Herbalife Ltd. (NYSE:HLF), the highly controversial multilevel marketing company selling nutritional and weight loss products faces another foe— the Culinary Workers Union Local 226, one of the most influential unions in the country.
Geoconda Arguello-Kline, secretary-treasurer of the Culinary Workers Union Local 226, urged Nevada Attorney General Catherine Masto and Federal Trade Commission (FTC) Chairperson Edith Ramirez to investigate the allegations that Herbalife Ltd (NYSE:HLF) is a pyramid scheme
Different Latino activist groups already called for investigation
The Culinary Workers Union joins several Latino organizations such as LULAC, Hermandad Mexicana, and the Federacion de Clubes Michoacanos Unidos de Nevada (FECMUN) in requesting inquiry regarding the business practices of the multilevel marketing company. These Latino organizations complained that Herbalife Ltd. (NYSE:HLF) unfairly targeted and recruited members of the Latino community with a promise that they will gain financial freedom, but ended up losing money.
Union believes allegations against Herbalife
In her letter to the Attorney General and the FTC, Arguello-Kline emphasized that the union believed the allegations that Herbalife Ltd (NYSE:HLF) is “unfairly targeting minority groups and luring them into a losing business deal.”
Arguello-Kline noted that the management of Herbalife Ltd. (NYSE:HLF) already admitted the fact that it is targeting minority groups because of its “African American Initiative” and “Latino business.” She emphasized, “By recruiting vulnerable people in these communities with little or no business experience, Herbalife convinces new sellers to ignore the risks and high costs of their program.”
She emphasized that the individuals who joined Herbalife Ltd. (NYSE:HLF) failed based on the data of the company that 88% of its distributors and sales leaders do not receive any payment. Arguello-Kline said the Culinary Workers Union represents tens of thousands of Hispanic families and it is joining the increasing number of organizations calling for an investigation into the company.
“We strongly urge you to investigate and for the FTC to open a full investigation into Herbalife’s recruitment tactics and business practices. If they prove to be biased and unfair, Herbalife would be responsible for personal harm and financial distress throughout minority communities. The Attorney General’s office has a duty to protect these consumers,” said Arguello Kline
FTC considering lawmakers’ concerns against Herbalife
Meanwhile, the FTC said it is seriously considering the concerns raised by Sen. Edward Markey regarding complaints that Herbalife Ltd. (NYSE:HLF) is a pyramid scheme. FTC chairperson Ramirez informed the senator that the agency takes into consideration several factors such as the impact to consumers to determine its actions.
Ramired added certain rules and provisions prevent her from disclosing any information regarding the activities of the FTC regarding the issue. She said, “With respect to the allegations against Herbalife Ltd. (NYSE:HLF), a number of statutory provisions and the Commission Rules of Practice prevent me from discussing what action, if any, the Commission may take in any particular situation.”