Even if FTC steps in, 80% of sales are outside the U.S.
This whole saga is intensely curious. The entire 300+ page presentation is based on one half-paragraph blurb from the FTC on what they consider a pyramid scheme. It's a skyscraper built on sand. And even if the FTC did take up the cause (*big* if), AND instituted a punitive punishment (bigger if filled with legal potholes), AND Herbalife pulled out of US instead of just changing their compensation system (almost inconceivable), that still leaves 80% of the business untouched!
No guarantee that it won't be in business in the future but it could be still making profits 20 years from now. I remember getting a flyer on my windshield around 1990 while I was working in Santa Monica. It was a get risk scheme. I attended the meeting and it was a big distributor for Nuskin. The presentation sure sounded like a MLM scam but that company is still around some 22 years later. So Ackman's impression of the company may not mean crapola. He said that nobody in his organization went in as a distributor and he probably did not do much in the way of inside investigations on the company either.
The issue with talking to any distributor is they aren't going to tell you anything but how great things are in hopes you'll sell for them. That's the ugly/beauty of any MLM company, no one on the inside is going to talk bad. They want to paint a picture which will bring in anyone to possibly make them money. Talking to a distributor would be like talking with a minister about his or her church.
Yeah this will be a case study regardless of what happens, quite the story. I will say I know for a fact the FTC has bigger fish to fry than this. It may be Ackman's opinion that this is a scam, but don't really see that much fallout, and they do sell product... FTC is knee deep in dealing with internet scams to the end of the earth among other traditional sccams. People would not beleive the way more blatant scams the FTC is struggling to even have the authority to stop.
His logic is simple and clever: If everyone knows HLF is a pyramid scheme it will collapse on it's own due to the lack of new suckers to keep the scheme going. The FTC does not have to get involved, but they probably will anyways.
If he is wrong, the company does not collapse and he loses big.
I had no opinion this morning but have done a lot of research on HLF today. I think it is much more likely that Ackman is right than wrong.
After one day of research. What a joke! In that entire day of rsearch, what made you so sure he was right??? Did you talk to any HLF distributors? How many research reports on them did you read? To be able to come to any kind of solid conclusion after a day is laughable. Did you do any research on Ackman and the accuracy of his calls?