A report released by Sen. Jeff Klein and New York City elected officials on Wednesday knocks the multi-level marketing company Herbalife as a “get rich quick scheme’ that targets poor immigrant families.
Klein has been eyeing the company’s practices since earlier this month, when he launched an undercover investigation into the company’s practices that he said operates essentially as a pyramid scheme.
“Herbalife’s house of cards is tumbling down,” Klein said in a statement. “This fraudulent company’s efforts to lure in vulnerable New Yorkers and recent immigrants in pursuit of the American Dream is downright shameful. With false promises of wealth and extravagance, a disproportionate number of Hispanic families are falling prey to these schemes and sacrificing their hard earned dollars.”
The Bronx Democrat who leads the Independent Democratic Conference has introduced legislation aimed at enhancing protections for both cosumers and distributors, as well as expand financial reporting requirements for independent members of Herbalife and beef up oversight.
Instrumental in the push has been Public Advocate Letitia James and the advocacy group Make The Road New York.
“Herbalife cannot continue to destroy thousands of lives with its despicable and unethical practices,” James said in a statement. “Our undercover investigations show just how blatantly this pyramid scheme is targeting and exploiting immigrants across our City – particularly from the Hispanic community. Together, we are putting Herbalife on notice, and we will ensure that their days of deceit in New York are numbered.”
Critics of Herbalife say it has targeted low-income immigrant families as a business opportunity in which its products can only be purchases through an accredited distributor. The distributors, who are not employed by the company, sell and market the products to family and friends in their communities and away from brick-and-mortar locations.
Consumers are encouraged to become Herbalife members and buy the company’s products directly, and recruits are promised low start up costs for as low as $60, but can very quickly spend more on buying an ever increasing amount.
The American Scheme- Herbalife's Pyramid 'Shake'Down by Nick Reisman