In July 2016, the Federal Trade Commission imposed conditions on Herbalife Ltd. (HLF) and its distributors to assure that the earnings potential of the company’s business opportunity was accurately described. Promoters are now prohibited from “misrepresenting or assisting others in misrepresenting, including by providing others with the means and instrumentalities with which to misrepresent, expressly or by implication that participants will or are likely to earn substantial income” and “the amount of revenue, income, or profit a participant earned or can likely earn.” (Section II)
Yet, that’s exactly what happens at dozens of Herbalife “Circle of Success” training events in dozens of locations across the country, from Los Angeles to New York, Seattle to Miami, Houston to San Juan. These monthly events are organized by top distributors in close coordination with Herbalife corporate.
At Success Training Seminars (STSs), held on Saturdays in hotel ballrooms and convention centers across the US, the audience is packed with distributors and their guests. As part of every STS, organizers ask distributors to come up on stage and tell the group how much they earn. These individuals, who parade across the stage, one after the other, have a few seconds to give their testimonial. These are not the star distributors, who appear on stage as part of the event grand finale, accompanied by thumping music and a crush of distributors rushing the stage to get the speaker’s autograph. For the most part, the group providing testimonials is presented as rank-and-file Herbalife distributors.
The testimonial section of the event is included in a segment known as the Herbalife Opportunity Meeting (HOM), which is intended to provide information for the guests that distributors brought to the meeting in hopes of recruiting them into the business.
There is little doubt that distributors feel pressured to go up on stage and to exaggerate their income. Top distributors frequently tell their downline members that the way to succeed in the Herbalife business is to maintain a positive attitude. Why bring down this part of the meeting – which is, after all, a sales pitch for potential recruits – with a less than inspiring story?
Also, even if distributors tell the truth about the size of their checks, the income claims they make are typically based on gross income; testimonials don’t include information about the costs of operating an Herbalife distributorship.