The case of the US Federal Trade Commission against diet supplement giant Herbalife has come to an end as neither side fully gets what they wanted.
Herbalife was able to escape the lawsuit without being labeled as a “pyramid scheme,” worth a lot more than the $200 million fine they were forced to pay, as expressed by an immediate 15 percent rise in the company’s stock.
The FTC accused Herbalife of cheating their own salespeople out of hundreds of millions of dollars by thrusting a hard-sell, multi-level, marketing scheme on them.
The FTC is also demanding Herbalife to restructure its operations. It will need to track and reward sales which end in purchases by consumers, instead of tricking the junior retailers, which was the contention of the lawsuit.
The chairwoman of the FTC, Edith Ramirez said that the regulator decided not to label Herbalife as a pyramid scheme company, or shutting them down. Instead they decided to just go for the less serious charge of “unfairness.”
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