LOS ANGELES (Legal Newsline) — The Federal Trade Commission (FTC) has announced Herbalife International of America Inc., Herbalife International Inc. and Herbalife Ltd. will pay $200 million in consumer compensation and restructure their U.S. business operations after allegations of deceiving consumers.
Herbalife allegedly recruited people into business opportunities selling its products by promising thousands of dollars in income. The FTC charged this promise was untrue, as the average reward payment was under $300 for 2014. The minority of consumers who made significant money did so not by moving product but by recruiting new distributors.
“This settlement will require Herbalife to fundamentally restructure its business so that participants are rewarded for what they sell, not how many people they recruit,” FTC Chairwoman Edith Ramirez said. “Herbalife is going to have to start operating legitimately, making only truthful claims about how much money its members are likely to make, and it will have to compensate consumers for the losses they have suffered as a result of what we charge are unfair and deceptive practices.”
As per the settlement agreement, Herbalife must restructure its compensation system to reward consumers for selling product, not for recruiting new participants or buying products from Herbalife.