A Boston City councilor requested the Federal Trade Commission (FTC) investigate the business practices of Herbalife Ltd. (NYSE:HLF) in his district due to allegations that the multi-level marketing company is a pyramid scheme according to a letter obtained by ValueWalk.
Complaints about Herbalife
In his letter to the FTC, Boston City Councilor Tito Jackson expressed concern regarding complaints that Herbalife Ltd. (NYSE:HLF) is ‘praying [sic] on disadvantaged populations and offering them income and hope,' instead 'they receive debt and despair.' According to Tito, he cannot ignore the potential harm the company could bring to his constituents.
“I urge you to [conduct a] thorough investigation into Herbalife’s sales and marketing practices to ensure my constituents and the residents of Boston are protected,” wrote Jackson to Edith Ramirez, chairperson of the FTC.
Jackson emphasized that one of his priorities in his district is to promote economic development, and he is working hard to ensure that Boston residents have the opportunity to succeed personally while helping the city to grow and prosper.
He said, “A company like Herbalife with allegedly deceptive practices threatens to undermine my work. By targeting minority population, and promising a quick buck, Herbalife is taking citizens out of the workforce and diminishing their chances at advancing their careers.”
He added that only a very few people were able to recoup their initial investments in Herbalife Ltd. (NYSE:HLF), and the company's business practices are putting Boston residents into debt.
According to Tito, the company's promotional materials are promising consumers a “generous compensation plan,” but 88% of Herbalife’s participants did not receive any payment in 2012.
Jackson said he does not want Herbalife Ltd (NYSE:HLF) in his community if the allegations against the company are true.
MANA on Herbalife
Earlier this month, a National Latina Organization known as MANA also requested that the FTC investigate Herbalife Ltd. (NYSE:HLF). The organization claimed that the company engaged in “deceptive business practice and abuses” by encouraging Latinas and promising them an “exciting business opportunity” and “unattainable wealth and success.”
Alma Morales Riojas, head of MANA said, “On a personal level, I believe they prey on our most vulnerable, and I have seen some of my own friends in my home state of Texas fall victim to these terrible practices.”
Herbalife Ltd (NYSE:HLF) appointed former Los Angeles Mayor Antonio Villaraigosa as senior adviser to Michael Johnson, chairman and CEO of the company, and to its board of directors. His primary duty is to provide guidance on strategic business development and global community outreach to management of the company.
Full letter to the FTC below.