Independent Democratic Conference Leader Jeff Klein on Friday praised the settlement with the Federal Trade Commission and Herbalife after the company was criticized for unfair and predatory consumer practices.
The settlement requires the company to pay $200 million and restructure itself, though regulators added Herbalife itself is not a “pyramid scheme.”
Still, the development is a victory for consumers who had been duped by the company, Klein said in a statement.
“Today’s Federal Trade Commission settlement illustrated what we’ve known all along about Herbalife — it’s a company that engages in heavy recruitment tactics, makes false promises to distributors and forces inventory loading,” Klein said. “In New York State I met former distributors who lost their life-savings through Herbalife’s deceptive tactics and now the FTC’s $200 million settlement lays out a path similar to one that I’ve called for to prevent more consumers from getting scammed.”
Klein has blasted Herbalife as a get-rich-quick-scheme that has target low-income people and immigrants. He’s proposed a range of reforms, including having the company operate under a more transparent distribution model.
In the statement, Klein said he was especially heartened by the settlement including new disclosure requirements for the company aimed at benefiting distributors and customers.
“The FTC’s ruling, just as I proposed, includes enhanced disclosures for distributors and customers, limits compensation for recruitment and forbids distributors from telling potential participants that selling this product will lead to a ‘lavish lifestyle,'” he said.