How MLM Herbalife is using International Women’s Day to ‘prey on women’

Business

As International Women’s Day approaches, we are used to receiving PR pitches. But, given our campaigning against MLMs, were surprised to receive one about Herbalife.

We are sad to see a network marketing company like Herbalife use International Women’s Day to prey on women, as we believe they are doing. In this article we explain why we believe their press release is so problematic.

But first, in case you are unaware of who Herbalife is, we have investigated them in depth in this article. They were also the focus of the award-winning documentary Betting on Zero.

Like other MLMs, the failure rate in Herbalife seems very high. In 2005, Herbalife admitted that it had a turnover rate of 90% of distributors who were not supervisors, and 60% of supervisors. They stated:

“We estimate that, of our over one million independent distributors, we had approximately 201,000 supervisors after requalifications in February 2005.”

The FTC found Herbalife made “deceptive earnings claims”

And given the details revealed in their income disclosure statements, we aren’t surprised so many people leave the company. The FTC discovered, when they investigated Herbalife, that, of 464,736 distributors in the company:

  • 399,673 made nothing.
  • 34,855 made less than US$370 a year (approximately £281).
  • 6,971 made more than US$6,965 a year (approximately £5,303).
  • 697 made more than US$108,802 a year (approximately £82,846).

The FTC also calculated that “half of Herbalife’s “sales leaders” earned less than $5 a month on average from selling the product. Instead, the incentives were to recruit more people who would then buy more product – whether or not there was a market to sell it.”

As a result, Herbalife settled with the FTC for the damage done to people “victimized by Herbalife’s deceptive earnings claims” in 2016. The company paid $200 million and was forced to restructure its business.

The vast majority of Herbalife distributors earn less than a waitress

It’s hard to tell today what people are making (or not) from Herbalife, as they have reduced the amount of information they share on their income disclosure statements in recent years (like many MLMs under an increasingly critical spotlight).

But Herbalife’s 2021 North America income disclosure statement shows that just 10% of first year distributors (2,4000 people) who made any money, earned more than $1,636 in any month (not every month, but in any month). To contrast, the average monthly salary for a waitress (not including tips) in the US is $2,813.

And don’t forget, this is just 10% of the people who made any money with Herbalife. And we know, from previous years, this appears to be a small percentage of distributors.

So, according to their own data, you are more likely to earn a higher amount as a waitress than you are as a Herbalife distributor in your first year.

After the first year, things don’t get much better. Again, only the top 10% (about 6,100) of people who have been with the company for more than a year and made any money at all, earned more than $3,925 in any given month.

Add tips to the monthly salary of a waitress (the lowest state average is $120 a day) and you would STILL earn more from waiting tables than joining Herbalife, in our estimation. (You would also not have business expenses to deduct from your earnings.)

Herbalife are attempting to exploit IWD, in our opinion

Given how little Herbalife distributors apparently make – and we believe the company is FULLY aware of their terrible success rate as they produce their income disclosure statements – we were disappointed to see the company attempt to exploit, in our opinion, International Women’s Day (IWD).

Claiming to be “the number one brand in the world for active and lifestyle nutrition”, Herbalife say they have conducted research focusing on women in business. Their Regional Vice President for North West Europe, Violetta Zlatareva, has “dived into how an estimated 252 million females are running their own businesses worldwide”.

Herbalife’s research involved 9,000 women across 15 countries, and found that 72% of women want to own their own business, but many aren’t sure how to go about it.

The press release goes on to claim that “Herbalife… wants to provide a direct route to entrepreneurship for women and provide a step ladder for individuals to climb onto their own entrepreneurial career paths.”

Herbalife distributors are NOT business owners

The problem with this is that people who join Herbalife aren’t business owners; they are, in effect, unpaid sales reps. They also are highly unlikely to make money, based on Herbalife’s own income disclosure statements.

In fact, according to research published on the FTC website, on average, 99.6% of people who join an MLM like Herbalife will lose money once business expenses are taken into account.

However, Herbalife’s press release continues to try to claim that they are offering women genuine business opportunities:

“…companies like Herbalife that sell their products via a global network of independent distributors, offer a great option for those who want to begin their entrepreneurial journey with a reassuring element of safety, support and protection.”

And:

“…working with an established direct selling company allows you to build on the success of a brand that’s already established, well known and with a significant share of the market – a supercharged start for those who want to be their own boss.”

In fact, as we explain in this article, the structure of MLMs like Herbalife offer people who join none of the usual protections they would have with employment (including a salary), and none of the freedoms associated with genuine entrepreneurship. It also leaves them vulnerable to “cult-like culture”.

And they are absolutely not “their own boss.” Can they make decisions on branding? No. Can they change suppliers? No. Can they alter the pricing strategy? No. A Herbalife distributor has no influence over the business, as they would if they were a real ‘boss’.

We predict that many of the women who fall for the sales pitch will fail to make money

Herbalife also admit that women are a core target audience for them:

“Over half of Herbalife’s independent distributors are women which reflects the fact that Herbalife provides the ideal entrepreneurial opportunity for women worldwide who want the flexibility, confidence and opportunity to start their own businesses.”

Sadly, we predict that many of the women who do fall for their sales pitch will discover quickly that it’s not really possible to make money in an MLM – as reflected in the 90% of distributors who left Herbalife in 2005.

On the plus side, we anticipate fewer women falling for this pitch than in previous years. As we catalogue at length here, the MLM industry has been in decline for a few years now. Herbalife is also a member of the UK Direct Selling Association (DSA), which admits that their market in the UK has HALVED over the past five years.

Read more about the MLM industry

If you’d like to learn more about MLMs like Herbalife, and why we believe they are so harmful, we recommend reading these articles:

We also recommend reading the experiences of some of the former MLM reps we have interviewed here:

Photo by CoWomen