First off, apologies to westerbass.com for the off topic content...
Ok...just do a simple Google search for "herbalife" + "pyramid" and see all the references that pop up. This excerpt is just one of many:
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Herbalife like many other MLM's or Multi-Level Marketing programs have both its strong proponents and detractors. There have been many that have earned a great deal with this program and many that have not done well. We'll look at both scenarios as well as the fascinating history of this company.
Herbalife was started in 1980 by Mark Hughes who was then 24 years old. They are now one of the largest weight management and nutritional supplement companies in the world currently active in almost 60 countries and grossing close to $2 Billion per year. Participants in the program are known as "distributors" and there are over 1 million active worlwide today.
Legal troubles began early on and in 1982 the FDA filed against
Herbalife for false advertising as they had claimed their products
could dissolve and remove tumors, increase circulation and treat a
number of other diseases. In 1984, the FDA continued their reports and found that some of the Herbalife products also seemed to produce negative side effects and discontinuance often caused the side effects to stop. The FDA claimed that literature produced by Herbalife for their distributors indeed pointed out that adverse side affects were likely in up to 25% of users of the products, but this was just the body's way of showing that improvement was occurring and the body was purging itself of impurities. Lawsuits from individuals followed. Some were settled out of court, but settlement amounts remain sealed although they were reported as being "substantial".
As noted at this Herbalife Report on "Learn the Truth About Herbalife":
http://www.freewebs.com/herbalifereport/historyb.html
1985: The First Major Law Suit For Herbalife
In May 1985, Senator William V. Roth, Jr. (R-DE) held two days of
hearings on weight-reduction programs, during which he grilled Hughes about the "research and testing" done prior to marketing Herbalife's products. Hughes said, "We have a lot of scientific data on the herbs," but Roth ascertained that no actual testing of Herbalife products had taken place.
The hearing also brought to light a study done by Herbalife of 428
users of its products. About 40% had experienced headache,
constipation, diarrhea, nausea, lightheadedness, palpitations, and/or other transient symptoms that might be attributable to Herbalife products. The occurrence of side effects came as no surprise because several ingredients in Herbalife products were potent laxatives and one product (N.R.G.) contained guarana, which is high in caffeine.
In March 1985, the California Attorney General had charged Herbalife with violating California's consumer protection laws. The suit charged that early editions of the Herbalife Official Career Handbook made illegal claims that various herbal ingredients were effective against more than seventy diseases and conditions. Although most of these claims were deleted in subsequent editions of the handbook, the company had not replaced the original pages sent to distributors with the revised pages or asked these distributors to destroy them. Similar testimonial claims had been made in the company's cable television broadcasts. The suit also charged that Herbalife had been operating an illegal pyramid scheme. The case was settled in 1986 when Hughes and
the company agreed to pay $850,000 and to abide by a long list of
court-ordered restrictions on claims and marketing practices..."
As this article notes as it continues, Herbalife survived, toned down
the advertising claims and removed some potentially dangerous
ingredients from the products.
In 2000, founder Mark Hughes died of a prescription drug overdose at the age of 44. You will find a number of conflicting stories
surrounding his death and his successor as company chairman who claims to be his father. Much of the success early on for the company was due to Mark's charisma and evangelical sales meetings and pitches which may still be viewed at the Herbalife web site or elsewhere on the Internet. Today, 14 of the largest distributors conduct these meetings in his absence.