Monday, December 7, 2009

What you need to know about Herbalife

This is for my Vietnamese friends who may know not much about Multilevelmarketing. Herbalife finally arrived in Vietnam. :-(

It's actually a pyramid scheme, that means you start a business selling a product, and then instead of finding just customers, you find also (or instead) new sellers. They again find news sellers, and so it goes all the way down to the ones at the bottom, who are not able to find sellers anymore. But as long as there are people joining the program, it's actually legal. So Herbalife is a legal business (although I am not sure if you may need a business license and work permit in Vietnam as a seller), I would call it unethical.

Usually MLM means people try to sell to their friends and family and their friends and family.

The basic system is not bad, Tupperware is doing a great job for example, but they take care of both, the products and their sellers. Other, like Herbalife, put a lot of pressure on sellers, usually more psychological. You will find yourself easily in a trap once you joined this world.
They may promise you a lot of money (and easy to make, but it's not easy, believe me. So don't quit your job, eat fruits and all the other healthy vietnamese food and you don't need that Herbalife powder.)

That's what other says about Herbalife and MLM:

Scheme Alert:Herbalife Warning Signs of Financial Harm and Deception Abound at Herbalife
Herbalife, one of the oldest and largest America-based multi-level marketing schemes exemplifies most of the classic warnings signs of a financial trap, a pyramid scheme and marketing program that is steeped in deception.

... 2004 settlement resolved a class action suit on behalf of 8700 former and current distributors that accused the company and distributors of "essentially running a pyramid scheme." A total of $6 million was to be paid out, with defendants not admitting guilt.
In a California class action suit, Minton v. Herbalife International, et al., the plaintiff is "challenging the marketing practices of certain Herbalife International independent distributors and Herbalife International under various state laws prohibiting "endless chain schemes", insufficient disclosure in assisted marketing plans, unfair and deceptive business practices, and fraud and deceit". [25] In a legitimate MLM company, commissions are earned only on sales of the company's products or services. No money may be earned from recruiting alone ("sign-up fees"). One must analyze the compensation plan to determine whether participants are paid from actual sales to customers and not from money received from new recruits. If participants are paid primarily from money received from new recruits, then the company is an illegal pyramid or Ponzi scheme

The FTC about MLM

Hubpages, a personal view:

HerbaLife makes the big bucks not by selling nutritional supplements, but by recruiting folks to become distributors.These distributors buy up a certain lot amount of the company's products, sample them, and try to sell them. More importantly, though, the newly-minted distributors are "encouraged" to recruit their friends and family (and anyone else they know) to become distributors too. And when I say "encouraged", I mean that the company will pretty much twist your arm in order to have you find new recruits. Weekly meetings, HerbaLife newsletters, company-wide e-mails, etc., will all repeat the company core motto until it comes out of your ears: recruit, recruit, recruit!.
Of course, there is an incentive to finding new distributors: a portion of their earnings on products gets kicked up to you. And likewise, part of your earnings get kicked up to whoever recruited you. And so it goes, until the very few people at the top of this pyramid scheme rake in the big bucks while you drive around in your car with big boxes of muscle-building protein powder. It's multi-level marketing (MLM), plain and simple.

So better apply for a regular job. Or even go to a casino (where at least you make yourself unhappy, but not others)


Mai Anh said...

Thank you for your warning but honestly I have never read anything so crap like that, especially "go apply for a job or even go to a casino".

Look at yourself again man. Are you still miserably working long hours at the office and still not able to afford a house/car/around-the-world tour?

If you look at those people who are willing to learn, who dare to take challenge, you must feel shameful when writing such words about MLM and Herbalife. If you dont like doing business, if you even hate MLM, it is not your business to prevent people from doing it. Please shut your mouth up because you dont know what you are saying. I'm sorry but you think you know everything.

Thomas Wanhoff said...

Yeah, here they are, the MLM soldiers! Ok, that the only pro-herbalife comment I allow, and it stand for itself. I think this cpmpany has enough ways to tell people their view, so I want to keep this blog for those who have another view. Means, you HL guys are out here!

camilynn said...
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Trần Phương Thúy said...
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Hang Toe said...

Very interesting article. I actually just learned about Herbalife today and the fact that it's just been launched in Vietnam literally scared the hell out of me! Confess it, it's an unethical business, not b/c it's MLM but b/c the particular way that Herbalife is running its business: 100% of its profits is generated from upfront fees that distributors pay when signing up for the program. The company made almost $0 on the products themselves. The upfront fees ($3,500 in the US, I think) differentiated Herbalife with other good MLM companies (Avon, eg.)

The Chinese govt is thinking about suspending Herbalife business license in China. Herbalife may create a new wave in Vietnam given all its buzzwords (nutrition, made-in-US, etc.), but at the end of the day, the Company can't grow w/o signing up new distributors and expanding to new markets.

It's scary indeed, and I wish I could do something else to tell people to be conscious and please not sign up.

BewareMLM - No MLM said...

You should watch your mouth young lady Mai Anh!!! What kind of uneducated lawyer that made you?! Your tones and words spoke volume about how obnoxious you are and you should be ashamed yourself for being a Vietnamese! Obviously, a frog at the bottom of the well couldn't see a thing!

Sir Thomas, thank you so very much for taking the time to help educate and save Vietnamese friends from such MLM CRIMES! Your help is greatly appreciated! Please accept apologies from people in need of your kindness. All the best to You Sir! Best regards!

Anhcanada604 said...

I am Vietnamese and I understand how Multiple Level Marketing are. YES Herbalife make billion for their own company but the people who being recruit to work for them are the dumb ass noob (uneducated fool) thinking they can make moneys by selling products to their friends and family and keep on going. You are just hurting your friends and family by being a sale man and women. I did went to the meeting in Rex HOtel and Let me tell you. these people on top are always talk about how much million you can make .. they selling a dream to other people.
and the Mai Anh: you are soo stupid to believe in Herbalife.. get a real job instead of selling to your friends and family..

Anhcanada604 said...

MAi Anh:
careful with your words. YOu are probably one of the scammers working for Herbalife.
how many of your friends and family did you hurt by bringing them to HERB? I wonder how selfish you are to try to make a buck by selling your friends/family out? you make me as a vietnamese feel ashame. working as a dog for Herbalife ..