Herbalife Faces New Pyramid Scheme Allegations

Herbalife Faces New Pyramid Scheme Allegations

Herbalife Ltd. (NYSE:HLF), the controversial multilevel marketing company that sells nutritional and weight management products, is facing another problem in Nevada as State Senate Majority Leader Mo Denis called on of Attorney General Catherine Cortez Masto to investigate allegations that it is targeting Hispanics with deceitful business practices.

According to Mr. Denis, he was obliged to write a letter to the Attorney General Masto after receiving many complaints concerning the Latino distributors of Herbalife Ltd. (NYSE:HLF).

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“I always have a concern when it’s that group because I see when people are taking advantage and we do see it every day. There are a lot of businesses out there that offer a lot of services and things,” said Mr. Dennis.

Latino groups advocating investigation of Herbalife

Latino advocacy organizations in Nevada alleged that Herbalife Ltd. (NYSE:HLF) is a pyramid scheme and called for regulators to investigate the company. Currently, there is a nationwide call among Latino groups demanding an investigation into the business practices of the company.

Priscilla Rocha, director of League of United Latin American Citizens in the state said, “They are trying to make a living and if I invest this much money, I’m going to make this much money and I can double my money, and that’s the way they looked at it.”

Herbalife Ltd (NYSE:HLF) was disappointed with Mr. Denis for demanding that the Attorney General conduct investigation without reaching out to the management of the company. In a statement, Herbalife’s senior director for corporate communications, North America said, “A pyramid scheme involves people paying money to participate in hopes that they’ll earn money based on later participants paying to play. It is all about recruiting and like a chain letter it requires unlimited, exponentially increasing recruiting; when recruiting stops, all those still in the system lose their money.”

Others involved in the controversy

The Attorney General’s office said it is aware about the issue regarding Herbalife Ltd. (NYSE:HLF), and scheduled a meeting with LULAC.

Separately, Latino leaders in Chicago requested that Attorney General Lisa Madigan investigate accusations that Herbalife Ltd. (NYSE:HLF) is a pyramid scheme and unfairly targeting Hispanics.

Omar Duque, chief executive officer of the Hispanic Chamber of Commerce said, “Pyramid schemes like Herbalife engage in deceptive business practices and take the hard earned and limited financial resources from inexperienced minority business people. Herbalife works against our goal to support healthy, financially literate communities through their deceptive marketing and business practices.”

According to August Sallas, president of Little VillageCommunity Council, “Latino victims rarely report abuses on their own due to cultural, legal and language barriers.” The group launched a toll-free number (855) 701-5437 for victims in Illinois to call and tell their story. Sallas said stories will be shared with the Attorney General

In October, an ad-hoc coalition of consumer advocates petitioned the Federal Trade Commission (FTC) to crack down on the multilevel marketing industry amid the growing calls to investigate Herbalife Ltd. (NYSE:HLF).

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