't mean others have to as well.

EDUCATE yourselves people before you get started on this Herbalife "Active Nutrition Centers" scam. All those people there on the ads "working" are not getting paid a base salary and have to recruit others to make money. It's like a cultish pyramid scheme. Do your research on lawsuits against them before you fall for it.


Sammy 4 years ago

"Rather, thanks to what I've been reading and researching about HerbaLife, I am convinced that the company is nothing more than an elaborate pyramid scheme."

Right there is where you lose credibility. A wise man once said that opinion is formed by mixing 90% "hearsay" and 10% "fact". This cycle keeps going until no-one wants to try and attain a dream... even the ones that ARE capable of making a success.


Marcos Sierra 3 years ago

Herbalife has changed my life. I know that it does seem like a scam but the truth is that it is not one. I have already made supervisor in one month and qualifying for the world team next month. The truth is that you need to work at this business to get anywhere just like in life! You get what you put into it so if you don't think you will succeed then you wont, simple as that. Herbalife is for the hard working and not for the people that want a free ride.


John M 3 years ago

It is not a pyramid scheme - but it IS a pyramid business model.


April Sakazov profile image

April Sakazov 3 years ago

Herbalife is not a scam!

It is not a pyramid scheme - but it IS a pyramid business model.

There's lot's of pyramid business model out there.

And the products does work if u follow by a right coach.

There is no "EASY MONEY" in this world.

you wonna earn much then u need to work hard on it. DUH!


April Sakazov profile image

April Sakazov 3 years ago

@kschang

"Selling health products in itself is not a scam. Selling products with promise of making great income when it's anything but would be a scam."

INDEED AND THAT GOES BY PERSONAL not the company and the products.


swentworth 3 years ago

All these comments are so true as far as the positive feedback on Herbalife and her products. The biggest problem is retention. Customers general stick around for a month or two possibly three if your lucky and are never heard from again. The products are amazing and the business model is legal, but the ability to represent a company that does not want you to use the name is very hard to back up. I was with the company for nearly 2 years, and never made my money back. I am not bashing Herbalife, just how they implement the business model. I have since then moved on to another MLM that actually allows you to use its name and represent the product as a brand partner and you get paid. No fumbling with merchant accounts, or collecting money or waiting for checks to cash. I don't know about you, but I am all about the path of less resistance and more profit.


April Sakazov profile image

April Sakazov 3 years ago

there's no such retention. It's your body getting healthy and letting bad things out they did not get sick. u can get explained on their nutrition webpage.

my body isn't that well before. when i just started herbalife my period came like a pregnet woman's amount for a week. and got better in sec week, period came for a month and few more days.

everyone's just got it from different ways but they did NOT get sick.


Weird 3 years ago

This is so stupid you guys are all fighting for something not worth arguing about lol really,i can create a webpage like this and literally look up how people are messed up personally and shouldn't be trusted. Sounds like someone wasn't successful in anything and blamed life or a company. This website makes me laugh. Literally any one can create a website and call anything a scam now a days, heck I can make a website like this and point fingers at anyone and call them a scam during his or her life.


Liz 2 years ago

Herbalife is not a scam. The ones that go around saying it's a scam are usually the ones that go intoit thinking that they are going to get rich quick..... sorry, you have to work......but well worth it...you get rewarded for the effort you put into it & you get to live life on your own terms......it feels surreal that I'm achieving my lifelong dream of working from home., getting paid helping other people achieve their weightloss & wellness goals & improving their financial situation if that's what they choose to do. THANK YOU Mark Hughes & THANK YOU Herbalife


Sandra 19 months ago

Its a SCAM! BEEN THERE DONE THAT! THEIR BRAIN WASHED!! HAHAHA

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