Karen E. Klein
“It’s been a wild ride lately for Herbalife,” said Karen Klein. One hedge fund titan, Bill Ackman, has called the multilevel marketing firm a pyramid scheme and bet $1 billion that the government will shut it down; another, Dan Loeb, is buying up Herbalife stock, convinced that the market for its nutrition products is real. But “what gets lost in the noise about the hedge fund scuffle is the pain of ordinary people who have been burned.” Multilevel marketing companies like Herbalife work by getting independent distributors to recruit more salespeople. It’s not easy. Nicole Lopez, a single mom in Utah, spent seven years paying off the $9,000 in debt she accrued to keep her Herbalife status. Almost 16 million Americans participate in the $28.5 billion multilevel marketing industry, and critics say more than 90 percent of them “either break even or lose money.” Yet thanks to intensive lobbying, the Federal Trade Commission has no “specific regulations in place for the industry.” These companies prosper with ease because what they’re “really selling is hope, something most people are eager to buy.”
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- 43 TV shows to watch in 2014
- How to be the most productive person in your office — and still get home by 5:30 p.m.
- How our botched understanding of 'science' ruins everything
- Why so many Christians won't back down on gay marriage
- How to be the star of a cocktail party where you don't know anyone
- California's epic drought
- 6 things the happiest families all have in common
- Russia is stealthily threatening America with nuclear war
- 13 Urban Outfitters controversies
- What would a U.S.-Russia war look like?
Subscribe to the Week