They come to this country looking for a better life, but promises of quick cash often allegedly go unfulfilled.
Officials throughout the U.S. have asked the Federal Trade Commission (FTC) to investigate Herbalife, a global nutrition company which has been accused of operating an “abusive” pyramid scheme targeting minority groups.
“Herbalife seemingly goes after largely poor, minority and immigrant groups that lack financial literacy and are often desperate to escape poverty,” said Councilmember Julissa Ferreras, who has seen a handful of Herbalife shops appear in her district only blocks from each other. “Many of their recruitment tactics focus on targeting new immigrants who have come to New York in search of the American dream.”
In a letter to FTC Chair Edith Ramirez, Ferreras explained her concern about the impact Herbalife is having on the Latino community, both in her district and across the country.
Herbalife provides nutrition, weight-management and personal care products such as shakes, vitamins and protein bars. The products are sold through independent sellers or distributors who recruit others into selling.
According to Ferreras’ letter, recruitment begins when individuals are asked to join groups billed as nutrition and wellness clubs. Within these clubs, Herbalife allegedly takes advantage of members who have little to no business experience, luring them with promises of large profits and minimal work. Distributors for Herbalife must purchase the merchandise, lists and marketing material out of their own pocket.
Jose Calderon, president of the Hispanic Federation, wrote a letter to the FTC claiming that in these “get-rich-quick schemes,” distributors appear to lose money instead of making any profit. He said concerns about Herbalife boil down to whether distributors make money by selling products or by recruiting others to sell.
Noticing signs of consumer harm in her district, Ferreras has asked the FTC to conduct a thorough investigation and protect individuals.
“If Herbalife is acting illegally by making false income claims to vulnerable Latinos in my community, then they need to be held responsible,” said Ferreras. “We cannot and will not stand back while Herbalife takes advantage of my hardworking constituents.”
An Herbalife spokesperson said it is “disappointing” that Ferreras did not reach out to the company before contacting the FTC.
“Had she done so, we would have been able to correct her misconceptions and explain how nutrition clubs work as a positive contributor to her district,” said the spokesperson. “We would also have described for her how Herbalife has helped to change people’s lives over the last 33 years by providing the best nutritional products and an excellent income opportunity to individuals around the world, including within her own district.”
According to the Better Business Bureau Serving Metropolitan New York, there are no recorded complaints against any Herbalife stores or distributors in the area.
Along with Ferreras and the Hispanic Federation, California Congressmember Linda Sanchez has asked the FTC to investigate Herbalife.