Is Herbalife a Scam?


Quick Answer

There is no official confirmation that Herbalife is a scam, but the company is, as of November 2015, under federal investigation. Since 2014, both the FBI and the FTC have been engaged in probing the company for fraud.

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Full Answer

Herbalife is a company that sells nutritional supplements via a distribution system that rewards sellers for recruiting others to join the company. Many consider Herbalife's business model unsavory, but the company has yet to be prosecuted despite multiple lawsuits and probes from two separate federal agencies. For example, a lawsuit filed by shareholders in 2015 was thrown out of court, in part because the judge found that the company's CEO did not have any knowledge of wrong-doing.

Investor William Ackerman has publicly claimed that Herbalife is a pyramid scheme, but Ackerman himself has been under investigation for allegedly making these claims in order to devalue the stock.

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