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Herbalife Circle of Success Fraudulent Statements RICO Class Action

Herbalife International of America, Inc. involves a multilevel marketing (MLM) company that maintains its distributors’ enthusiasm through a series of events the complaint for this class action identifies as the “Circle of Success.” The complaint claims, however, that the statements made in these events are fraudulent, and that distributors have little to no chance of achieving the promised success.

The class for this action is all persons who bought tickets to and attended at least two Circle of Success events, from 2009 to the present, in pursuit of Herbalife’s business opportunity.

The complaint describes the Circle of Success this way: “You build your life around a series of scripted, highly emotional, day or weekend events; you attend one of these events every month; between events you participate in a series of mini-events that feed into the big events.” At these events, the company promotes its business: “‘This business builds itself,’ you’re told. Follow the path—and follow instructions—and you’ll achieve the same success as the ‘experts’ Herbalife so vigorously promotes.”

However, the complaint calls Herbalife a “corrupt organization of individuals and entities who act together, using misrepresentation and deceit, to sell access to a series of emotionally manipulative live events.”

Distributors are told they must go to every event, and they are then asked to “qualify” for special treatment at these events by making large monthly purchases of Herbalife’s products.

The complaint quotes one of the speakers at these events as saying, “If you go to all the events, you qualify for everything—you will get rich.” However, the complaint asserts that this is not true. The complaint says, flatly, “The Circle of Success does not produce financial success for business opportunity participants, and Herbalife knows it.”

Even worse, the complaint alleges, “None of Herbalife’s top distributors, past or present, has built a significant income by retailing Herbalife’s products according to Herbalife’s rules as they exist today.” Participants have “dismal results…”

The complaint refers to a Federal Trade Commission (FTC) document of 2016 that draws dismal conclusions, including, the complaint says, that “[m]ore than half of the top 13% of distributors grossed less than $300 per year in payments from the company.” 

The people who have made money with Herbalife often did so, the complaint claims, using techniques that were banned as regulatory organizations scrutinized the company’s business practices. The company’s settlement with the FTC “fundamentally changes the way Herbalife operates” because it requires that distributors rely on retail sales of the product and not on pyramiding on the sales of others and other improper techniques. 

The complaint says that the featured speakers at the meetings are still reaping the benefits of the banned methods that created their success yet do not admit it. One speaker, it says, touted his “financial freedom” at a meeting, and then filed for bankruptcy the following month. 

Article Type: Lawsuit
Topic: Fraud
No case events.
Tags: Fraud, Fraudulent Misrepresentation, RICO laws