Herbalife Review from Non Distributor so Unbiased!

herbalife reviewToday I am reviewing a business opportunity that is clearly very well known.

However, it is still an opportunity that I get pitched on a fairly regular basis.

Now, I’ve never considered joining but I’ve always wanted to fully understand the company.

But, of course be aware that this is an unbiased Herbalife Review and I am not promoting as a distributor.

I will present facts on the products, compensation plan and company background so you can make your own decision.

This company is certainly not for me, but you have to make your own mind up.

You can also watch the video version of my review below.


Check out this Herbalife Review video on YouTube

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What Is Herbalife All About Then?

Based out of the State of California, United States, Herbalife appeals to the health and wellness niche of the MLM industry. However, Herbalife has incorporated in the Cayman Islands.

Mark Hughes reportedly began selling Herbalife product “from the trunk of his car” in 1980.

“Hughes often stated that the genesis of his product and program stemmed from the weight loss concerns of his mother Joanne, whose premature death he attributed to an eating disorder and an unhealthy approach to weight loss.His goal was to change the nutritional habits of the world.”

Hughes achieved great success with Herbalife, but tragically died from an “accidental overdose of alcohol and doxepin” in 2000.

Despite his passing, Herbalife continued on, and is currently run by Chairman and CEO Michael Johnson.

Herbalife does provide a very helpful Wikipedia entry, however I would like to focus on recent events involving Herbalife.

The Commercial Court in Belgium ruled that Herbalife was a pyramid scheme in November 2011, after seven years of litigation.

“Test Aankoop,” a non-profit organization, brought the case forward, citing claims that Herbalife was in breech of the WPMC (market practices act), and was in fact running a Pyramid Scheme.

Herbalife responded by filing a defamation countersuit against Test Aankoop.

The court focused on the revenue makeup of Herbalife, as well as examined what distributors were receiving the majority of their commissions for. As retail and downline commissions were observed, the court noted:

“the provided incomes out of the distribution network are therefore significantly higher as the provided incomes from the same amount of clients (retail customers).”

Also:

“there is a chance of a compensation which is derived primarily from delivering (recruiting) new distributors  into the system then out of the sale or the usage of the products.

Furthermore the most purchases were performed against a discount percentage of 25% and 35%, which shows that Herbalife is getting the biggest part of her profit out of the distributors.

Following the foregoing shows that it is a lot more profitable for a supervisor to sell to a distributor, rather than selling directly to a consumer.”

Attorneys for Herbalife attempted to argue that distributors purchasing products counted as retail sales, as it was assumed that distributors were then selling these products to retail customers.

This argument was unsuccessful.

In the end, the Commercial Court found Herbalife “in breach of Articles 91, 4 and 99 of the Act regarding market practices and consumer protection because it has established, managed or promoted a pyramid scheme.”

The defamation suit against Test Aankoop was then dismissed.

United States pyramid scheme allegations were brought forward in December 2012.

herbalife scamOn December 20th, 2012, Bill Ackman (see the photo), a hedge fund manage, presented a three-hour exhibition detailing exactly why Herbalife was a modern day Ponzi scheme.”

A 300-page slideshow was also shown at the presentation, after which Ackman declared would be handed over to the regulators.”

Unsurprisingly, Herbalife CEO Michael Johnson immediately dismissed the allegations, claiming Ackman’s presentation was a ridiculous assertation by people who are trying to manipulate our stock.”

The SEC (New York) launched an “inquiry” on July 9, 2012 in Herbalife.

“The Securities and Exchange Commission has opened an inquiry into Herbalife Ltd. amid an intensifying public battle between the seller of nutritional supplements and a hedge fund that argues it is a pyramid scheme, a person close to the probe said Wednesday.

The inquiry is being led by enforcement officials in the SEC’s New York office, the person said.

The probe won’t necessarily result in any enforcement action, but it adds pressure on Herbalife a day before a meeting with investors at which the direct seller has promised a full rebuttal of the allegations lodged by hedge-fund manager William Ackman.

The inquiry by the SEC’s enforcement division follows scrutiny of Herbalife’s financial disclosures by the regulator’s corporation finance division last year.

A spokeswoman for the SEC declined to comment. Herbalife had no immediate comment.”


What Are The Herbalife Products?

herbalife productsFocusing on Health and Wellness, Herbalife offers a range of products including:

  • Weight management solutions – protein bars, shakes, protein powder, soup, “enhancers” and other related items
  • “Targeted” nutrition – products and vitamins tailors to men, women, children, elderly, the immune system, some heart products and stress management supplements
  • Personal care – shampoo and conditioner, skin revitalizers and treatments, anti-aging compounds, fragrances and other hygiene items
  • Energy and fitness – granola tablets and tea, fitness drinks, and “Herbalife 24” performance nutrition range

As you can see, the products are within the Health and Wellness arena similar to a company like Isagenix.

Some Details On The Herbalife Compensation Plan

Official documentation provided by Herbalife is poorly constructed and fails to present any real structure.

Retail Profit

Herbalife defines Retail Profit as the difference between the discounted product price paid by distributors and the retail price paid by their customers. This is roughly 25-50% of the retail product price.

Wholesale Profit

Herbalife defines Wholesale Profit as the difference between the discounted price distributors pay for products and the discounted price paid by their personally recruited distributors.”  This downline commission can be, according to Herbalife, up to 25% of wholesale profit.”

Volume Points

A large portion of the Herbalife Compensation plan appears to be “points,” which are earned based off the sale of Herbalife products by a distributor to recruited distributors in the downline, or to retail customers. Distributors may also earn volume points by purchasing Herbalife products directly from the company or from someone in their upline.

Personal Volume is all volume earned by a distributor and anyone recruited in their downline, until the first qualified “Supervisor” is located in the downline.

Group Volume is all volume earned by newly qualified Supervisors who place an order in the first 30 days of qualifying. This may only be earned by distributors who are ranked as a Supervisor or higher.

Volume Points may also be deemed “encumbered” or “unencumbered.”

Senior Consultant Sliding Scale

By purchasing product themselves at wholesale, distributors receive a 30% discount – meaning that when they sell the product at full retail, they earn 30%. The Senior Consultant Sliding Scale becomes available to distributors who qualify by:

  • Personally purchasing one order valued at 400 VP of product or more that month.
  • Personally purchasing several orders that total 800 VP or more
  • Earning 400 VP over two consecutive months while still failing to qualify under either option above.

As a member qualifies for the scale, it is tied into total volume as follows:

  • 0-424 VP – 30%
  • 425 – 549 VP – 35%
  • 550 – 799 VP – 38%
  • 800 – 999 VP – 40%
  • 1000 – 1999 VP – 41%
  • 2000 – 4000 VP – 42%
  • 4000+ VP – 50%

Herbalife Membership Ranks

Three membership ranks exist within Herbalife.

  • Distributor – joins the company by paying a joining fee
  • Senior Consultant – qualifies based on the Senior Consultant Scale shown above
  • Supervisor – generates 4000 in VP per month (1000 unencumbered) OR generates 2500 VP for 2 consecutive months (1000 unencumbered VP per month)

The status of a Supervisor is an annual qualification.

Royalty Override Income

Herbalife uses a unilevel compensation structure to pay out Royalty Overrides. This means any personally recruited affiliates are placed directly below them on level 1. Any affiliated recruited by a distributor is placed on level 2.

A Supervisor Distributor is able to earn override bonuses earned by Supervisors down three levels.

Global Expansion Team

The Global Expansion Team (GET) is the first membership level higher than Supervisor. If a GET Distributor is able to generate 5000 VP in a month, a 2% Production Bonus is earned.

A GET distributor may also “qualify for vacation and training events.”

Millionaire Team

Millionaire Team Distributors are entitled to a 4% Production Bonus if they generate 3000 VP AND 4000 Royalty Override points in a month. Members who fail to qualify are instead paid a 2% bonus.

President’s Team

A President’s Team distributor has the opportunity to expand their Production Bonus to 7%, depending on how many Royalty Override Points they are able to generate.

Luxury Bonuses

A distributor may be able earn a luxury bonus based on the annual Royalty Override Points they earn.

What Is The Cost Of Joining Herbalife?

The cost for joining Herbalife is not disclosed anywhere on their website. Some other sources have estimated this cost to be anywhere between $60 to $200.

Is Herbalife A Scam Or A Legit Opportunity?

First of all, I don’t agree with people who call network marketing companies “scams”.

A lot of these people don’t know the meaning of the word.

So, of course, I don’t agree with those who talk about a Herbalife Scam taking place.

A scam is when someone takes your money and runs away.

And that does not take place here.

Herbalife presents a specific business opportunity and it is your decision whether to get involved. That does not make it a scam.

Now, other people call it a pyramid scheme.

So, is Herbalife a Pyramid Scheme?

Well, read my conclusion for a more thoughtful analysis of this.

Here Is My Herbalife Review And Conclusion

So is it possible that Herbalife is really an enormous Pyramid scheme? You bet.

As a company that has been in existence for over thirty years, the fact that their compensation plan is so confusing and disjointed is a major issue – I’m not certain that most distributors would be able to understand it, and I think this might be intentional.

There is a very real lack of incentive to sell any of the products at a retail level, and this leads us to a pattern of chain recruitment.

Another major flaw to the system is the fact that it costs more to purchase product from your upline distributor than it does to purchase it directly from the company yourself. This makes me wonder why this option even exists.

It is likely that a distributor would join Herbalife, purchase a large quantity of product, and then sell it to recruited distributors – who then have to do the same thing in order to earn any income. These sales are replicable over and over again, with each of the distributors earning a commission of every other distributors purchases.

Ultimately, this is what led to the demise of Herbalife in Belgium.

Promoting Herbalife is like promoting any other business opportunity.

You need to learn the skills required to be able to recruit effectively.

And you need to learn how to market towards the “cold market” – not just your friends and family.

Whether you decide to market Herbalife or another business, my free ebook will help you learned these skills.

Feel free to get it for free below.

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There are a lot of biased Herbalife reviews out there that simply want to recruit you. I’ve tried to give much more detail on the actual company than those reviews provide.

So, I hope you have got value.

The majority will always fail with something like Herbalife. If you want to succeed, you need to develop those important skills to recruit effectively. See my ebook to learn those skills.

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