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Herbalife Ltd. Message Board

  • singhlion2001 singhlion2001 Mar 30, 2013 6:35 PM Flag

    RED ALERT: ANY ONE STILL HAS ANY DOUBT THAT "HLF" IS NOT PYRAMID SCAM?Income At Home, Herbalife, and the $8 billion pyramid Exposing the iconic brand behind Scamworld’s most visible ‘biz opp’

    Income At Home, Herbalife, and the $8 billion pyramid
    Exposing the iconic brand behind Scamworld’s most visible ‘biz opp’
    By Matt Stroud

    Read this Investigation: Game Over.

    Roaring Salute to ACMKMAN

    Upline, downline
    As a regular reader of The Verge, you probably know that Herbalife is what’s known as a multi-level marketing company (MLM). Instead of dealing directly with franchises, an MLM distributes products through a network of independent distributors.

    To understand how MLMs differ from conventional franchising, let’s go back to Wendy’s for a moment. If you wanted to take advantage of the business opportunity afforded by the home of the Frosty (which is not a pyramid scheme), you’d become a franchisee — you’d pay Wendy’s to use its name and products for your own restaurant. The path would begin in a pretty straightforward way: email the company, and they’ll get you started.

    If you wanted to work with Herbalife, however, the company would put you in touch with an independent distributor — someone outside the company. The term itself, "distributor," conjures images of, well, distribution — handling products. And Herbalife would love it if you actually believed that you could earn a great living if only you worked hard and sold the #$%$ out of things like cell activator pills and body buffing scrub. Just like Shawn Dahl did.

    The real nature of his success, however, is embodied by two key MLM terms: upline and downline. Simply put, if you signed up for Herbalife today — and please don’t — you wouldn’t interact with the company at all. You’d interact with the person who recruited you: your "upline." (And if you started recruiting distributors yourself, they would be your "downline.") Since you’re restocking through your upline, it’s the person who recruited you in the first place who receives a commission from any sale that you make. Or any sale you fail to make, as long as you keep placing orders.

    There’s no guarantee that any of those leads will pan out, of course,
    but the opportunity’s there
    The first step with Online Business Systems is purchasing something called the Internet Startup Kit. This is the same thing that Income At Home sold Barron Hansen. If you go to either of those websites at the time of this writing, the ordering page clearly states that you can try the kit risk free for 14 days, if you pay $9.95 shipping and handling. After two weeks, if you don’t return the kit, you’re charged the full $39.95 price. According to Hansen and several others, the terms weren’t always that clear: the web is full of complaints made by people who thought they were paying $9.95 for something that cost five times that.

    If you’re still with the program, you’ll receive a call from a "mentor," which is little more than someone who was recently in your position. They bought the kit, liked what they heard, and stuck with it long enough to purchase your name from Online Business Systems. Hopefully, they’re having less luck than their mentor did.

    The next step in the process is to sign you up as an Herbalife distributor. Outside of Dahl’s "system," this will cost you something in the $100 range. But with Online Business Systems, the price is $399.

    And what if you want to start your own downline? In order to do that, you need to become a supervisor. This requires other product purchases, where you’ll spend up to $4,000. With this investment, you’ll receive a ton of sales tools and advice from Shawn Dahl’s team, some of which may be helpful. But unfortunately you won’t get any sales leads. And you can’t really sell Herbalife without anyone to sell Herbalife to.

    Cheap leads cost about $6. But if you want the good leads, the Barron Hansen-quality leads — that is, people who have responded to Glenn Beck’s radio ads and typed their credit card numbers into a website purporting to provide business information — you’re paying closer to $100 a head.

    There’s no guarantee that any of those leads will pan out, of course, but the opportunity’s there. And, by the way, you’ll also want to buy a website to sell your products and attract new distributors. That’ll run you $79.95 per month.

    Sentiment: Strong Sell

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    • Legally, a pyramid scheme is when a multilevel marketing company distributor makes MORE money RECRUITING than SELLING product. To your point about illegality, pyramid schemes are inherently fraudulent and the repercussions are severe.

      Herbalife to track wholesale customers in April
      As good an admission as any that there are some serious problems with Herbalife’s current compensation plan and business model, the company announced today that it ‘will more clearly identify the wholesale customers among its 3.2 million distributors from April’.
      The big questions?
      Will Herbalife actually cut off these wholesale customers from the income opportunity (making them true customers) and will said wholesale customers stick around after being cutoff from earning anything?
      Herbalife disclosed that the decision to create a wholesale customer class in April came about after it held ‘short discussions with Carl Icahn‘.
      Icahn is an investor in the company who currently holds a ‘13 percent stake in the company‘. Why an MLM company is only now taking action and direction (from a stock investor no less) I have no idea.
      On an investor call, CEO Michael Johnson stated that ‘beyond that (discussions with Icahn), there’s nothing concrete to report‘. Whether or not a regulator has stuck their finger into the Herbalife pie and prompted their decision remains to be seen.

      Update 21st February 2013 – Herbalife has announced that they are ‘cooperating with a Securities and Exchange Commission review of its business model‘.
      This seems far more likely the reason behind Herbalife’s wholesale customer’ announcement, as opposed to it being the result of discussions with Carl Icahn. /end update

      In anycase the announcement is a welcome one and if Herbalife do truly cutoff what they claim are existing wholesale customers, provide a deeper insight into the distributor to customer ratio of the company.
      Currently Herbalife claim that ‘73 percent of its “distributors” join Herbalife just to get a discount on the products rather than to earn money‘.
      They identify these distributors as not having earnt anything. Joining Herbalife as distributors and as such participating in the income opportunity, this would make them “failed distributors” (in that they made no money).
      Herbalife however insist they aren’t failed distributors but are instead wholesale customers. Where the 73 percent figure comes from I have no idea, it appears to be pulled out of their #$%$. Herbalife are notoriously vague in tracking distributors statistics, at least publicly.
      Given review of the current Herbalife compensation plan, there’s no way to differentiate between a failed distributor and wholesale customer as they’re both distributors who earned nothing. Truthfully or not, Herbalife just presume that if you didn’t make any money as a distributor then you are a wholesale customer.
      Another aspect to consider with the introduction of a wholesale customer class would be general attraction to the business. Currently you can recruit distributors on the promise of the attached income opportunity, with Herbalife claiming you as a wholesale customer if you fail to generate any income.
      With no access to the compensation plan and income opportunity, it will be interesting to see whether or not the existing distributorbase will be able to market the products.
      One of the key points of Bill Ackman’s criticisms of Herbalife is the fact that demonstrably, Herbalife’s products are overpriced. The current pricing of Herbalife’s product range only makes sense if you consider the attached income opportunity.
      Another possibility is that the wholesale customer class will flop, revealing that, contrary to Herbalife’s unfounded claims, that new distributors are infact signing up for the income opportunity, buying a whole bunch of products to qualify themselves for commissions and then failing to generate any.
      And what about retail? Surely the introduction of a wholesale customer class (with no distributor membership fee) will kill the retail side of the business?
      Why pay full retail when you can sign up as a wholesale customer and get a 25% discount? Sure you’ll have to commit to a minimum monthly autoship but if you don’t like the product just cancel the order after a month. That’s still better than paying 25% more.
      Either way Herbalife’s announcement appears to be a bit of a gamble for Herbalife but as I said earlier is a welcome one. They’re pegging everything on supposed wholesale customers they’re not even sure actually exist.
      Here’s hoping they follow through and create a wholesale customer class that is truly cut off from the income opportunity.
      Anything less is just confirming an already present lack of faith in Herbalife’s products themselves, meaning we’re left with a company generating the bulk of its revenue interally from its distributors.

      Sentiment: Strong Sell

    • Sing Cat, dude, who says thats the prime DMO that distributors use? Most are using daily consumption. When is your shift in the boiler room finished tonight. You need some Sleep Now.

    • If king carl is buying then rest assure, hlf is no house of cards. Jmho-bucko

    • You and Ackman should not buy HLF products if you don't believe in them. Just go buy a JCP suit. Man you are full of it. Give it a break.

      Sentiment: Strong Buy

    • "I think they should be in chains," Hansen said, referring to Dahl, Herbalife, and the groups associated with business methods and the misleading lead generation tactics of Income At Home and Online Business Systems.

      "I think they should be prosecuted."

      Sentiment: Strong Sell

57.91+0.56(+0.98%)May 4 4:01 PMEDT