25 reasons Herbalife is a pyramid scheme

tony

25 reasons Herbalife is a pyramid scheme 

Herbalife has been existence for a lengthy period of time with varied definitions of success. The recent inquest has exposed the hidden operational aspects that define the company as a pyramid scheme. Widely represented as a nutritional supplement company, the business model of the company has been exposed as one running on an illegal multilevel setting. Among the reasons Herbalife ranks as a pyramid scheme include:

Collapsing membership

Due to an unsustainable recruitment system, the company is experiencing collapsing membership which has stalled and threatened to stifle progress in terms of the company sustaining its operations.

Promise of exciting opportunity

The red flag with all pyramid schemes is the promise of providing an exciting opportunity for the individuals who crave financial independence.

Products are not on shelves in retail stores

Legit companies explore the retail avenue but with Herbalife, their products are not anywhere on shelves which is a sign of pyramid schemes disguised as product companies.

Recruitment and more recruitment

The goal of the company is not selling products but ensuring that more people are recruited to sustain the model of commission sales.

Promise of total life transformation

Many have been lured to Herbalife with the promise of total life transformation where an individual will get to work at their own desired schedule and also work from home while making a fortune.

Untold financial success upon signing

A major factor that has led to Herbalife being branded a pyramid scheme is the promise made to prospective clients that they will receive untold financial success upon signing up.

Hard sale on benefits

Unique and beneficial products fly off the shelves with minimum effort but Herbalife has wired representatives to pitch benefits of the untold success and capabilities of the products including the curing of cancer.

Pressure of bulk buying

Entrepreneurs in the business field have always identified pyramid schemes by their tactic of pressuring their reps to buy products in bulk with the promise of massive bonuses and discounts.

Quick life transformation

Herbalife declares that anyone who joins the team is assured of a transformation where they will be able to work from home and create their own schedules.

Luxury life bait

Herbalife has been able to bait many unsuspecting individuals by promising them a luxurious life once they attain certain tiers within the organization.

Rewards are discounts and commissions

As with many pyramid schemes, the rewards offered by Herbalife are in the form of discounts and commissions that are based on the recruitment efforts that the reps make.

Incentive is to buy not sell

The representatives of the company are incentivized to buy the products and not sell where bonuses are received for the volume bought and not the sales made.

New members make the higher tiers rich

Typical with pyramids, the new members at Herbalife are responsible for the earnings that the higher tiers receive within the chain.

Wealth soaked testimonials

The testimonials that are paraded in the face of new members are wealth soaked which is a tactic that pushes new recruits to work hard in bringing in new members.

No profitable retail avenue

Members of Herbalife do not have a viable retail avenue that the company can point out as an alternative to the recruitment model that they encourage.

Costly distributorship

With no retail avenue to exploit, members are forced to buy products in bulk to distribute which is costly since one may be stuck with inventory that they cannot sell or consume.

Short seller business model

What new members of Herbalife are taught and inspired to do is do a short seller model of creating a following where one recruits the people closest and then the recruits bring others close to them as the web grows.

Psychological mind games

Herbalife encourages the formation of nutrition clubs as a platform where members can share their knowledge of the products and the usage mechanisms that yield desired results. This is usually a mind game since what actually happens is that the clubs act as recruitment centers.

No records of transactions at the member level

The most notable red flag with Herbalife is the lack of records at the member level which indicates a focus on recruitment of bodies as opposed to sales.

Expensive initial startup

The initial startup capital required for a member to make any significant steps in the distribution chain is high which only serves to benefit the company.

Only top percentile benefit

The setup at Herbalife only rewards the top percentile where their pockets are lined with money resulting from hard work done by those at the ground level.

Preying on entrepreneurial dream

Herbalife has a way of preying on the entrepreneurial dream by proposing that the company offers a way to work from home with schedules that a person is comfortable with.

Distributors feed on scraps

The distributors at the bottom of the pyramid make a few dollars while the big wigs ear hundreds of thousands of dollars.

Qualification thresholds

Herbalife dictates that for any member to make a higher tier, qualification thresholds have to be met which include spending and recruitment.

Large percentage of distributors lose money

In excess of 82% of the distributors usually end up losing money instead of making any income as promised by the company.