Is Herbalife a Pyramid Scheme? Legit MLM or Scam? Exposed!

Herbalife is an MLM company that sells nutritional supplements. It is not a pyramid scheme, and it is one of the legit MLM companies.

There is a good chance that you heard about Herbalife through someone – a friend or family member.

Many people these days are looking for additional income, and you are most likely one of them. There was then an opportunity to work from home by joining Herbalife as one of their independent distributors.

However, as I’ll discuss in this review, there are some reasons why success with Herbalife is unlikely. Experienced salespeople and well-funded recruiters are the only ones I can think of to have real success with this MLM program.

As a disclaimer, I’m not affiliated with Herbalife. It means I’m not paid to write this review. So you can rest assured that you will get an honest and unbiased review from me.

At the end of this review, I’ll also tell you the best alternative to the Herbalife MLM program that has enabled me to make a full-time passive income online.

Herbalife MLM Review – Key Takeaways

  • Name: Herbalife
  • Pros: MLM opportunity to make money
  • Cons: Herbalife MLM has a very low success rate; Herbalife MLM commission is low; Herbalife MLM model is not sustainable; Herbalife MLM costs money to join
  • Overall Rating: 1/5
  • Who is Herbalife MLM For: Herbalife MLM is supposed for marketers to make money. But you are unlikely to make a penny because of the MLM nature and you may end up losing a lot of money.
  • The Best Alternative: An All-in-One Platform to Make Passive Income Online

In this Herbalife MLM review, I’m going to cover the following in this review:

What is Herbalife?

Herbalife Nutrition Ltd. is a global multi-level marketing (MLM) company that develops and sells nutritional supplements. The company was founded in 1980 by Mark R. Hughes and employs an estimated 9,900 people worldwide.

The company has a network of approximately 4.5 million independent dealers and members in 95 countries. Since March 2020, John O. Agwunobi has served as the company’s Chief Executive Officer and Executive Chairman.

Herbalife sells protein shakes and nutritional supplements that are not available in any store. Herbalife distributors are the only places where you can get these products. Their website contains product and price information, but you cannot purchase them.

Originally, Herbalife sold weight loss products, with the first offering being a protein shake to help with weight loss. Since then, the product line has expanded to include women’s health, aging, digestive health, fitness, and other areas.

Herbalife is now worth billions of dollars. However, it has been criticized for operating a “sophisticated pyramid scheme.”

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What Products Does Herbalife Offer?

Herbalife Nutrition products include weight loss and protein shakes as well as protein bars, teas, aloe, vitamins and sports, energy, and personal care products.

The Formula 1 protein shake, a soy-based meal replacement shake, is Herbalife’s original product. The product first appeared in 1980 and was the company’s best-selling product in 2015, accounting for nearly 30% of total sales.

Herbalife’s products are manufactured at the company’s five manufacturing facilities in the U.S. and China, as well as by third-party manufacturing partners. According to the company, claims about the health benefits of its products are closely scrutinized by the medical community, consumers, and government agencies.

However, Herbalife was sued in 2008 after laboratory tests revealed that lead levels in several Herbalife products exceeded California state law and may cause liver problems over time.

Herbalife encourages people to form groups by calling them “nutrition clubs.” At these events, members sample beverages and discuss how to live a healthy, balanced life.

In reality, these events are just a way for Herbalife to promote their product and grow their business.

According to Herbalife, these nutrition clubs help people who would otherwise eat out or from vending machines. In this way, they help show healthy and balanced options and support them in this transition.

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Is Herbalife An MLM?

Herbalife is a legit MLM (multi-level marketing) company. According to a 2010 article in the Los Angeles Business Journal, Herbalife Nutrition was one of the most profitable companies in Los Angeles County and benefited directly from its business model.

As a multi-level marketing firm, Herbalife won’t provide its sales representatives with a regular salary. After joining Herbalife’s MLM program and becoming one of the members, you’ll run your own business as an independent distributor of Herbalife products.

However, it is unlikely that you can make a good income selling their products. As in the case of most MLM programs, your business relies on recruiting new members to work under you. You will earn a commission on the sales and new recruits generated by the people you hire once they begin producing results.

This is complex on multiple levels (hence multi-level). At Herbalife, those at the top of the pyramid are called “sales leaders.”

Let’s imagine a triangle. Because everyone in the triangle is in your direct downline (in an MLM, the people beneath you are known as your “downline,” and you are their “upline”), you will earn commissions from everyone in the triangle if the person at the top recruits ten people, and each of these ten recruits ten more.

If you can bring in just 10 people, you’ll make $1100.

Most people in your MLM would rather earn a lifetime passive income from recruiting others than a one-time commission from selling products, even if your MLM offers a wide range of products.

Due to the way the money flows, those at the top of the triangle have the most financial success, while those at the base have the least.

Having a large number of people in one’s “downline” is essential for success in a multi-level marketing company like Herbalife.

In the past, the Herbalife management even considered the number and retention of distributors a critical parameter and monitored them closely in financial reports. Sales leaders must requalify by January of each year. Individuals who have not met the qualification requirements for sales leaders in the previous 12 months are removed from that rank in February of each year.

Approximately 67.9 percent of eligible sales leaders were requalified during the most recent 12-month requalification period, which ended in January 2019.

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Is Herbalife A Pyramid Scheme?

Herbalife is not a pyramid scheme. It is a legit MLM company that allows members to make money by selling their dietary supplements. As a member of Herbalife, you don’t have to make money solely through recruitment.

However, before you can become a member or representative, you must first purchase Herbalife products. You can then sell them or use them to promote your business. This is the main reason why some people are confused and think Herbalife is a pyramid scheme.

Critics of the corporate structure have alleged that Herbalife was a pyramid scheme.

In November 2011, the Commercial Court in Brussels, Belgium ruled that Herbalife was an illegal pyramid scheme. The company appealed on March 8, 2012. On December 3, 2013, a Belgian appeals court upheld Herbalife and overturned the lower court’s decision.

So, what is actually a pyramid scheme? A pyramid scheme is a fraudulent system of making money based on recruiting an ever-increasing number of “members” who are promised money or services in return for recruiting others. It is unsustainable and often a scam because members at the bottom end are doomed to lose money.

Those who want to join must pay a membership fee to the company that runs the pyramid scheme. The company would share a portion of the funds raised from each additional member they recruit as a reward.

However, the scam is profitable only for the directors of the company, i.e., those at the top of the pyramid, since they can receive a portion of the payments from every newly recruited member. The scheme continues as long as members recruit and funnel money to the top of the pyramid.

Such companies almost never sell valuable goods or services. The scam’s only source of revenue is from recruiting new members and soliciting more money from current members.

A pyramid scheme would have to grow infinitely to make money for everyone who participates. This is impossible due to the finite population of the planet.

The scam will fail if there are no new recruits and other sources of income. Since the majority of members are at the lowest level of the pyramid, most of them will lose their money.

A good example of pyramid schemes is Vemma, a producer of energy and weight loss drinks. The FTC accused Vemma of operating a pyramid scheme in August 2015 that paid more to recruit new members than to sell products.

New members, who were typically college students and other young people promised high compensation, were required to pay $600 for starter packages and hundreds more for monthly products. According to the FTC, the majority of participants lost money.

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Can You Make Money With Herbalife MLM?

Yes. It is possible to make some money working as a Herbalife sales representative. The company offers two ways to earn money:

  • Selling products
  • Recruiting members

Selling Herbalife products isn’t the only way to make money. You can earn bonuses by bringing in new members and having them bring in new members as well.

To make any money, you’ll need to sell a lot of Herbalife protein shakes. Also, keep in mind that you must first purchase the items before you can sell them.

What you can afford to buy will tell you how much you can earn. If you buy too much, you might have trouble selling it.

You have a year from the date you bought the items to return them if you haven’t opened them.

When these goods are sold, distributors make very little money. Of course, when you sell more items, you make more money.

If you reach a certain number of volume points, you can advance to the next level, but your retail commission will remain the same.

Volume points are added to your account when you or your downline purchase products. As a result, the more volume points you obtain, the more you or others will order.

You can then proceed to the next level.

In most MLMs, recruiting is more important than selling. You can make more money if you have a large number of people in your downline because you get a percentage of everything they sell.

If you want to join an MLM to make money while you sleep, you must recruit. If you want to make a lot of money, try to get as many people to join your team as possible.

MLM business models do not last, so you will eventually run out of people to recruit.

It makes no difference how many items you sell in MLMs. What matters to them is the number of items you can purchase and the number of people you can bring in.

Herbalife Compensation Plan

Obviously, the more Herbalife products you sell, the more money you make. However, distributors do not make much money from selling these products. The goal is to sell items and earn volume points for each purchase.

When you reach a certain number of volume points, you can advance to the next level, where your downline commission is higher.

Finally, when you or your downline order items, you receive volume points. So the more you or your downline order, the more volume points you or they receive.

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15 Reasons Why You Should Not Join Herbalife MLM Program

1. Herbalife Products Can Cause Liver Damage

Herbalife products have been shown to cause side effects such as liver damage, jaundice, nausea, pale stools, fatigue, exhaustion, and abdominal pain. In some cases, taking Herbalife products has resulted in death.

After four people who had used Herbalife products were found to have liver problems, Israel’s health minister launched an investigation into Herbalife’s products in 2004. The company was accused of selling toxic ingredients such as Quaqua, Comfrey, and Kraska.

Samples were sent to Bio-Medical Research Design LTD (B.R.D), a private laboratory in the United States, and to the Israeli Laboratory for Forensic Research. An investigation of the cases, funded by the Israeli Ministry of Health, found a causal link.

As a sales representative, you’re actually putting your customers’ health at risk when selling Herbalife products.

2. Very Few People Can Make Money With Herbalife

Success is difficult to achieve with an MLM company like Herbalife.

You can look at the statistic that says 72.5 percent to 99.9 percent of MLM members lose money.

The reason for this is that MLMs have sales quotas that require members to continue selling products in order to remain active and eligible for commissions.

They will not be paid if they do not meet the quota.

As a result, many MLM members lose a significant amount of money before even recruiting one person into the company.

3. Losses From Herbalife MLM Program Are Reframed As Investments

Herbalife MLM uplines often reframe their financial losses as ‘investments’ in their business so as to keep their reps in an MLM scheme, dangling the carrot of future financial freedom. 

But the reality is that these are not investments. You are unlikely to get the money back. And the return on “investment” is negative in most cases. So saying that it’s an investment is cheating.

4. Herbalife is a Cult

Why do people continue to work for Herbalife if it appears to be so bad? Our investigation of MLMs revealed that they all have cult-like company cultures.

Critical thinking is actively discouraged among MLM representatives. They are chastised and even isolated when they ask questions that deviate from the ‘this company is a-mazing’ mindset.

MLMs, like abusive partners, encourage you to isolate yourself from anyone who questions your involvement.

Those who leave an MLM are labeled as failures or bad people/influences, and reps are not allowed to contact them.

Rejection from people they once considered practically family is one of the most devastating losses experienced by former MLM representatives.

MLMs frequently expect their representatives to prioritize their events and business over their personal lives in order to further embed them in the business while separating them from their family and friends.

5. You May Need to Purchase Herbalife Products Yourself

If you don’t have a large network of friends, family, neighbors, and so on, you may have to buy products yourself each month. It’s a losing proposition all around.

I think it’s quite ridiculous when you have to buy the products you are trying to sell. But this is very common for people who join MLMs like Herbalife. That’s why in the long term, you are going to lose a lot of money, not to mention making money.

6. Herbalife Products are Overpriced

As with other MLMs, Herbalife offers overpriced products. There are many other brands that offer similar products but at lower prices.

Therefore, you may find it difficult to sell Herbalife products because your prospects can buy the same product elsewhere at a much cheaper price. This explains why most people who join MLMs only focus on recruitment instead of selling actual products.

7. Herbalife’s MLM Business Model Has a Bad Reputation

Some people have benefited financially by joining a network marketing/MLM company. Unfortunately, most people who join MLMs are left with nothing but regret and a lot of useless products that they were unable to sell.

MLM like Herbalife is fundamentally flawed. The distribution of commissions is skewed toward the top.

The majority of those in the top tier and pioneers make the most money, while those at the bottom will not even break even after a few months.

As a result, many people do not consider Herbalife to be a legitimate business opportunity.

8. Exaggerated Claims Of Income

Herbalife, like any other MLM company, makes exaggerated income claims, but in reality, very few people make a good living by promoting Herbalife.

Herbalife’s low retention rate can also be discouraging, as less than 41% of its distributors are active.

According to Herbalife’s payouts to distributors, over 99 percent of Herbalife distributors never make a profit.

9. Herbalife Is Like A Pyramid Scheme In Disguise

If you want to avoid losing money every month, the MLM will actually encourage you to recruit people.

Every system that requires you to recruit people in order to make money eventually looks like this.

Herbalife is not a pyramid scheme in the traditional sense because you can earn money by selling their products.

However, in order to make a living, you will need to hire others in reality.

10. Recruiting is Required to Succeed

I don’t recommend MLMs to people for this reason. MLMs like Herbalife put a lot of effort into recruiting. Eight out of ten ways to earn money with Herbalife require recruiting. If you don’t recruit, you are destined to lose money at the end of the day.

My #1 recommended platform is different. You can make a 4-figure, 5-figure or even 6-figure passive income by promoting and selling products you truly like. You don’t have to recruit people but recommend useful and great products. I will tell you more at the end of this Herbalife review.

11. Herbalife Products Are Not Approved by FDA

The Food and Drug Administration (FDA) has not approved Herbalife’s products. However, FDA approval was mentioned in a 2014 Herbalife video. 

In the video, Vasilios Frankos, a former FDA official who joined Herbalife as a senior executive in 2010, says, “When I was director of dietary supplements at the FDA, I oversaw nutritional supplements, making sure they were safe and effective for use.”

FDA has asked Herbalife to stop airing the video that the agency says gives the false impression that the company’s shakes and other products have received the FDA seal of approval.

The agency has no oversight over natural supplements, it says in a letter to Herbalife CEO Michael Johnson, asking him to remove and not show the YouTube video and any ads that use it.

12. Herbalife Has Received Many BBB Complaints

Herbalife has an A- rating and a 2.2/4 star rating from the Better Business Bureau (BBB).

Although there aren’t many reviews, the ones that are available are useful. Customers who have purchased the products have left reviews. Distributors who left reviews were dissatisfied with the products.

Herbalife has addressed only one of the six complaints listed on the BBB website.

13. There Have Been Many Lawsuits Against Herbalife

According to our research, many lawsuits have been filed against Herbalife for questionable business practices over the years. There have also been allegations of a pyramid scheme. All of this has severely damaged Herbalife’s reputation.

The FTC sued Herbalife for $200 million for operating a pyramid scheme. This does not come as a surprise. After all, Herbalife is one of the largest MLM companies in the world. It’s only a matter of time before the FTC shuts the company down if it does not change its business model.

Herbalife is even listed on the Better Business Bureau’s website. The warning lists misrepresentations of Herbalife’s business model as a direct selling company in China.

Another class action lawsuit has been filed by Herbalife distributors who claim the company has misrepresented the amount of money they can make.

Distributors were also told that anyone who participated in the “Circle of Success” events would get rich.

Several distributors have suffered significant financial losses as a result of the lawsuit.

It is extremely difficult to build a home business when major networks like ABC and HBO are investigating your business and customers are complaining about your products.

14. Herbalife Is In A Very Saturated Market

If you are looking for a health and wellness company, there are thousands that are better than Herbalife.

To be honest, Herbalife hasn’t convinced me. To me, it appears to be a fairly typical multi-level marketing company.

Aside from celebrity endorsements, Herbalife does not stand out. They stand out in a negative way as a result of their bad reputation.

15. Herbalife’s Compensation Plan Is Too Complicated

Herbalife MLM has a complicated compensation plan. It also focuses too much on recruiting members rather than selling products.

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How Much Does It Cost To Join Herbalife MLM?

To sign up, Herbalife distributor kits must be purchased. There are two kits to choose from.

The International Business Pack costs $94.10, while the International Business Pack-Super Starter costs $124.10.

Other costs are hidden costs. Costs that your distributor agreement does not cover, such as your time, phone calls, and gas to and from your customers.

Herbalife MLM Positive and Negative Feedbacks By Real Users

Positive Feedbacks

  • A long-standing business (40 years in business)
  • High-quality dietary and weight-loss supplements
  • Some people claimed that their MLM was successful.

Negative Feedbacks

  • You must immediately purchase the items you intend to sell.
  • Herbalife is considered a pyramid scheme, which is illegal.
  • Their products and plans are quite expensive.

Is Herbalife Legit?

Although Herbalife has been accused of making misleading and false health claims for its products, it is still a legitimate MLM company.

Since its founding over four decades ago, Herbalife has been a leading natural health company. This type of MLM company is well known and widely recognized.

The company has survived countless lawsuits, Congressional opposition, and Wall Street titans betting against its stock to destroy it for four decades.

In 2020, the company generated US$5.54 billion in revenue. It’s unlikely a company with billions in revenue will disappear anytime soon.

In addition, new Herbalife representatives are entitled to a one-year refund. This can be a safeguard for MLM newbies. Distributors can return all unsold products to the company within one year. Distributors will then receive a refund.

If you terminate your Distributorship, all products, as long as they have not been opened, will be fully refunded.

The company offers a 30-day return policy to regular customers who wish to return unused products within 30 days.

Herbalife also has several high-profile sponsorships that reinforce the company’s credibility.

These sponsors include Cristiano Ronaldo, one of the most popular soccer players in the world, as well as LA Galaxy, a Major League Soccer team from Los Angeles.

These well-known athletes are almost invariably associated with the Herbalife brand. This might make your job as a sales representative easier.

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Is Herbalife MLM a Scam?

Herbalife is not a scam. It is a legit MLM company. A scam is defined as “a dishonest scheme; a fraud” by the Oxford Living Dictionary. 

However, critics of Herbalife’s corporate structure have claimed that it was a pyramid scheme.

In 2016, a segment on Last Week Tonight with John Oliver about multi-level marketing focused on Herbalife. He strongly condemned the company for its structure, which resembles a pyramid scheme, and cited the FTC report that suggested the company was operating in an illegal manner. Oliver criticized Herbalife for exploiting Latino communities and overstating the health benefits of its products.

Is it possible that the US court will classify Herbalife as a pyramid scheme in the future? We cannot rule out this possibility.

All in all, we don’t believe that you can make a living selling Herbalife products, even if it’s not found guilty.

According to our research, a majority of Herbalife reps did not earn any money. A few people do make money but only if you put in a lot of effort. And usually, the way they make a lot of money from Herbalife is by recruiting aggressively.

Also, Herbalife blatantly makes disingenuous and irresponsible marketing claims to recruit members. Therefore, some people do consider Herbalife MLM program a scam.

My #1 recommended platform, however, has seen a lot of beginners earn four figures a month after joining it for a year.

I will tell more about my #1 recommended platform at the end of this review.

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Final Verdict: Herbalife MLM Review

Here comes the conclusion of my Herbalife MLM review. Overall, I don’t recommend joining the Herbalife MLM program to make money.

You will have a tough time in the beginning when you are prospecting and trying to find recruiters to add to your Herbalife commission.

The worst part is that you practically have to ask your family and friends to join your Herbalife business opportunity. It’s not fun.

Your upline is constantly following up with you to encourage you to buy more Business Support Material even as you struggle to get people to join your downline.

The reality is that you’re likely to lose more money. Statistics confirm this as well. 99% of people who join an MLM break even or lose money, according to a case study on the FTC’s website.

People who join these MLM-type businesses often feel under pressure to succeed, and that is one of the main reasons they leave. 

Why not consider starting your own online business if you want to earn money and have a flexible schedule? 

Thus, you can choose what you want to promote rather than having someone tell you what you must promote.

Let me tell you how to build an online business in a legit way to make passive income online in the next section. This has allowed me to make a full-time income in a year. Most importantly, unlike MLM models, It’s 100% legit and sustainable.

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Best Alternative of Herbalife MLM Program

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When you join Wealthy Affiliate, you can get access to the first-class web hosting service, keyword research tools, community support, comprehensive training, writing tools, and other software to help you build an online business step-by-step.

You can register a free account with Wealthy Affiliate, which enables you to get started with affiliate marketing right away without paying a penny.

If you like the platform, you can then upgrade to the premium membership to get access to everything on the platform. There are no upsells afterwards.

But How Much Can You Earn with Wealthy Affiliate?

A 21-year old student from Wealthy Affiliate was able to earn $7,395 in just 1 week, which means he made more than $1k a day…all while applying what is taught inside Wealthy Affiliate.

Herbalife MLM Review

Compared with Authority Hacker, Wealthy Affiliate has a much longer history, which has been established for 15 years and there are many success stories in the past decade. Actually, Wealthy Affiliate has more than a million members so far, so you can see how popular this platform is.

To give you more examples, here are some of the other inspiring success stories of Wealthy Affiliate members.

Where to Join Wealthy Affiliate?

Wealthy Affiliate has a very simple pricing scheme. It has a free and premium membership. The premium membership only costs $49/month or $395/year.

If you want to feel about Wealthy Affiliate, you can sign up for the free starter membership here (no credit card required). You can select to be a free member with no time limit.

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Herbalife MLM Review FAQs

1. Why Is A Pyramid Scheme Illegal?

Pyramid schemes initially make money for the early investors, but then they dry up.

Although they are intended to fail, they do not appear to be so. In fact, they set unrealistic expectations for something that is doomed to fail.

You’re squandering not only your time but also your money.

It’s sad how they prey on your hopes and dreams of becoming wealthy.

Many MLM companies appear to do the same thing.

2. Is There A Lawsuit Against Herbalife?

There have been numerous lawsuits filed against them. The most recent was filed this year.

They bribed Chinese officials for the third time in four years.

They spent $123 million on the settlement with the US government.

The settlement and indictment came less than a year after Herbalife agreed to pay the SEC $20 million for misleading investors with its China business model.

Herbalife CEO Rich Goudis was recorded telling a Chinese employee to disregard expense account limits.

These are just a few of the recent lawsuits.

3. Why Is Herbalife Banned In The US?

Herbalife reached an agreement with the US Federal Trade Commission (FTC) in 2016 to reform its business and pay a $200 million fine in response to allegations that it was a pyramid scheme. Ackman’s hedge fund closed its Herbalife short position in November 2017.

Herbalife products were also pulled from the market in 2002, after several states in the United States banned plant-derived ephedrine supplements.

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1 thought on “Is Herbalife a Pyramid Scheme? Legit MLM or Scam? Exposed!”

  1. I honestly could care less what the FTC says about Herbalife or any MLM company for that matter. The only reason people fail in their MLM’s is because they don’t learn the necessary skills to build their business properly so that fail. Most people work harder on a job, making it okay to make your company richer instead of learning key skills to grow your own economy. The biggest Pyramid Scheme out there will ALWAYS be a job. Work your business like you work your job and you’ll succeed. I see you create content to sell stuff too. Well done and great post!

    Reply

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