FTC Gives Bill Ackman Everything He Wants-Except Herbalife's Scalp

The FTC reached a separate $200 million settlement with Herbalife that will provide reimbursement to impacted members nationwide, including in IL.

ABC News found that almost 600 independent distributors of the diet and nutrition sales brand Herbalife had been disciplined by the company in 2013 for making medical claims when selling the company's weight-loss shakes and supplements, despite company policies aimed at preventing such tactics.

The FTC had charged that Herbalife had deceived consumers to believe they could make substantial profits bringing their products to market.

"99% of Herbalife distributors earn less than minimum wage and 86% earn nothing from the company", Pershing Square said.

Herbalife, however, said that the terms of the agreement does not change its business model. However, the FTC used extremely tough words for the company, making it clear that it considerers many of Herbalife's businesses practices as deceptive. "Specifically, consumers will benefit greatly from the settlement's requirement that Herbalife base its compensation structure on verifiable retail sales to end-users of the product, not recruitment of new distributors".

In a statement, Herbalife said it considered numerous FTC's allegations "factually incorrect" and stressed that the conditions it agreed to "do not change Herbalife's business model as a direct selling company".

We guarantee you have at least one person on your IG timeline that's an Herbalife 'gram hustler, constantly posting before and after weight loss pics, singing the praises of the nutritional supplements offered by the company and urging you to get in on the goods. Herbalife will also pay $3 million in a separate agreement to settle an IL investigation.

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But Ramirez said at a news conference that it would be inaccurate to say that the FTC determined Herbalife's practices were not a pyramid scheme.

Thus, participants' wholesale purchases from Herbalife are primarily a payment to participate in a business opportunity that rewards recruiting at the expense of retail sales. "Because of this, we are confident and excited about the future of our business".

Let's hope embattled hedgie Bill Ackman has plenty of aspirin today. Icahn famously called hedge fund manager Ackman a "liar" and a "crybaby" in a CNBC interview in 2013.

Despite ongoing investigation into the company over the last several years, Herbalife is the third-largest multilevel marketing company in the world, behind Avon and Amway, with $3.5 billion in annual sales, according to Network Marketing Central, a direct sales industry publication.

'While Bill Ackman and I are on friendly terms, we have agreed to disagree (vehemently) on this subject'.

Herbalife's shares were up 8 per cent at US$64.08 in premarket trading on Friday. "We expect that once Herbalife's business restructuring is fully implemented, these fundamental structural changes will cause the pyramid to collapse as top distributors and others take their downlines elsewhere or otherwise quit the business". Currently Icahn and his holding firm holds 18.3% of Herbalife's outstanding shares.

Source: FTC Gives Bill Ackman Everything He Wants-Except Herbalife's Scalp