This company reminds me of Selling Candy Bars in Elementary School
In Elementary school we would sell chocolate candy bars and the proceeds went to the school to help pay for new computers, books, or any repairs that were needed. Whoever sold the most candy bars (Top 5 or so) received prizes and such. So the kids would become motivated to try and outsell each other to win prizes. Well, the problem was that many of the kids would actually eat the candy bars or "sell them" to themselves rather than sell them to neighbors and such. So you would have these kids basically asking their family for money to pay for the boxes of candy rather than anyone else buying them.
This company sounds the same except rather than the proceeds going to a good cause (school or such) it lines the pockets of someone making millions a year at the top and the people (distributors-consumers or whatever you want to call them) have major problems and lose money on the "deal"
It seems like a scheme that illiterate people would fall for.
I think you have it right. Fools are the source of HLF's profits. This is very bullish for HLF because a new fool is born every second. It is amazing the profits and growth they have had with this. It all appears to be legal too. At least with Herbalife, just like candy bars, you can eat the inventory and get most of your money back that way.