Vemma Settles with FTC

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It’s a new day for Vemma Nutrition Co.

The Federal Trade Commission announced Dec. 15 that it has approved a settlement agreement in its case against the Arizona-based company, bringing an end to a more than year-long, multimillion-dollar legal battle. The agreement offers a clear path forward for CEO B.K. Boreyko to continue operating Vemma as a customer-focused network marketing company, while also establishing specific rules related to distributor compensation and income claims.

The settlement covers Vemma Nutrition Co., Vemma International Holdings Inc. and Boreyko, and a separate settlement covers former Vemma distributor Tom Alkazin and Alkazin’s wife, Bethany, who had been named as a relief defendant in the original federal court action. The settlement outlines specific business practices from which the defendants are prohibited in engaging, including paying compensation to a distributor unless a majority of that individual’s revenue comes from sales to people who are not a part of the business venture, making deceptive income claims and making unsubstantiated health claims. In addition, Vemma has agreed to…

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DSN will continue to update this story as additional details become available.


Herbalife Beats on Earnings, Boosts 2016 Guidance

Herbalife Ltd. (HLF—NYSE) boosted its guidance for the year in its latest earnings report, released late Wednesday and watched closely by investors following the nutrition company’s settlement with the Federal Trade Commission.

Results exceeded Wall Street estimates for the quarter ended June 30, just weeks before Herbalife announced a settlement with the FTC. The long-awaited deal concluded a U.S. probe into the company’s business practices that had stretched on for more than two years, following accusations by hedge fund manager Bill Ackman that Herbalife rewards distributors for recruiting new members rather than sales of its shakes and supplements. Ackman has backed his claims with large bets against the company’s stock.

In its complaint, the commission did not accuse Herbalife of being a pyramid scheme, and the company is able to continue its U.S. operations, with some new restrictions. Herbalife agreed to pay a $200 million judgment and implement various policy and procedural changes, including distinguishing between those who sign up to sell products and those who only wish to purchase products at a discount.

Additionally, to compensate distributors at current levels, at least 80 percent of Herbalife’s product sales must be to legitimate end-users, rather than for the distributor’s personal consumption.

Taking into account the impact of these changes, management expects full-year adjusted earnings of $4.50 to $4.80 a share, up from May guidance of $4.40 to $4.75.

The company recorded a second-quarter loss of $22.9 million, or 28 cents a share, including a $203 million charge related to regulatory settlements. Excluding items, earnings were $1.29 a share, up 4 percent from a year ago. Analysts polled by Thomson Reuters had predicted $1.21 a share.

Overall sales rose 3 percent to $1.20 billion, in line with the $1.19 billion expected by analysts.

The company is developing new tools and apps to help distributors implement agreed-to changes within the 10 months provided by the FTC. During a call with investors, Chairman and CEO Michael Johnson said Herbalife will “likely roll out” many of the changes globally, once it has studied affects in the U.S.

Herbalife Settles with FTC

Herbalife Ltd. and the Federal Trade Commission have reached a long-awaited settlement agreement resolving an investigation of the Los Angeles-based nutrition company that began more than two years ago. The deal, which requires Herbalife to make specific changes to its U.S. operations and pay $200 million, will be studied closely by the wider direct selling channel.

Herbalife also reached a settlement with the Illinois Attorney General, resulting in the company agreeing to pay $3 million to the office, separate from the FTC agreement.

Company executives and investors responded positively to the settlements, with shares in the company trading above $66 at midday, an increase of more than 10 percent.

“The settlements are an acknowledgment that our business model is sound and underscore our confidence in our ability to move forward successfully, otherwise we would not have agreed to the terms,” Herbalife Chairman and CEO Michael O. Johnson said in a statement announcing the settlement. The statement went on to say that the company believes many of the allegations made by the FTC are factually incorrect but that the settlement is in the company’s best interest in light of the financial cost and distraction of protracted litigation. Herbalife said management can now focus all of its energies on continuing to build the business.

The FTC commenced an investigation into Herbalife 26 months ago, following accusations by hedge fund manager Bill Ackman that the company is defrauding customers. Ackman launched a campaign against the supplement seller in December 2012, backing his claims with a $1 billion short position in Herbalife stock.

As part of the deal, the company will pay a $200 million judgment and has agreed to various business procedures and policy enhancements. The $200 million figure is what Herbalife had floated in its first-quarter financial report as the company’s best estimate of a settlement. The FTC said this is the largest such consumer redress settlement obtained by the FTC and that it will provide information at a later date about how it will make those funds available for consumers.

The business procedures and policy enhancements included in the settlement pertain largely to Herbalife’s compensation model and marketing claims, which the FTC criticized in its complaint against the company. The settlement stipulates that the company must distinguish between individuals looking to build an Herbalife business and those who sign up simply to purchase products at a discount—a practice Herbalife management, in fact, implemented several years ago. Discount buyers are not eligible to sell product or earn rewards. The company is also required to ensure that at least two-thirds of rewards paid out to distributors are based on verified retail sales, rather than distributors’ personal consumption. And, in order to pay compensation to distributors at current levels, at least 80 percent of Herbalife’s product sales must be comprised of sales to legitimate end-users. If that threshold is not met, rewards to distributors must be reduced.

The company also agreed to:

  • require distributors to complete their first year, as well as a …


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Direct Selling Day Brings More than 500 Distributors to Capitol Hill

Photo: Direct Selling Day participants gather outside the U.S. Capitol.

More than 500 direct selling entrepreneurs converged upon Washington, D.C., Thursday for the third annual Direct Selling Day on Capitol Hill. The U.S. Direct Selling Association (DSA) initiative is an opportunity for independent consultants to share with lawmakers the value of the business model, both to individuals and the economy.

Throughout the day participants from 32 states took part in one-on-one meetings with representatives and heard from congressional speakers from both parties. The event also featured a Direct Selling Marketplace in the Rayburn House Office Building, where Members of Congress and their staffs could see firsthand the kinds of products and services sold through direct selling companies. In a statement from the floor by Rep. Marsha Blackburn (R-TN), Co-Chair of the recently formed Direct Selling Caucus, the House of Representatives marked the occasion by formally recognizing Oct. 29, 2015, as Direct Selling Day.

“As a full-time student, direct selling provided me with the flexibility necessary to pay for college while in school,” Blackburn said of her own experience in direct selling. “Running my own business was an extremely rewarding experience and served as great preparation for my career in public service. It is a vibrant sector of the economy that embraces entrepreneurship and helps people achieve their American dream.”

Blackburn also emphasized the importance of the business ethics and consumer safeguards put in place under the DSA’s leadership. Those efforts were the topic of discussion at the DSA Global Regulatory Summit, held two weeks earlier in Washington, D.C. The summit brought together regulators, law enforcement officials, and industry leaders to explore various challenges facing direct selling companies, including issues raised by the Federal Trade Commission’s ongoing pyramid scheme lawsuit against Vemma Nutrition Co. and hedge fund manager Bill Ackman’s three-year short campaign against Herbalife Ltd. Both Direct Selling Day and the Global Regulatory Summit are part of what DSA President Joseph Mariano calls a “tapestry of communication and advocacy” the organization is weaving at the federal and state level to provide an accurate picture of direct selling.

“We want to have the important and sometimes difficult dialogue with regulators on issues that are of concern, but we also want to have this important conversation with lawmakers and policymakers, as a demonstration of who we are, and then we want to have involvement in the community by our member companies and members of the field,” Mariano told DSN. “It’s all of those things together, along with the day-to-day activities of the association and the Direct Selling Education Foundation (DSEF) that will end up, we trust, creating a positive understanding of direct selling and protecting and supporting us in the marketplace.”

Vemma: Caught in the Cross Hairs

On Dec. 4, 2014, Matthew Thacker logged onto a computer in Dallas and signed up as an Affiliate for Arizona-based Vemma Nutrition Co. Seven days later, three boxes arrived containing his starter kit, which consisted of a variety of products and materials for launching his business. Over the course of the next few months, he spoke with his up-line enroller for guidance on establishing his business, attended two training events, received regular product shipments and spent considerable time studying online Vemma training materials.

But Thacker was far from being a new, engaged company recruit.

As Vemma learned in late August, Thacker is an investigator with the Federal Trade Commission. He signed up for Vemma using an undercover name, contact information and credit card account, documenting each step along the way with screen recording software, and he continued to use his undercover identity as he …

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Vemma Regains Partial Control of Business; Judge Appoints Federal Monitor

A federal judge has returned partial control of Arizona-based Vemma Nutrition Co. back to the company’s management team, by granting only part of the preliminary injunction sought by the Federal Trade Commission.

The 10-year-old company essentially had been shut down since Aug. 24, when the FTC served Vemma with a temporary restraining order that it obtained on an ex parte basis. That TRO had come with the appointment of a temporary receiver to run the business and a freeze on the assets of the company as well as the other named defendants: CEO B.K. Boreyko and top distributors Tom and Bethany Alkazin. U.S. District Court Judge John J. Tuchi heard arguments related to the FTC’s request for a preliminary injunction on Sept. 15. He issued his ruling approximately one hour before the temporary restraining order was set to expire on Sept. 18.

Under the preliminary injunction, the judge is permitting Vemma to…

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Vemma Battles FTC to Restart Operations

Arizona-based Vemma Nutrition Co. had its day in court Sept. 15, making its case and asking Judge John J. Tuchi to lift or modify the terms of the court order that has put a halt to the company’s business.

In August, the Federal Trade Commission sued Vemma, accusing the company of being a pyramid scheme, making false and misleading income claims, and failing to provide appropriate income disclosures. The FTC requested and received an ex parte temporary restraining order with asset freeze and the appointment of a receiver, which meant Vemma executives did not have an opportunity to offer a defense prior to the order being issued. The FTC has asked the judge to extend the government’s control of the company with a preliminary injunction. It is the first significant FTC action in the direct selling space since the Ninth Circuit of the U.S. Court of Appeals’ 2014 ruling that BurnLounge Inc. was an illegal pyramid scheme. The court’s final decision will join existing case law in shaping the legal standards that govern direct selling in the United States and may provide new insight into how federal regulators view the distribution channel.

The more immediate issue for Vemma, however, is that the temporary receiver appointed in the case has shut down all company operations, including its international business units and retail sales. “There is no doubt that if this injunction is left in place we are never going back,” Vemma’s counsel said in his closing summary before the judge. The temporary restraining order expires at 2 p.m. local time on Friday, Sept. 18, and Judge Tuchi said he will issue his ruling before that deadline.

The courtroom was packed for the all-day hearing, which included cross examination of witnesses on both sides of the case: FTC investigator Matthew Thacker; professor Stacie Bosley, who provided an analysis of Vemma’s compensation plan for the FTC; Truth in Advertising Executive Director Bonnie Patten; Kenton Johnson, Executive Vice President of Robb Evans & Associates, the temporary receiver currently running the company; professor Emre Carr, Vemma’s compensation analysis expert; Allison Tengan, Vemma’s Vice President of Legal Affairs; and Vemma COO Brad Wayment.

During the hearing, the FTC continued to shape a sweeping case that Vemma’s compensation plan improperly paid Affiliates for recruiting and not for product sales to end users, its marketing materials made inaccurate income claims, and its compliance efforts were ineffective. The defense offered testimony to refute those assertions, arguing that the government built its case without using actual purchasing data from the company and by cherry-picking often out-of-date marketing materials. The defense also focused much of its time before the judge on building a case for why the TRO should be lifted or modified, including establishing that the receiver spent a combined 90 minutes with company management before deciding that he could not continue any aspect of Vemma’s operations under the terms of the TRO.

The BurnLounge Court Decision Clears the Air on Many Issues

by Kevin Thompson

Editor’s Note: On the publication of the Ninth Circuit Court of Appeals’ opinion on the BurnLounge case, attorney Kevin Thompson published an article on Seeking Alpha detailing the decision and what each aspect of the Court’s opinion meant for the direct selling industry as a whole, and Herbalife in particular. This article contains excerpts of Thompson’s longer article, which you can access on or Thompson’s website.

On June 2, 2014, the Ninth Circuit published its long awaited BurnLounge Opinion. Within hours, both sides of the Herbalife (HLF—NYSE) battlefield issued statements claiming victory about the decision. One thing is clear: The gray space in MLM law separating legitimate direct selling companies from pyramid schemes has been minimized considerably.

BurnLounge was held by the court to be a pyramid scheme. In its opinion, the Ninth Circuit clarified a lot of contentious issues surrounding the industry. The factors assessed in reaching that determination are informative for long and short investors going forward. And of course, the factors are informative for the industry as a whole. While the people betting against Herbalife have argued that the entire industry has been propped up with bubble gum and duct tape over the years with clever interpretations of case law, this opinion clears the air considerably.

Thoughtful Analysis Regarding the Definition of “Ultimate User”

The Court dedicated an entire section to the definition of “ultimate user.” Before diving into the law, it’s important to understand the basics: The practice of paying commissions on purchases made by distributors for self-consumption and/or resale is known as “internal consumption.” The opposite is when distributors buy primarily to qualify for bonuses, i.e. buy things they would never buy at prices they would never pay without the financial opportunity. In BurnLounge, the Court held that participants in the plan can be counted as “ultimate users” provided that the participants bought the products for legitimate “internal consumption,” i.e. personal use.

The Court held, “BurnLounge is correct that when participants bought packages in part for internal consumption, the participants were the ‘ultimate users’ of the merchandise and that this internal sale alone does not make BurnLounge a pyramid scheme.”(BurnLounge Decision, p. 19). The Court went on to say, “Whether the rewards are related to the sale of products depends on how BurnLounge’s bonus structure operated in practice.” Bottom line: Factors need to be weighed when assessing whether commissions are driven by “ultimate users.”

What Is an “Ultimate User”?

In this regard, the Court looked to the FTC’s 2004 Staff Advisory Opinion for guidance. The section quoted by the court reads, “In fact, the amount of internal consumption in any multi-level compensation business does not determine whether or not the FTC will consider the plan a pyramid scheme. The critical question for the FTC is whether the revenues (that support the commissions) are generated from purchases of goods and services that are not simply incidental to the purchase of the right to participate in the money-making venture,” (emphasis mine).

BurnLounge was held to be a pyramid scheme because “the rewards BurnLounge paid were primarily for recruitment, and (distributors) were clearly motivated by the opportunity to earn cash rewards from recruitment.” (BurnLounge Decision, p. 3-4). The Court weighed several factors in reaching its conclusion that the majority of the rewards were tied to recruitment, not legitimate product sales to “ultimate users.”

Retail vs. Non-Retail

It’s now a moot point. Up until this case, critics argued that the majority of a company’s revenue must come from retail sales, i.e. sales to customers outside of the network. Their rationale: Rewards via internal consumption were “recruitment rewards,” thus, the majority of revenue must come from customers instead of participants. While external sales remain a strong indicator of product value, it’s not a bright-line, determining factor. More importantly, it’s not a requirement.

In its opinion, the Court made itself clear that purchases made by the participants can be counted as legitimate sales PROVIDED… and this is key… there’s legitimate consumer demand for the products. In other words, the Ninth Circuit affirms the idea that there are essentially two categories of purchases: (1) those by ultimate users inside or outside the network, and (2) those derived via opportunity driven demand, i.e. people inside the network buying to qualify for commissions, otherwise known as “channel stuffing,” “garage qualifying,” “inventory loading,” etc.

Factors the Court Used in Finding that BurnLounge Lacked Sufficient “Ultimate Users”

It’s now reality beyond debate: Revenue from participants inside the network must be carefully considered when assessing a company’s legitimacy. The resulting commissions from internal consumption cannot be blindly treated as “recruitment rewards” as critics would prefer.

What are the factors that the Ninth Circuit used?

  • Purchasing patterns
  • Lack of value
  • Requirements to buy to qualify
  • Lack of consumer safeguards
  • Emphasis of the marketing

While these factors were not centrally located, they were referenced in various locations throughout the opinion. They’re discussed more fully below.

Purchasing patterns: The Court was disturbed by the fact that 95 percent of distributors bought the premium products while only 35 percent of non-distributors (customers) bought the same. (BL Decision, p. 14). The Court said, “If package purchases were driven by the value of the merchandise included in the packages rather than by the opportunity to earn cash rewards, one would expect to see comparable numbers of (distributors) and (non-distributors) buying the same packages.”

Lack of value: The Court held that the BurnLounge products had limited value, thus, the primary motivation leading to the purchases was NOT for legitimate product consumption. (BL Decision, pages 10, 19). Instead, the BurnLounge distributor was motivated to enhance earning potential. The Court held, “In practice, the rewards BurnLounge paid for package sales were not tied to consumer demand for the merchandise in the packages; they were paid to (distributors) for recruiting new participants. BurnLounge, through its recruitment efforts, created its own synthetic market.”

Requirements to buy to qualify: In BurnLounge, participants were REQUIRED to buy the premium packages to qualify for deeper commissions. Since the motivation driving distributor consumption is crucial in pyramid scheme analysis, BurnLounge was immediately dead in the water when it required distributors to buy. The Court held, “The district court found that because purchasing a package was required for participation as a Retailer or Mogul, and because Moguls earned cash for selling packages, (distributors) by default received compensation for recruiting others into the program.” (BurnLounge Decision, p. 10). Plus, distributors had to recruit several additional participants to qualify for the basic bonuses (“concentric retail bonuses”). Without question, the plan forced people to focus on recruitment and buy items they never would have bought at prices they never would have paid but for the income opportunity.

Lack of consumer safeguards: This is a point that’s more nuanced. While the Court did not reference the “Amway Safeguards” specifically, they did note that Amway was found to be legitimate due to its policies. As a recap, the FTC held Amway to be a legitimate enterprise largely because of its consumer safeguards. Specifically, Amway had a 70 percent rule (where 70 percent of all purchases needed to move to other people), the 10 customer rule (where distributors had to certify that products went to at least 10 customers each month) and the buyback rule (where distributors had 12 months to return sellable inventory). These safeguards were not specifically referenced in the opinion. However, in response to BurnLounge’s argument that it was just like Amway, the Court said, “Though Amway created incentives for recruitment by requiring participants to purchase inventory… it had rules it effectively enforced that discouraged recruiters from ‘pushing unrealistically large amounts of inventory onto’ recruits.”

In my opinion, the 70 percent rule and the 10 customer rule are no longer relevant. Those rules are vestiges from an era that pre-dates direct fulfillment. In those days, the “directs” had to purchase inventory on behalf of their entire organizations and fulfill the orders; thus, warranting rules that ensured the inventory was moving to “ultimate users.” Today, unique orders can be shipped to individual homes. The risk of inventory loading is greatly reduced provided that there’s a robust, easy-to-understand and clearly communicated buyback policy.

The Court held that BurnLounge had zero policies to prevent bonus buying. Once bought, the products were non-refundable.

Emphasis of the marketing: The Court held that BurnLounge participants focused primarily on recruitment over product value. The Court wrote, “The district court also found that BurnLounge’s marketing focus was on recruiting new participants through the sale of packages.” (BurnLounge Decision, p. 10). In BurnLounge, the pay plan literally required participants to recruit several people to achieve the basic levels in the plan. Plus, the products had minimal value, leaving distributors with little choice but to focus on the financial opportunity.

What Does This Mean Going Forward?

Network marketing companies will get more intelligent in delineating between “ultimate users” and everyone else. The market is already moving toward preferred customer programs where people can receive product discounts as preferred customers WITHOUT joining the business. Since we know these are metrics the courts want, it’s important to show clean data. Absent clear delineation, we have the factors provided in the BurnLounge case to help. Currently, when people join to save money on product (as my friend recently did with an essential oils company), short sellers treat them as “victims” or “failures” for purposes of beefing up the failure rate and finding a pyramid scheme. As the BurnLounge opinion makes clear, it’s not proper to make such distinctions without carefully considering the motivation driving the sales.

KevinKevin Thompson is an MLM attorney specializing in working with direct selling companies, large and small. He is a founding member of Thompson Burton PLLC and a Supplier Member of the Direct Selling Association.

Amway Leaders Express Relief at India CEO’s Release

After two months in detention, Amway India CEO Bill Pinckney was released on bail Monday.

According to The Times of India, Pinckney was arrested May 26 at Amway India’s headquarters and is accused, along with the company, of financial irregularities by Amway.

Chairman Steve Van Andel and President Doug DeVos issued a joint statement expressing their relief at the news.

“We are thankful that after these many weeks he is finally able to be with his family, yet profoundly dismayed that this unnecessary detention occurred at all, and are even more troubled that it lasted so long,” they said. “Our focus is squarely on efforts to ensure that nothing like this happens again.”

Amway remains committed to the India market and is working with the various governing bodies there to craft clear legislation that distinguishes legitimate direct selling businesses from frauds. It continues to invest in the country and has a new manufacturing facility in Tamil Nadu that is scheduled to come online later this year.

The company also plans a vigorous defense of the charges that led to Pinckney’s arrest, said Samir Behl, Regional President, Europe, South Africa & India.

“We have much work to do to define specific legislation which regulates the activities of the direct selling industry in India,” Behl said in a written statement. “In the absence of such legislation, some authorities have, on a mistaken understanding of the direct selling model, taken the view that direct selling companies are covered under the Prize Chits and Money Circulation Schemes (Banning) Act. This act does not distinguish between genuine direct selling companies and illegal schemes, nor was it intended to. In fact, this act was never intended to cover the distribution of real products and services and is being misapplied against genuine direct selling companies like Amway.

“We are a legitimate direct selling company, which sells more than 140 daily use products across categories like nutrition, beauty, personal care and home care through individuals who make personal recommendations regarding the use of distinctive high quality products and earn commissions only on the sale of Amway products. Amway products are widely recognized and appreciated for their quality and value. The Amway business costs nothing to join, and all Amway products are backed by a money-back guarantee for 100 percent satisfaction of use.

“The business community in India has supported us in this hour of crisis and pledged its continuing support in our pursuit of fair legislation that also protects Indian consumers. Leading industry associations like FICCI, IDSA, Amcham, CII, USIBC and the Kerala Chamber of Commerce openly support our cause. We are thankful to them.”

Herbalife Ducks Ackman’s ‘Death Blow’ as Shares Skyrocket

Photo above: The Herbalife Ltd. logo is displayed outside of the company’s corporate headquarters in Torrance, California.
(Photographer: Patrick Fallon/Bloomberg)

Herbalife short seller Bill Ackman took to a Manhattan stage for nearly four hours Tuesday morning in his latest round against the global nutrition company. In a Monday interview with CNBC, Ackman claimed he would deliver Herbalife a “death blow” in the planned presentation, but it has had the opposite effect on the company’s stock. With one of its largest daily percentage increases thus far, the direct seller closed out the day at $67.77, up 25 percent.

“Once again, Bill Ackman has over-promised and under-delivered on his $1 billion bet against our company,” Herbalife said Tuesday afternoon in its response to Ackman. “After spending $50 million, two years and tens of thousands of man-hours, Bill Ackman further demonstrated today that the facts are on our side.”

The focus of Ackman’s presentation was Herbalife’s nutrition clubs, run by teams of distributors who rent commercial or industrial space to train and recruit others in a social environment. Ackman described the structured recruiting model as a “mini pyramid scheme” used by the company to target the “poorest of the poor” globally, and particularly U.S. Latinos.

At one point Ackman fought back tears recounting his own family’s American experience, which began when his grandfather emigrated from Germany. He claims Herbalife is “selling the American dream” by promising its salespeople success many will never achieve.

“Mr. Ackman’s claim about the earnings of Herbalife nutrition clubs is completely false and fabricated,” Herbalife included in its response. “In fact, according to a recent study commissioned by the company, 87.5 percent of nutrition club operators feel good about the money they earn, and 92 percent want to continue with their club.”

Ackman also took shots at Herbalife supporters and endorsers, including former Secretary of State Madeleine Albright and soccer stars David Beckham and Lionel Messi, saying they failed to perform due diligence on the company and are cashing in on a fraud. Albright’s connections likely enabled Herbalife to enter difficult markets like China, Ackman claimed.

Explaining how Herbalife has built a thriving multibillion-dollar business over more than 30 years, Ackman invoked the deception of totalitarian regimes, the Nazis and the mafia. “People generally believe big lies, because they’re so bold that how could they possibly be false?” said Ackman.

The Securities and Exchange Commission (SEC) launched a formal investigation of Herbalife in January 2013, but thus far has not made any charges against the company. “I think that’s a failure on the part of the SEC, even though they are hard-working, high-quality people,” Ackman noted.

The Federal Trade Commission (FTC) also opened an investigation into Herbalife in March of this year. In April, the Department of Justice, the FBI, and Attorneys General in New York and Illinois launched their own investigations into the company.

Today Herbalife also released the findings of an economic analysis performed by former FTC economist Dr. Walter Vandaele of Navigant Economics, LLC. Herbalife commissioned Vandaele to assess the company’s standing as a legitimate multi-level marketing (MLM) firm.

The assessment included factors such as end-use consumption of the product, as well as its intrinsic value and market demand. In summary, Vandaele found that “Herbalife’s U.S. business operations are consistent with the socially beneficial MLM model and inconsistent with the socially harmful pyramid scheme model.”