The whole world, in a sense, is looking for the perfect weight-loss tool, and Herbalife sells weight management products. Not only that, but it is an MLM-based company, and maybe you’re looking to make some extra income. In my Herbalife MLM Review, we will closely examine the products and Herbalife’s chosen business model.
Weight-loss, weight-gain, weight sideways and upside down; in other words, weight is a controversial subject today. Women and men alike are embracing their bodies and learning to love themselves from the inside out.
So why is the weight management nutritional supplement market a $254 billion industry? Some of it may have to do with health, but the majority is from advertising and big companies pushing to make money.
Well enough of that because I could go all day on this subject, and we are here to review the Herbalife MLM model.
Who Is Herbalife?
Mark R. Hughes founded Herbalife in 1980 as an MLM model promoting dietary supplements, and; it began with Mark selling the first weight-loss product out of the trunk of his car.
Mark’s mom passed away at a young age, which he believes was from improper weight management and poor nutrition. His loss and inability to help his mom led him to the desire to “change the nutritional habits of the world.”
Mark Hughes died on May 20, 2000, from an accidental overdose of alcohol and antidepressants.
What Products Does Herbalife Offer?
Herbalife products support wellness for weight management and enhance workout routines.
The Herbalife categories; as can be seen here, are:
- Nutrition – powders and tablets of vitamins and minerals to build your nutrient level
- Weight – includes powders, snack bars, and supplements to promote healthy weight loss
- Special Nutrition – helps support sleep, digestive, heart health and boost immune as well as women’s and children’s health
- Fitness and energy – increase enegy and hydration in sports and fitness
- Skin care including hair – hemp, body and bath, skin and acne solutions
- All other products in general – just as it sounds, all of the products Herbalife offers is listed in this category
Herbalife MLM Review
Herbalife has been a business for 41 years with many ups and downs; on the whole, it appears maybe more downs than ups.
- Over 5 years in 1984 Herbalife grew in revenue from $386,000 to $423 million.
- 1988 world wide expansion
- 1995 expanded products to facial cleansers and fragrances
They ran into many obstacles such as lawsuits, criminal charges, and numerous CEO’s:
- 6 different CEO’s in 41 years
- 1982 reformulation of products due to FDA complaints
- 1984 charges filed by Canada Department Of Justice for false medical claims
- 1985 sued by California Attorney General for false claims, settled for $850,000 and resulting in 800 people laid off from the company and a $3 million anual loss.
- 1999 lawsuit from the shareholders of Herbalife
- 2003 Herbalife paid $7 million into a class action suit fund because distributors had violated the Telephone Consumer Protection Act
- 2004 current distributors filed a lawsuit claiming Herbalife is a pyramid scheme and won a settlement of $6 million dollars but; in reality, Herbalife did not admit guilt.
- 2017 changed their business model and paid out $200 million to it’s distributors due to a law suit from the FTC
- 2019 Herbalife charged with conspiracy by the US Justice Department and paid $40 million to resolve the charge.
- In 2020 the founder Mark Hughes died of an accidental overdose
WOW! That’s about all I can say to this long list of issues Herbalife has had over the years.
And now, in light of the pyramid scheme charges, Herbalife has to show for the next eight years that customers and not distributors purchase at least 80% of their product sales.
How Can You Become An Herbalife Distributor?
You can join Herbalife two different ways:
- Become a Preferred Member and purchase products.
- Or become an Herbalife Nutrition Independent Distributor under another distributor in the company.
Price To Join
It starts getting a bit tricky here. As a preferred member, you pay a one-time fee of $34.95 to get a 25% discount on products. But if you want to make money and get more significant discounts, you will need to purchase 500 points up to 2500+ points in products over 12 months. Moreover, if you want to convert to a distributor later, it will cost a $59.95 one-time fee.
As an Herbalife Nutrition Independent Distributor, you need to buy an Herbalife member pack for a one-time fee of $94.10.
Herbalife Distributor Compensation Plan
The Herbalife Distributor Compensation Plan is one of the more complicated ones I have run across. I tried to figure it out in the hope that I could make a graph, but it was too difficult. What I did gather is a distributor needs to purchase products at a discounted rate and resale them; not to mention, they also need to recruit other people to become distributors and will potentially make more money.
Basically, it is the old MLM model where the more you recruit, the more money you can potentially make. I did find a video that may help explain the compensation plan.
Video Of The Compensation Plan For An Herbalife Distributor
Pros And Cons
YHerbalife MLM has a few pros as well as cons. On the positive side, we will list a few pros and on the negative side, we’ll talk about some cons.
- Longevity in business for 41 years
- Recent change in compensation plan to meet FTC requirements
- Complicated compensation plan
- Requires inventory to make entry level income
- Herbalife has had many lawsuits over the years
- The compensation plan is designed to make the company rich yet very little to no income for the majority of distributors
- Compensation plan recently revamped but underhandledly still focuses on recruitment
- Closely linked to and cited as a pyramid scheme
- Company refuses to comply with the law as evidenced by repeated lawsuits and criminal charges
Herbalife MLM Income Disclosure
I have screenshotted two-income disclosures. The information in the green one is from 2019 and is a required statement that Herbalife has to produce; comparatively speaking, the second one is from 2020, a distributor attempting to recruit new distributors.
The difference is the second one is missing a large percentage of statistics to make it look like everyone can make money with Herbalife MLM.
The income disclosure above says that:
- 78.1% of all distributors make $292 or less per year
- 13.7% make $2,216 or less a year
- 6.9% make $7,008 – $35,581 per year
- 2.8% make the big bucks
The image below from a distributor marketing for recruits says:
- 50% of the distributorsnafter the first year earned $3,168 – $194,556 anually
- 50% first year distributors earned $2,412 – $70,956
The figures in the image below are misleading because it never says anything about the other 50% who didn’t make a thing. If I were not familiar with MLM companies, I would think that all people make money and not look at the fine print.
With all of the lawsuits and trouble Herbalife has had, I find it hard to trust any of the information; in addition to that, the emphasis is placed on the distributors to recruit and make the big bucks. I fear a distributor would do or say whatever they can to get recruits.
The statistics below do not match the claims of the income disclosure above.
According to a report by Fundera, “Only 25% of MLM participants turn a profit.“
Please note that this says “turn a profit.” It does not say that 25% make money. After you take out expenses, very few make money. Only 0.05% made the big bucks that all MLM companies try to make us think everyone earns.
Is Herbalife MLM A Scam?
A scam is a fraudulent business where the company is dishonest in what they offer. I don’t think the products produced by Herbalife are a scam, although they are expensive and in the past have not met ingredient requirements; by the same token, they may provide some valuable outcomes, but I have not taken them to say this is a true statement. At the same time, I do not believe the MLM portion is a scam, but they do border a scam.
Is Herbalife MLM A Pyramid Scheme?
To answer this, I have to go off of the definition of a pyramid scheme, and with this in mind, I have to say Herbalife is not an actual pyramid scheme, but it does closely resemble one, as do all MLM companies. Not to mention, Herbalife received many Lawsuits for running their business as a pyramid scheme.
Herbalife has paid out tons of money over the years; in this case, it was to settle lawsuits and criminal charges, referring them to a pyramid scheme.
The Problem With MLM Companies In General
According to an FTC Government file, an MLM operation does not have a clearly defined definition; but with that in mind, the FTC does call MLM’s a” product-based pyramid scheme“ and compares it to an illegal chain letter. You know the letters you receive in the mail, it says to put a dollar in an envelope with a copy of the letter and send one to 10 people. Then if you do this, you will make a ridiculous amount of money.
The FTC Government document also states that MLM “is inherently flawed, unfair, and deceptive.”
Overview Video Of Herbalife MLM Review
My Recommendations Regarding Herbalife MLM
I don’t very often recommend that everyone stay away from a company; however, this time, I do not recommend the products because of the claims and charges over the years of liver failure and ingredients that are harmful to our bodies. Herbalife was not honest before; what is to say they are honest now when they say the ingredients are safe. But then again, I prefer a more natural-based product, and the Herbalife products may be a good fit for you.
However, I do not recommend the MLM part of the Herbalife company. All MLM models are set up for only the top tier to make money. Herbalife pays according to how many recruits a distributor has. I do understand they restructured the MLM model in 2020; although this may be true, they were forced to do so.
The way Herbalife has handled their business over the years is untrustworthy and breaks my ability to trust them.