After a two-year Federal Trade Commission investigation into Herbalife’s business practices, the nutritional supplement company agreed in July to pay $200 million into a consumer relief fund. It also said it’d restructure its policy for distributors in order to avoid being charged with operating an illegal multi-level marketing business, more commonly knows as a pyramid scheme. Earlier this month, the FTC announced that as part of Herbalife’s settlement, 350,000 US distributors wronged by the company would get a refund, Bloomberg reports. “We are pleased to announce that hundreds of thousands of hard-working consumers victimized by Herbalife’s deceptive earnings claims will receive money back,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “Along with changes the company will make to its business structure, this is a win for consumers.”
With most refunds ranging from $100 to $500 – and some as high as $9,000 – the money will bring relief to people who were duped. Latinos, in particular, have been on the receiving end of the company’s predatory practices. The feature documentary Betting on Zero follows New York businessman Bill Ackman – who makes a $1 billion bet against Herbalife’s stock. Ackman called the company a pyramid scheme, because nothing of true value is ever actually bought or sold. Instead, he charged that the only way to make money is through recruitment.
Ted Braun’s Betting on Zero highlights the twisted workings of how shorting – a brokerage term that describes when you stand to make a profit when the stocks fall – works within our lopsided financial system. But it’s also a look into how the company preyed on Latino consumers, who were led to believe that they’d achieve wealth and entrepreneurial independence – two things that are difficult to attain within a multi-level marketing business.
With Latino and Latin American figures – like former Los Angeles Mayor Antonio Villaraigosa, for example – endorsing Herbalife’s weight management and sports nutrition products, it specifically marketed itself to the Latino community. Herbalife’s model also made undocumented community the perfect prospective recruits because their status made them afraid to come forward and denounce the company. Betting on Zero played at the Tribeca Film Festival last April. Months later on Last Week Tonight, John Oliver dedicated 30 minutes to explaining how companies like Herbalife have zeroed in on Latinos.
“Whether Herbalife is pyramid, not a pyramid, or not ‘not’ a pyramid, it is true that Herbalife is growing,” Oliver said, according to the Huffington Post. “And a lot of that growth has come from Latino communities, where Herbalife has been aggressively expanding for years. They even bought a sponsorship on the hit telenovela La Fea Más Bella.”
In 2013, for example, the Los Angeles Times reported that 60 percent of Herbalife’s US sales came from the Latino community. As Oliver noted that Herbalife’s former CEO Micahel Johnson – who stepped down in November – called its large Latinos base part of its family. However, it not only took advantage of them, Herbalife also forced them to scam other Latinos. Check out Oliver’s full breakdown of Herbalife and other multi-level marketing business below: