Why is Herbalife Allowed to Continue
Anyone on social media has probably seen advertisements for "nutrition clubs," featuring colorful "loaded teas" or meal replacement shakes with cookie crumbles, cereal or sprinkles. They look good.
The health benefits and nutritional claims look better. Most drinks are allegedly under 300 calories and have very little sugar. Others can supposedly give brighter skin, more energy, support healthy digestion and help with weight loss.
These claims can be tempting for those desperate for something easy to help them meet their health goals, but nutrition experts say that's simply not the case.
Many clubs — including several in Weld County — are run by Herbalife Nutrition distributors, a multi-level marketing company, who often have no background in nutrition. Registered dietitians and those previously involved with Herbalife say the business practice is misleading and something people need to be wary of.
"They're just not good products," said Katie Kissane, a registered dietitian in Fort Collins. "They're not good formulations and their (marketing) tactics prey on people who are vulnerable."
What is a nutrition club?
Nutrition clubs are physical storefronts used by distributors such as Herbalife to sell supplements and snacks, as well as recruit others to join the company, said Dorothy Blyskal, a former Herbalife corporate employee.
The Greeley Tribune confirmed Blyskal's claim of being an Herbalife employee through online company documents.
Adam Martin and his wife, Katie, have clubs in six states. Aside from their Colorado locations, most of their shops are in the south, including Mississippi, Alabama and Louisiana.
The Martins opened J-Town Nutrition in January 2020 in Johnstown and "helped open" Simple Nutrition in Greeley and Anchor Roots in Loveland.
"That's what we do," said Martin. "We open nutrition clubs and have helped other families that want to start a small business open them as well."
Weld County is home to at least a half dozen of these nutrition clubs. Despite distributors' claims of being a small business, these locations must follow specific guidelines set by Herbalife corporate.
The Tribune contacted six nutrition clubs in Weld County for comment. Four did not respond to voicemails, and Global Nutrition "does not accept incoming calls."
Herbalife states in its online rule books that nutrition clubs are not franchises, restaurants, food service establishments or retail stores. Many in the county, however, list themselves as smoothie and juice bars on Facebook. On Google, they may be listed as restaurants, health shops or vitamin and supplement stores.
Clubs cannot post prices, otherwise they would be considered a food establishment, Blyskal said. Owners must charge a "membership fee," which often covers two drinks and the overhead. Martin said his shops advertise "no pricing," and said customers are welcome to ask about this policy.
Locations are not supposed to have open or closed signs visible from the exterior, but J-Town Nutrition has an open sign.
Herbalife also says products and club interiors cannot be visible from the exterior. Windows should be covered to prevent people from looking inside.
Distributors are allowed to sell products, despite Herbalife saying in the same document the clubs are not retail stores.
Clubs cannot advertise on television or radio, instead relying on social media marketing. They promote their locations with colorful drinks, toppings and drizzles, and use clear cups with their own logos. Herbalife branding is not allowed.
"Anyone who knows what to look for now can know within a second (of seeing a photo) whether it's an Herbalife nutrition club or not," said Bella Jones, a registered nurse from Windsor. Jones was given a pseudonym due to concerns regarding her employment. "It's just getting frustrating, because we're in northern Colorado, which is very protective of small and local businesses. All of these nutrition clubs, they don't come up and say they're from Herbalife. It's all based in secrecy. They make themselves sound like they, too, are local, small businesses."
Are Herbalife products safe?
Herbalife nutrition clubs have come under scrutiny because of their safety history, which includes links to possible liver damage, liver failure and an increased risk of hepatitis.
Hospitals in the United States, Argentina, Iceland, Israel, Spain and Switzerland reported incidents of liver damage in patients who used Herbalife, according to the Journal of Hepatology and the Archives of Toxicology. Some of these cases date back to the early 2000s.
Researchers admitted in 2015 that affirmative diagnostic tests were not available, but they felt comfortable linking Herbalife to these risks after in-depth evaluations of the patients' health histories, the strategic exclusion of other potential causes and similarities among other cases.
Another study from the World Journal of Hepatology found in 2010 that weight loss supplements, including Herbalife, were the likely culprits of liver damage in a number of patients. Researchers are unsure if the damage was caused by an active ingredient in the product or other ingredients. The study says it could have been caused by flavor enhancers, preservatives, pesticides or heavy metals that were intentionally added or part of the raw herb extracts.
"To date, Herbalife has refused to provide detailed analyses of their products' composition and ingredients," the report states. "This contamination hypothesis could also explain the different patterns of pathology seen on liver biopsy specimens previously observed in patients with hepatotoxicity from Herbalife products as both predominantly cholestatic injury pattern and acute hepatitis pattern have been reported. Our patients had findings consistent with acute hepatitis due to drug-induced liver injury."
Each of the studies indicate liver damage is rare, but it's worth exercising caution.
Some nutrition clubs market allegedly healthy drinks for children. The Cleveland Clinic, however, warns against giving children supplement-based items.
It said most children in Western countries already receive too much protein in their diets. Adding more by way of a meal replacement shake could eventually cause weight gain, organ damage and impacts to the immune system.
The CDC and National Institutes of Health report high levels of caffeine can negatively impact children, teenagers and young adults. A typical 12-ounce can of soda has roughly 35 milligrams of caffeine. An 8-ounce cup of coffee may have about 100 mg, but a loaded tea ranges from 175 to 200 mg.
Meanwhile, anecdotal information indicates some customers have experienced dizziness, fainting and stomach illnesses. These symptoms began after they started consuming Herbalife and stopped when the products were removed from their diet.
Are Herbalife products approved by the FDA?
Herbal and dietary supplements do not receive FDA approval and no longer have to meet the same standards as other food or drink products.
United States law was changed in 1994, altering the FDA's role regarding supplements and similar dietary products. It now requires companies to determine themselves if products are safe and that any claims are backed up by evidence.
It is illegal, however, for supplements to claim they cure diseases or alleviate symptoms of a disease.
The FDA often does not step in during the manufacturing process unless products are using a new ingredient.
Companies do not have to provide proof that the products are safe or that they work. The FDA may investigate products for "significant or unreasonable risk of injury or illness" or misbranding, but this happens after the product has entered the marketplace.
The FDA cautions consumers from believing companies that promise miracle weight loss or significant health benefits.
Kissane, who has a bachelor's degree in kinesiology from University of Colorado Boulder and a master's in human nutrition from Colorado State University, warns against the use of Herbalife. She said they use highly processed ingredients and proprietary blends, which are not disclosed to the consumer.
However, as Martin pointed out, the process is the same for all supplements, not just Herbalife.
"The FDA doesn't approve any supplements, so, yeah," he said when asked what he would say to customers who are concerned about the reported health risks and lack of FDA approval
Does Herbalife live up to the claims made by nutrition clubs?
In short, health professionals say claims about Herbalife's actual nutritional value and impact on the body are far-fetched.
J-Town Nutrition advertises on social media its drinks have ingredients to promote healthy skin, reduce the appearance of cellulite, promote weight loss, boost metabolism and are "packed" with vitamins and minerals. Most drinks are under 300 calories, have 15 to 30 grams of protein, have low sugar and low fat content, the club states.
Alan Hoffman, Herbalife executive vice president of global corporate affairs, wrote a blog post on the company website asserting nutrition clubs help alleviate food deserts in areas without "fresh, healthy and affordable food."
Food deserts are often in low-income urban areas with high Black and Hispanic populations, according to the NIH.
Mark Smith is a Windsor man who reluctantly sold Herbalife with his now-ex wife during his time as an active-duty military member. Smith's name has been changed for employment and safety purposes.
He said the product is not as healthy as the company claims. Most of their nutritional information comes from the supplement labels, but shop owners don't consider the extra food coloring, cookies, flavoring and chocolate drizzle they add to the drinks.
"If it sounds too good to be true, don't believe it. It probably is," said Cindy Dallow, a registered dietitian in Greeley.
Almost everyone the Tribune talked to for this story said distributors will say anything to sell a product. The claims are often half-true or not provable, they added.
"If you eat a shake instead of food, you will factually lose weight," Blyskal said. "That doesn't mean it's healthy. But people lose the weight, so they see it's 'working.' Everything else, there's no way to quantify it. 'Oh, my iron is kicking in,' or, 'Oh, the tea is really cleansing me.' How would you know?"
Kissane shared similar thoughts, adding that fad dieting leads to failure. Multiple studies show about 95% of diets fail and participants regain the weight. This "yo-yo" effect is worse than maintaining weight, she said, because dieting and relying on supplements can have "awful" metabolic consequences.
Registered dietitians are often a last resort after years of failure, and they help patients restore their bodies' natural processes.
"It's not sexy to eat more fruits and vegetables or to tell people to do that. It's not exciting," Dallow said. "It's not cutting-edge research and all this stuff that they claim they have. They'd rather sell a bottle of something."
Are nutrition club owners qualified to give supplement advice?
Most Herbalife nutrition club owners likely do not have the educational or occupational experience to make recommendations about supplements, Kissane and Dallow said.
Both dietitians earned degrees — Dallow has a doctorate from CSU in nutrition — participated in internships and acquired special certifications. It's possible for people to take an online nutrition class and call themselves a nutritionist, even with a limited knowledge that might not meet clients' needs.
"I don't know of any dietician who would (promote Herbalife) — maybe there are some out there that do — but I don't know of any," Kissane said. "Just because it's a nutrition club doesn't mean it's being run by a professional."
When asked if he has a background in nutrition or science, Martin said in the clearest terms, "No, we don't. We don't have any of that."
Instead, he talked about losing 65 pounds, which he admits is not typical, and participating in athletic events.
Health care providers and those formerly with Herbalife who commented for this story also agreed selling products while making health recommendations is unethical, as the ultimate goals of those pursuits are often mutually exclusive.
"If a product is involved, then that means there's money to be made. You can't buy health in a bottle. It really has to be a lifestyle," Dallow said. "I have companies that approach me wanting to sell stuff, and I don't, because I think it's ethically wrong. I think there are some supplements out there that can help people, but I don't sell them, because I think that's a conflict of interest."
Do nutrition clubs have business licenses?
All Herbalife nutrition clubs are supposed to be licensed businesses through the municipality in which they are located.
Greeley Finance Director John Karner said all nutrition shops must have a local business license and must be registered with the Colorado Secretary of State to operate. The city, however, does not have knowledge or say in inventory if the products are legal, which Herbalife is.
In fact, Greeley Sales Tax and Business Licensing Manager Michael Kibbee said his office bases registering and licensing on city code. Nutrition shops receive licensure because nothing in the law specifically bars them from operating.
"If this was ever something Greeley specifically wanted to address, it is technically possible," Karner said. "It would just have to be changed to city code through a city council process."
Licenses may be revoked, but that's rare and occurs when the law is broken or a business does not follow procedure.
For example, if a business does not update its information and provide certain annual reports to the state, it can be marked as a delinquent business. Owners have time to address the delinquency, but the state could revoke its business registration if they don't. This may cause problems locally, since state registration is required for operation.
Do nutrition clubs receive health inspections?
Nutrition clubs are subject to health inspections in Weld County — despite Herbalife's insistence that clubs are not restaurants or food service establishments — but not all receive them.
"Nutrition clubs serve ice and generally store and serve time/temperature control for safety foods, like milk," Weld County food program coordinator Nick Trautner wrote in an email. "Some of these nutrition clubs also prepare waffles and other baked goods made onsite. All of which require a retail food license."
J-Town Nutrition, Simple Nutrition in Greeley and Front Range Nutrition in Frederick have records of inspections through the Weld County retail food inspections database. They all passed their inspections, which means they met basic food safety standards.
The products themselves are not inspected for health or safety issues.
NoCo Nutrition, Global Nutrition and Smile Nutrition, which are registered with the state, do not have records of food inspections.
Kibbee said the city does not notify the county when it issues business licenses for food service establishments. The owner is expected to independently handle those requirements.
Trautner said some clubs may not be subject to food inspections because they started out serving samples. This is not a licensable activity. These clubs, however, sometimes move to full service, but generally county officials do not know of this change until they receive a complaint or see an advertisement.
"We have become aware of a few doing more extensive food preparation recently, but over the years, we have licensed these types of operations as they have come to us," Trautner said. "If a facility cannot be found on our website, please call our main Environmental Health number at (970) 304-6415."
Can people make money with Herbalife?
Martin and his wife help others open shops because they know the business model and have seen success. He said they're not concerned about market saturation.
Clubs can be found "on, like, every corner" in the deep south and "they all thrive and they all do very well."
He also said Herbalife distributors operate two times as many clubs as there are Starbucks coffee shops in the United States, though this could not be independently confirmed.
However, numbers directly from Herbalife corporate as well as experiences of others suggest success has been hard to achieve for many shop owners.
Smith said most people spend thousands to open their shop, including purchasing products from Herbalife, giving the company a guaranteed large order. Then, it's all on the club owner to make that back.
"They're not making this decision based on logic or some good risk management," Smith said. "They're doing it based on emotion and social pressure" from the company.
More than half of the nutrition club owners made no profit or lost money, according to a 2016 Federal Trade Commission survey. A 2020 Herbalife disclosure states that about 180,000 of its 191,000 distributors who purchased products for resale "earned money from their sales and the sales of those they sponsored." It also says that 90,000 distributors earned money in a typical month.
Of the 90,000 who allegedly earned money in one month, about half of them made less than $3,300. Most first-year distributors made less than $1,246 in one month. These earning values do not include expenses.
Top-tier distributors, only about 600, made $16,000 in a month. Jones said these figures are usually posted on social media to recruit others, but this is not the norm.
Blyskal agreed. She said it's virtually impossible to get into those top tiers at this point, due to the number of distributors. Yet, Herbalife's income statement claims those in the top tier — President's Team and above — are there because of "skills, consistent work and dedication."
Indeed estimates the annual income of Herbalife distributors to be roughly $1,800 to $2,200 per month. These numbers also do not factor expenses.
"Herbalife sells you on a dream, but remember it's exactly that: a dream," Blyskal said. "It takes a lot of time, energy and money to open a nutrition club, and we heard of more closing than those that were successful. Think about how much money you're putting into it and how much money you'd have to get back just to break even. You can't, because that's how the system is set up — in a way where you can't quickly or easily see the profit or loss."
Is Herbalife a pyramid scheme?
Herbalife's business model is considered a multi-level marketing company, but critics say it's a pyramid scheme that found loopholes in U.S. law.
Distributors are encouraged to sell a product but can receive commission if they recruit other people — known as a downline — and can receive commission off of their downlines' sales. When accused of being a pyramid scheme, the company asserts distributors cannot earn money from just recruitment.
But the definition of a pyramid scheme isn't that simple.
The New York Attorney General's Office, for example, specifies there are pyramid schemes with products, pyramid schemes without products and legitimate multi-level marketing.
A pyramid scheme is the system of earning money based on recruiting investors. Initial promoters recruit additional investors, who recruit more, thus building a pyramid. Those at the top get a portion of investments made.
Multi-level marketing sells products and services directly to buyers through distributors and not stores. These distributors can recruit others and earn commission on their sales. Legitimate MLMs emphasize products and services more than joining, the NY attorney general's office states. This is not illegal.
The office defines a product-based pyramid scheme as when companies use products to appear legitimate but are focused on earning money through additional distributors and investors.
"This is done solely to sidestep the regulatory agencies, as most state laws prohibit marketing practices where the potential for profit stems primarily from recruiting other investors and not from the sale of products," the New York Attorney General's website says. "The bottom line, however, is that in all pyramid schemes, the selling of a product itself is much less important than the recruiting of new investors."
A 2003 report from the Federal Trade Commission gives examples of how to spot product-based pyramid schemes, also known as recruitment-based MLMs, based on claims made.
Distributors or investors will describe them as "income opportunities," talk about how it's easy for anyone and say people can set their own hours and that a few hours a week can turn into enough income to quit a full-time job.
However, the FTC warns product-based pyramid schemes will shame people for failing and not working hard enough, despite telling recruits that it's not a big-time commitment. They may discourage people from criticizing any aspect of the products and the business model.
Additionally, the FTC warns people of believing claims that say MLMs cannot be pyramid schemes because pyramid schemes are illegal. The agency admits in its report that consumer protection officials are usually reactive and not proactive. It often takes complaints, but distributors may not report the companies due to the belief that they are at fault for failure — not the model itself.
It should be noted, it is legal in Greeley for nutrition club owners to recruit people to join the company, but only if the proper legal documents and protocols are followed.
Herbalife has used a lot of similar tactics that the FTC and New York Attorney General attributes to product-based pyramid schemes, multiple sources told the Tribune.
Smith said distributors lie about how much they make and use their Herbalife rank to back up their claim. He said this is usually not accurate, though, and these people will buy products to stay in their rank but typically cannot sell it.
Members are also known for making sweeping statements about how easy it will be and how much money a person can make, Kissane said. Another tactic that raises eyebrows, according to Blyskal, is the company's strict policy against signage on nutrition clubs.
"Clubs are not retail establishments, cafes, restaurants or takeout establishments. Because personal interactions are the foundation of direct selling, club customers should be attracted to a club through personal invitation," the Herbalife nutrition club rule book states. "Limited exterior club visibility supports the one-on-one relationships that distributors work hard to establish, as part of their direct selling businesses. These limitations regarding a club's exterior help avoid attracting passers-by."
Blyskal said if the company's mission was truly about selling and not recruiting, it would want to attract people to try the product.
The FTC settled with Herbalife in 2016 for $200 million for "deceiving consumers into believing they could earn substantial money selling diet, nutritional supplement and personal care products." Its complaint alleged the company's structure was "unfair."
"It rewards distributors for recruiting others to join and purchase products in order to advance in the marketing program, rather than in response to actual retail demand for the product, causing substantial economic injury to many of its distributors," the FTC report states.
Herbalife was expected to restructure its compensation plan, but Smith and Blyskal said it hasn't substantially changed.
In recent years, Herbalife was also fined by the Securities and Exchange Commission for lying to investors about its business structure in China and executives were criminally charged for bribing the Chinese government in efforts to evade regulatory scrutiny.
A federal court in Miami reopened a $144 million case in October against the top 44 Herbalife distributors for claiming others could achieve the same level of financial success. Several other cases against the company are still in litigation.
The company is banned in Belgium for being an illegal pyramid scheme, according to the Belgian government.
"Whether you agree it's a pyramid scheme or not, the shape of the pyramid is undeniable," Blyskal said. "The Founder's Circle, with the least members, is the top of the pyramid. Chairman's Club, with the next lowest number of people, is underneath. Everyone else is holding all the weight of the people underneath. That's you. You're not making money for you and your family, you're making money for your upline.
"And you're the last to see it."
What should people do instead?
People should seek professional care if they want to improve their health or lose weight. Kissane, Dallow, Jones, the CDC, NIH and FDA all encourage speaking to a dietitian or primary care provider before making diet changes.
Dietitians and physicians can run blood tests, do deep evaluations of a person's diet and health history, and determine the best steps.
Some insurance companies may not cover all dietitian visits, but virtual services can help people find dietitians whose visits are covered. Some providers may be able to work out a payment system.
EatRight.org, from the Academy of Nutrition and Dietetics, features a database for registered dietitians who have credentials and resources to care for them, Dallow said.
People also need to remember real change takes work and it takes time. Major weight gain usually occurs over months or years, so will weight loss. Those with other health challenges will often need to make long-term changes.
Dallow said society puts too much emphasis on weight and that people need to consider their genetics, strength, cardiovascular health, diet and mental health. These considerations will change based on each person. She and Kissane believe in creating individual plans for each client based on specific needs and abilities.
"You're almost like a detective, in a way, to figure out what's going to work," Kissane said. "I definitely don't have a cookie-cutter approach to it."
How can people find a good supplement?
Kissane and Dallow believe supplements can be helpful for people, depending on their situations, but want consumers to be extremely cautious.
"I think supplements can play a role (in health), but supplement means something added," Kissane said. "They shouldn't be the thing you're doing exclusively."
First, people need to talk to a preferred professional who can provide recommendations about brands, dosage information and active ingredients to look for. Both said effective supplements can be found at Walmart, Walgreens or other stores. There is no need to buy expensive products.
Dallow said people should do comprehensive research on the products, too. Look at reviews, contact the Better Business Bureau and seek third-party studies.
A lot of companies will conduct their own studies, but they often conduct experiments on animals and don't share substantial information, she said. Studies should be conducted in a double-blind manner on humans and make determinations about safety and effectiveness.
Products should feature third-party certification, but Kissane notes these certifications simply indicate a product's ingredients are accurate. It does not test for safety or efficacy. A supplement should have well-rounded information available.
Consumers should also avoid MLMs altogether, including Herbalife, Kissane said. There's no way to truly know what's in the product, due to FDA regulations. MLM products often use proprietary blends, and there is no public information on exact ingredients or the content levels.
When asked about ingredient lists, Martin said the J-Town Nutrition menu could be found on social media but no posts reviewed by the Tribune feature actual ingredients. There are shops in Weld County that provide customers with full ingredient lists online and in-store.
What is the takeaway?
Trying Herbalife products or selling them is risky, according to the vast majority of those who talked to the Tribune for this story. They said there are more reliable ways to earn extra income and better options for teas and shakes.
Blyskal said it took more than a year to "detox" from the harmful rhetoric she heard while working for Herbalife. Now, she speaks out against the company, its products and its practices whenever possible.
Meanwhile, Dallow and Kissane urge caution and care. There are no magic cures, especially ones that claim to make someone rich.
"The whole reason I went into nutrition was to help people and make a difference that was long term. I don't tend to want to keep clients forever," Kissane said. "I want to empower them to do it, learn and go on their own. To see some of these people preyed on is very disturbing to me, especially through some of these nutrition clubs."
Note: This story was updated at 10:04 a.m. Monday to correct a reference to Belgian government.
Source: https://www.greeleytribune.com/2021/07/11/faq-herbalife-nutrition-clubs-supplement-products
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