Online Business Systems, Global Online, Herbalife Deceptive Business Practices Work At Home Scam Loretto, Ontario Canada

And I thank those of you who did research about this, and other, online, work-from-home businesses. You do so many of us a great service.
I, too, started to get involved with Online Business Systems--among other "make money without lifting a finger" offers.

I had a really well-paying job, with great benefits, up until a few years ago when my body went south and just couldn't handle the physical demands. The company refused to put me into any other position that I could do(been there 19 yrs and know more than just what I did for 11 of those yrs.) With no other skills to fall back on, I grasped at online, work-at-home options.

Multi-Level Marketing 'businesses' come in many forms. They're not always online businesses, and they are often difficult to spot. Beware--- if you THINK they are MLM, and then you are told repeatedly, and adamantly, that they are NOT!---
They just might be. Also, the words Multi-Level Marketing are just a euphenism for Pyramid.
My stepmom, who I consider a fairly saavy person, fell for some. My ex, also intelligent, got us involved in another, and, although I agree with SOME of their concepts and products, it was MLM---pyramid. He lost some good friends by trying to recruit them into the business.

Some questions to ask yourself:
If they tell you, "You don't have to sell anything", ask "Then where does the money generated and made, come from?" The answer is you have to get someone UNDER YOU. You have to schmooze other people to buy into the system.
(MLM-PYRAMID)Well, someone has to sell SOMETHING! Right?
"What is the actual product?"
"Do I believe in this product?"
"Will I use this product myself?"
"Has, or is, this product helping me, so I believe it can be of benefit to others?"
Research-Investigate. Try it out for yourself, before you put yourself as the head of the company.

Let's face it, in any business, if you are the one person selling the product, or service, YOU ARE THE PRODUCT OR SERVICE. If the consumer is unhappy with the results, you may have made a couple of bucks, but in the end. you are BUPKUS!
AND If you have to work your butt off to make the $$ 'promised' by the infomercials, they Lied!

The whole premise of these commercials is that you can sit in your bathrobe in front of your puter for a couple of hours a week and make millions!

Yeah, I am envious of the Donald Trumps and Bill Gates of the world. But, they found their niche and made it work. They didn't rely on these fly-by-night schemes to make their billions.

Look out for easily made promises,because, in the words of Mary Poppins,
" Promises are like pie crusts. Easily made--easily broken."
Find what you're good at, what you enjoy--and make it work for you.
Another question to ask yourself: If it's so easy, and lucrative, why isn't EVERYONE doing it?

M
CT

William, I'm glad you stayed here at rip it off to continue educating these folks about this scamming company, Herbalife aka OBS. I received an email and thought it may be a good opportunity for my sister, so I decided to investigate. Nope! Another scam...

But, I will tell you this....I am a mortgage broker and I net no less than $5000.00 per deal, average 4 deals per month, spend less than 20 hours per month working, spend $300/per month in advertising, and spent $295 on my Mortgage school. That's right, no bachelor degree needed...just a 48 hour course.

There's a lot of money out here people...and herbalife is not it.

I have recently joined OBS. Please note that WE ARE NOT EMPLOYEES, but independent agents. After having entertained several entrepreneurial ventures without success, I can say that I have been pleased with the results with OBS. Those of you who would rather rail against a company for your failure in it should perhaps spend equal energy looking inwards.
Many have categorized OBS as a "pyramid" scheme. But, this structure applies to many, indeed most business ventures. Take the auto industry for example. There is the main corporate structure at the top. Numerous manufacturing facilities comprise the next tier. Auto dealerships comprise the next and the salespeople occupy the base of this "pyramid." Now, what chance does an auto sales person have at rising to occupy the top spot in the corporation these days? Virtually none. They can hardly hope to make it to the next tier as a dealership owner. With OBS, you can go as far as your desire will take you.
As to the money some say they "wasted" on advertising, in one of my previous ventures, I spent $9,000 in market research and targeted advertising relying on the opinions of the "experts" and got zero bang for my buck. The bottom line is, no matter how well you market something, if people don't want to buy it, you can't sell it. And if you don't follow up your leads and offer the BEST in customer service, your customers will soon be someone else's customers.

Herbalife products have a proven track record, and they are still improving them. Lord knows, everything that Herbalife markets is better for your overall health than anything fast food restaurants sell. Herbalife is working to help people live healthier, not just feed their bottom line at the expense of people's well being. Are they making money? Sure! Nobody goes into business to lose money! As to some of the critics on this site, I would like to know what their weights are and what their diets consist of. Often when people are spewing venom, it's to obscure their own unsavory image in the mirror.

There is no perfect business; there are no guarantees. You can work hard at any business and still fail. It's easier to fail if you don't work hard. Herbalife and OBS give people a fighting chance to improve themselves and their lives without having to waste resources on their own trials and errors. As one who is largely skeptical of everything, I have found value in what OBS and Herbalife have to offer.

I have recently joined OBS. Please note that WE ARE NOT EMPLOYEES, but independent agents. After having entertained several entrepreneurial ventures without success, I can say that I have been pleased with the results with OBS. Those of you who would rather rail against a company for your failure in it should perhaps spend equal energy looking inwards.
Many have categorized OBS as a "pyramid" scheme. But, this structure applies to many, indeed most business ventures. Take the auto industry for example. There is the main corporate structure at the top. Numerous manufacturing facilities comprise the next tier. Auto dealerships comprise the next and the salespeople occupy the base of this "pyramid." Now, what chance does an auto sales person have at rising to occupy the top spot in the corporation these days? Virtually none. They can hardly hope to make it to the next tier as a dealership owner. With OBS, you can go as far as your desire will take you.
As to the money some say they "wasted" on advertising, in one of my previous ventures, I spent $9,000 in market research and targeted advertising relying on the opinions of the "experts" and got zero bang for my buck. The bottom line is, no matter how well you market something, if people don't want to buy it, you can't sell it. And if you don't follow up your leads and offer the BEST in customer service, your customers will soon be someone else's customers.

Herbalife products have a proven track record, and they are still improving them. Lord knows, everything that Herbalife markets is better for your overall health than anything fast food restaurants sell. Herbalife is working to help people live healthier, not just feed their bottom line at the expense of people's well being. Are they making money? Sure! Nobody goes into business to lose money! As to some of the critics on this site, I would like to know what their weights are and what their diets consist of. Often when people are spewing venom, it's to obscure their own unsavory image in the mirror.

There is no perfect business; there are no guarantees. You can work hard at any business and still fail. It's easier to fail if you don't work hard. Herbalife and OBS give people a fighting chance to improve themselves and their lives without having to waste resources on their own trials and errors. As one who is largely skeptical of everything, I have found value in what OBS and Herbalife have to offer.

I have recently joined OBS. Please note that WE ARE NOT EMPLOYEES, but independent agents. After having entertained several entrepreneurial ventures without success, I can say that I have been pleased with the results with OBS. Those of you who would rather rail against a company for your failure in it should perhaps spend equal energy looking inwards.
Many have categorized OBS as a "pyramid" scheme. But, this structure applies to many, indeed most business ventures. Take the auto industry for example. There is the main corporate structure at the top. Numerous manufacturing facilities comprise the next tier. Auto dealerships comprise the next and the salespeople occupy the base of this "pyramid." Now, what chance does an auto sales person have at rising to occupy the top spot in the corporation these days? Virtually none. They can hardly hope to make it to the next tier as a dealership owner. With OBS, you can go as far as your desire will take you.
As to the money some say they "wasted" on advertising, in one of my previous ventures, I spent $9,000 in market research and targeted advertising relying on the opinions of the "experts" and got zero bang for my buck. The bottom line is, no matter how well you market something, if people don't want to buy it, you can't sell it. And if you don't follow up your leads and offer the BEST in customer service, your customers will soon be someone else's customers.

Herbalife products have a proven track record, and they are still improving them. Lord knows, everything that Herbalife markets is better for your overall health than anything fast food restaurants sell. Herbalife is working to help people live healthier, not just feed their bottom line at the expense of people's well being. Are they making money? Sure! Nobody goes into business to lose money! As to some of the critics on this site, I would like to know what their weights are and what their diets consist of. Often when people are spewing venom, it's to obscure their own unsavory image in the mirror.

There is no perfect business; there are no guarantees. You can work hard at any business and still fail. It's easier to fail if you don't work hard. Herbalife and OBS give people a fighting chance to improve themselves and their lives without having to waste resources on their own trials and errors. As one who is largely skeptical of everything, I have found value in what OBS and Herbalife have to offer.

I give much respect to your opinions and feelings!

However I have been affiliated with OBS for more than a year now. I have had excellent results. The system is not for everyone and is NOT a pyramid. The BBB does not invite business' to its forum if they are illegal.
OBS is simply a marketing system that provides tools and resourses to make the Herbalife business easier. It also helps people move much faster in the business.

Need more info. go to www.bbb.com

I am sure you will find more than enough info to make all negative comments about OBS seem false.

I need to clear some things up about OBS! OBS started in september of 04 and has helped many people with NO ezperience in sale become very successful. In order to become successful you need to follow the system. If you are not willing to follow the system it will not work!

Those who fail either do not have a pleasant personality, are not trustworthy or did not follow the system. You cannot rely on one method of advertising to get what you are striving towards, in any business!!

If you put 1000 into 1 method of advertising and get 10 leads, where are the other 10 leads coming from. If you know OBS you know the 20/10 plan should be done EVERY MONTH! If you got 13 packages out why did you not get the other 7 out. Were you solely relying on the wheel??

So if you lost money in the business there is only one person to blame! Its not a flaw in the system, the system works. We all have the same products, resourses and tools, the only denominator is YOU!!

For the person who states they wished they had JUST gotten involve with Herbalife instead of the marketing system, its all the same, you still have the products to sell, selll them YOUR way, stop putting more and more money into advertising if your not making it back!! DUH!!!!!

Next you need to retail the products at the same time as recruiting, because your not going to make a killing from recruiting until your team is exstablished so retailing will help to defer the costs and put money in your pocket quickly!!

I thank god every day for bringing OBS and Herbalifeinto my life, they truly are a blessing!!

Thanks!

Sigh...what can I say? You're obviously convinced that Herbalife and GOS/OBS or any combination/spin-off is from hell and should be destroyed. Yes, William, I read ALL of the information you posted before it was posted by you. I did the same google research before getting involved in this company and industry. Yes, Herbalife has been sued. Name 1 company with high sales that hasn't been. The real question is this, HAVE ANY OF THE PLAINTIFFS IN ANY OF THE LAWSUITS WON ANY CASE? The answer is no! The internet is a wonderful resource of information, it is just unfiltered. You can find anything for which you look. The thing is if you're looking for something disparaging about a company you can find it. Just look up Microsoft or Walmart or Fidelity Investments, et. al. That Pyramid lawsuit filed in Canada, I know all about it and guess what, I KNOW personally the owners of GOS and all the details surrounding that suit. It had nothing to do with Pyramiding (Herbalife's business plan is such that pyramids are not really possible). The reason that lawsuit was filed in Canada and not the US or any of the other 60 countries Herbalife operates in is because of a loop hole in Canadian law that allowed for an unfair competition clause to be exploited. My business coach in this system, is a retired attorney.

Ok, the main thing I want to stress is this business is awesome. You get out what you put in. It works. If it's not then it is something you're doing, not the system. There are way too many people making money than not. And William, before you ask, I've retailed 5600 dollars worth of product. My take from that is 2800 dollars. It didn't come from recruiting other people in the business it came from having people get results on the products. Results for which they've searched and hoped. It's a far better thing to help the millions of overweight-obese people at serious health risk find an effective and safe way to lose pounds and inches.

That's all, I'll come back again to this once I've made GET (if you don't know what it is, too bad). Also, because I don't know you, I'll let that comment relating to my intelligence and being a math major slide. If I did know you, I'd kick your you-know-what. You don't know me personally yet you insult me as if you do. Why? Because I have a different idea about the company with which I'm associated? That's like being upset with some one who works for Microsoft or Wal-mart because you believe their making a mistake with their business ideas and they are duping people into following them. And yet, you seem to believe me to be of lesser intelligence. Try again...

Later until like December or something...

Ok, I am an ex-user of Online Business Systems, and have a great deal of hostility to defenders of the "proven system". First, I got a crappy "coach" and he charged advertising wheel slots to my credit card which he never asked nor told me about. I learned later that what I thought were medical expenses for a surgery I had recently had were instead charges for "leads" of which I feel crappy that I signed up 3 of the 13 leads I recieved.

I think Herbalife is a semi-legit thing, and I wish I had gotten involved with only them and NOT the "marketing" company that's out to get all your cash by telling you to do much more advertising than you need and paying extortion high prices for leads and materials that probably cost a penny or two on every dollar if that. I worked very hard, told my "coach" I had only limited time aspirations at first, and they instead overwhelmed me with leads that I never authorized the purchase of with my card. Not to mention the "hidden" fees.

You have a basic 40 dollar a month fee to maintain your "back office" website, and your marketing and recruiting websites. Which are all cookie cutter and the same thing, then you buy materials for a decision pack and send them to people who are just like yourself, in a bind and looking for a way out. At first I thought man, what a great system, all these details on the sites I was sent to told me how it was all perfectly legal, and was governed by both U.S. and Canadian law, which obviously govern very loosely since this stuff is allowed to go on.

I hope the people I signed up can forgive me for getting them into this, I feel worse about that than over the money I lost. Herbalife is the fertile soil for these corrupt marketing companies that can "affiliate" themselves with it and take themselves along for the ride since every level of the distributors use it they get the best in the end. Notice how the high end people are the ones who do the "marketing" not the sales.

Well, in the end it can go both ways I think, people get suckered in, because of something that seems legit (Herbalife has some good credentials, since it's a publicly traded company and that sounds like what people who are desperate want to hear) the things that are not legit (GOS, OBS) are swindling and possibly giving a bad name to the company and the people who are in the business. Although Herbalife has it's problems, for example most times when I ordered something one or more items were out of stock.

Ok, I am an ex-user of Online Business Systems, and have a great deal of hostility to defenders of the "proven system". First, I got a crappy "coach" and he charged advertising wheel slots to my credit card which he never asked nor told me about. I learned later that what I thought were medical expenses for a surgery I had recently had were instead charges for "leads" of which I feel crappy that I signed up 3 of the 13 leads I recieved.

I think Herbalife is a semi-legit thing, and I wish I had gotten involved with only them and NOT the "marketing" company that's out to get all your cash by telling you to do much more advertising than you need and paying extortion high prices for leads and materials that probably cost a penny or two on every dollar if that. I worked very hard, told my "coach" I had only limited time aspirations at first, and they instead overwhelmed me with leads that I never authorized the purchase of with my card. Not to mention the "hidden" fees.

You have a basic 40 dollar a month fee to maintain your "back office" website, and your marketing and recruiting websites. Which are all cookie cutter and the same thing, then you buy materials for a decision pack and send them to people who are just like yourself, in a bind and looking for a way out. At first I thought man, what a great system, all these details on the sites I was sent to told me how it was all perfectly legal, and was governed by both U.S. and Canadian law, which obviously govern very loosely since this stuff is allowed to go on.

I hope the people I signed up can forgive me for getting them into this, I feel worse about that than over the money I lost. Herbalife is the fertile soil for these corrupt marketing companies that can "affiliate" themselves with it and take themselves along for the ride since every level of the distributors use it they get the best in the end. Notice how the high end people are the ones who do the "marketing" not the sales.

Well, in the end it can go both ways I think, people get suckered in, because of something that seems legit (Herbalife has some good credentials, since it's a publicly traded company and that sounds like what people who are desperate want to hear) the things that are not legit (GOS, OBS) are swindling and possibly giving a bad name to the company and the people who are in the business. Although Herbalife has it's problems, for example most times when I ordered something one or more items were out of stock.

Ok, I am an ex-user of Online Business Systems, and have a great deal of hostility to defenders of the "proven system". First, I got a crappy "coach" and he charged advertising wheel slots to my credit card which he never asked nor told me about. I learned later that what I thought were medical expenses for a surgery I had recently had were instead charges for "leads" of which I feel crappy that I signed up 3 of the 13 leads I recieved.

I think Herbalife is a semi-legit thing, and I wish I had gotten involved with only them and NOT the "marketing" company that's out to get all your cash by telling you to do much more advertising than you need and paying extortion high prices for leads and materials that probably cost a penny or two on every dollar if that. I worked very hard, told my "coach" I had only limited time aspirations at first, and they instead overwhelmed me with leads that I never authorized the purchase of with my card. Not to mention the "hidden" fees.

You have a basic 40 dollar a month fee to maintain your "back office" website, and your marketing and recruiting websites. Which are all cookie cutter and the same thing, then you buy materials for a decision pack and send them to people who are just like yourself, in a bind and looking for a way out. At first I thought man, what a great system, all these details on the sites I was sent to told me how it was all perfectly legal, and was governed by both U.S. and Canadian law, which obviously govern very loosely since this stuff is allowed to go on.

I hope the people I signed up can forgive me for getting them into this, I feel worse about that than over the money I lost. Herbalife is the fertile soil for these corrupt marketing companies that can "affiliate" themselves with it and take themselves along for the ride since every level of the distributors use it they get the best in the end. Notice how the high end people are the ones who do the "marketing" not the sales.

Well, in the end it can go both ways I think, people get suckered in, because of something that seems legit (Herbalife has some good credentials, since it's a publicly traded company and that sounds like what people who are desperate want to hear) the things that are not legit (GOS, OBS) are swindling and possibly giving a bad name to the company and the people who are in the business. Although Herbalife has it's problems, for example most times when I ordered something one or more items were out of stock.

Ok, I am an ex-user of Online Business Systems, and have a great deal of hostility to defenders of the "proven system". First, I got a crappy "coach" and he charged advertising wheel slots to my credit card which he never asked nor told me about. I learned later that what I thought were medical expenses for a surgery I had recently had were instead charges for "leads" of which I feel crappy that I signed up 3 of the 13 leads I recieved.

I think Herbalife is a semi-legit thing, and I wish I had gotten involved with only them and NOT the "marketing" company that's out to get all your cash by telling you to do much more advertising than you need and paying extortion high prices for leads and materials that probably cost a penny or two on every dollar if that. I worked very hard, told my "coach" I had only limited time aspirations at first, and they instead overwhelmed me with leads that I never authorized the purchase of with my card. Not to mention the "hidden" fees.

You have a basic 40 dollar a month fee to maintain your "back office" website, and your marketing and recruiting websites. Which are all cookie cutter and the same thing, then you buy materials for a decision pack and send them to people who are just like yourself, in a bind and looking for a way out. At first I thought man, what a great system, all these details on the sites I was sent to told me how it was all perfectly legal, and was governed by both U.S. and Canadian law, which obviously govern very loosely since this stuff is allowed to go on.

I hope the people I signed up can forgive me for getting them into this, I feel worse about that than over the money I lost. Herbalife is the fertile soil for these corrupt marketing companies that can "affiliate" themselves with it and take themselves along for the ride since every level of the distributors use it they get the best in the end. Notice how the high end people are the ones who do the "marketing" not the sales.

Well, in the end it can go both ways I think, people get suckered in, because of something that seems legit (Herbalife has some good credentials, since it's a publicly traded company and that sounds like what people who are desperate want to hear) the things that are not legit (GOS, OBS) are swindling and possibly giving a bad name to the company and the people who are in the business. Although Herbalife has it's problems, for example most times when I ordered something one or more items were out of stock.

OK Jackie -

I showed you mine, now its time for you to show us yours. Or were you just B.S.ing us...probably like you do your customers, if you really do have any.

Jacqueline:

Just for your information: Online Business Systems (OBS) is a spin-off from Global Online Systems (GOS). It was started in September 2004 by Shawn Dahl and Glenn Kirkpatrick, who were President's Team members and affiliated with Global Online Systems at the time.

OBS employs the exact same tactics, scripts, and business materials that GOS used. They did make some changes to their Decision Package kits and Business Materials, which go along with their new website that they started. But the methodologies employed haven't changed!!

Everything else is the same. Same illegal pyramid marketing scheme. I was involved with both companies, and was active during the transition from GOS to OBS which was mandatory for all people in Shawn and Glenn's downline.

Just be very careful, particularly with advertising expenditures for that internet marketing wheel each month. That's where people typically lose the most money! If you can focus on retailing the products on your own (friends, family, etc.) and employ your own marketing techniques such as flyers, pull-tabs, etc. you'll be less likely to get into insurrmountable debt. It's definitely hard to be profitable in this business, but you really have to be careful with that advertising; it's a scam, and that's where a lot of the money is being made by a few and lost by the masses. Another big money-maker for these clowns at the top are the business materials (Decision Packs, Business Manuals, Training Tickets, etc.) that you are required to purchase; these things are really marked up as well. Just watch yourself.

Wow....Talk about not having anything better to do. Ha-ha. For Your info None of the Herbalife products have ephedra in them any more. Yes they used to, but once the studies were out that this stuff was bad for you, then they started doing research for a better product that would not harm you. Infact Herbalife continus to do resaerch to make sure that the products are safe.

You do have some good info and it is factual but it is a little out dated. I for one like to move on, and strive to better myself instead of dwelling on the past. Thank you for taking the time to share these articles with anyone who realy cares.

God Bless, and Have A Great Day!

I would just like to personaly thank you for answering my questions directly.

I am sooo glad that I am not with GOS but with OBS.

I guess that a few people got a little greedy, and was trying to run the busines as a pyramid which is NOT how the business is supposed to be run.

I make sure to teach all of my new people that it does take hard work and not everybody succeeds, I don't make them buy a certain amount product everymonth, if they want to use it then it is totaly up to them.

Thanks again guys,

Here is some dirty laundry for the "Snake Oil Lady" from Texas.

Ephedra Products under Attack in U.S. and CanadaQuackwatch Home Page Herbalife, Other Ephedra Marketers Face Soaring Insurance Rates
David Evans 2002 Bloomberg, LP
April 11, 2002

Herbalife International Inc. continues to sell weight-loss products containing ephedra, following lawsuits blaming the substance for customer deaths, and a six-fold increase in product-liability insurance expense. Herbalife, which faces two wrongful death suits blaming its ephedra weight-loss products, still includes the herb in its line of diet products, which made up42.7% of last year's $1.66 billion in sales, according to its annual report.

Late yesterday, the company agreed to be taken private for $685 million, or $19.50 a share, by Whitney & Co. LLC and Golden Gate Capital Inc.
Robert Hartwig, chief economist for the Insurance Information Institute, said ephedra insurance premiums have increased along with adverse incident reports and lawsuits. "You have a situation where the house is on fire," said Hartwig.

"If your house was already on fire, it's very unlikely we'd write a policy." More than a half dozen other publicly traded companies also continue to sell ephedra products, while unable to obtain desired levels of insurance.

Herbalife said in its federal filing that its product- liability insurance premium soared from $400,000 in 2000 to $2.5 million last year, even as its deductible increased 10-fold to $5 million, and its coverage limit fell by $10
million to $40 million.

Ephedra is an herbal stimulant also used for bodybuilding. The National Football League banned ephedra last year after it was linked to the deaths of several athletes.

Health Canada ordered a voluntary recall of the products in January, after finding "these products pose a serious risk to health." Dozens of Deaths Ephedrine, the active ingredient in ephedra, also called ma huang, is a chemical
cousin of amphetamines and increases both blood pressure and heart rate, say experts. The U.S. Food and Drug Administration has linked ephedra to hundreds of adverse reactions and dozens of deaths.

Herbalife, based in Los Angeles, said in its annual report it might discontinue selling ephedra products because insurance is "becoming prohibitively expensive." It said the company had "substantial defenses" to the lawsuits and
said "they will not have a material impact on us." An Herbalife spokeswoman, Tammy Taylor of Sitrick & Co., said Herbalife believes ephedra products are "safe and effective when used as directed." Francis Tirelli, company president,
didn't return telephone calls.

Nine other public companies say they sell ephedra products. Advantage Marketing Systems Inc. received 52% of its $28.4 million of 2001 revenue from ephedra. The company's product liability insurance excludes ephedra claims, according to its annual report. The company didn't indicate any ephedra lawsuits in its annual report. Reggie Cook, chief financial officer, said the coverage would be too costly. "If I paid $100,000, I could get $100,000 of coverage," he said.

No Complaints Natrol Inc. of Chatsworth, California, has sold ephedra supplements for 18
years, without a single complaint, said Elliot Balbert, president and founder.Still, the company can't find product-liability insurance for the products, which include Natrol High, Metabolfirm and Therma Pro.

"We couldn't even get a d**n bid," said Balbert. "I don't like the exposure." He said Natrol might stop selling ephedra products, which generate less than 3% of
revenue. Three other public companies said they are selling ephedra products althoughtheir insurance now provides less protection.
Wrongful Death Suit Twinlab Corp. of Hauppauge, New York, faces a lawsuit over a customer death
following use of its Metabolift ephedra product. Chattem Inc. of Chattanooga, Tennessee,cautioned in its annual report it might not have sufficient insurance coverage to cover sales of Dexatrim after its policy expires on May 31.

Weider Nutrition International Inc., which distributes diet products from its Salt Lake City headquarters, is defending three ephedra lawsuits. Daniel Thomson, Weider's general counsel, didn't return telephone calls. William
Rizzardi, Twinlab's chief information officer, and Scott Sloat, Chattem's controller, declined to comment. Four other companies that sell ephedra products don't indicate any lawsuits in
their annual reports. Nutraceutical International Corp. said its liability insurance excludes ephedra, and the Park City, Utah-based company said it recently halted sales of some ephedra products. Les Brown, chief financial
officer, didn't return telephone calls.
Mannatech Inc. of Coppell, Texas, reported selling ephedra products. Steve Fenstermacher, chief financial officer, didn't return phone calls. Both Nature's Sunshine Products Inc. of Provo, Utah, and NBTY Inc. of Bohemia, New York, sell ephedra supplements. Harvey Kamil, NBTY's chief executive, didn't return telephone calls. Nature's Sunshine Products executives weren't available.

'Natural Reaction'
Among a group of 140 FDA adverse reaction reports, 104 show ephedrine was the "very likely" cause of a medical problem, according to Ray Woosley, who examined the reports. Woosley, dean of the University of Arizona College of Medicine, said there were 10 reported ephedrine cases of "sudden death" and 15 severe strokes.
Woosley, who joined Public Citizen in its petition for an FDA ephedra ban, said he's not surprised that insurers are shying away from companies selling ephedra. "That's a natural reaction to reckless behavior," he said. News Index ||| Quackwatch Home Page This article was posted on April 11, 2002.

Did your extensive research turn any of this up?
How about some of this?

Herbalife International: 1985 Hearings, Part IMLM Watch Home Page Herbalife Criticized at Senate Hearings Odom Fanning
Opening two days of hearings, Senator William V. Roth, Jr. (R-DE), chairman of the Senate Permanent Subcommittee on Investigations, made it clear that their purpose was not to "get" Herbalife or any other product, but resulted from five months of investigation into weight reduction products and plans of all types.

The Subcommittee is authorized to investigate the efficiency and economy of all branches of the government and also has jurisdiction over "all aspects of crime and lawlessness within the U.S. which have impact upon or affect the national health, welfare, or safety."
Roth acknowledged that following announcement of the hearings (held in Washington, D.C., May 14th and 15th), he had received a "very large number of phone calls and letters from individuals who are very satisfied with the Herbalife products, and have lost large amounts of weight." Many of these correspondents, and an estimated 3,000 Herbalife distributors who marched on the second day, were obviously on the defensive. So was the Food and Drug Administration, for, as the senator put it, the purpose of the hearings was "to find out if the public is being adequately protected when it buys and consumes
diet products." In his opening remarks, Roth made a distinction between "miracle pills and
creams," tinted sunglasses, plastic ear forms and other "patently fraudulent products" and the very low calorie (VLC) products that can actually produce weight loss but may not be safe. His major concern with the VLC products, he specified, "is with what the Food and Drug Administration is doing and what it is not doing, particularly when serious questions have been raised both within the FDA and outside this agency about the safety of such products....We are dealing with a multi-billion dollar industry which produces items ingested into the human body. Yet the FDA has been reticent to involve itself in low calorie diets. I want to know why, because I think the public deserves to know
conclusively about the safety of individual products now in the marketplace."

On the first day Roth's subcommittee heard testimony from scientists and VLC product users, all of whom submitted written statements as well. Most of the scientists favored more regulation of such dietary products; the users were pro and con.

One scientific witness was Judith S. Stern, Sc.D., professor of nutrition and director of the Food Intake Laboratory at the University of California, Davis. She conceded: The inadequacy of traditional medicine to provide a permanent cure for obesity has given rise to an entire industry of entrepreneurs who claim to be able to relieve the frustrations of the overweight. The ironic tragedy is that most diets work-at least initially-when they are followed. However, fad diets are usually quite restrictive in their food choices, may have unpleasant side effects, and most people cannot follow them for any length of time. In addition, when daily calories are restricted below 1,200, it becomes difficult
to satisfy all other nutrient needs.

Dr. Stern also made the distinction between "miracle cures" and VLC products.
Products in the former category include the hormone cholecystokinin (CCK), claimed to decrease hunger, and various amino acid pills, said to release growth hormone. Both have been promoted with false claims based on legitimate
scientific discoveries that were overgeneralized and misrepresented, she noted.

Debunking claims that grapefruit or grapefruit extract can act in a catalytic manner enhancing breakdown of fat, Dr. Stern described her testimony last year which helped the U.S. Postal Service stop sales of Super Grapefruit Pills by a California company.

Noting that these pills contained glucomannan, she reported that in 1980 she had conducted a double-blind study in which the test group
received one gram of glucomannan while the control group was given a placebo.

Both groups were placed on a behavior modification program. Both groups lost
weight, she noted, but there were no statistically significant differences in
hunger ratings or weight loss between them.

Dr. Stern also zeroed in on kelp/lecithin/cider vinegar/vitamin B6 combinations found in dietary products since 1974. Iodine-rich kelp is potentially harmful to a small number of individuals in whom high amounts of ingested iodine can cause thyroid trouble. The other three ingredients are worthless, she noted.

Another expert witness was Varro E. Tyler, Ph.D., professor of pharmacognosy
(the science of medicines from natural sources) and dean of Purdue University's School of Pharmacy and Pharmacal Sciences. Here is my summary of Dr. Tyler's detailed analysis of various Herbalife products contained in the lengthy packet of written material released by Roth's subcommittee to the press:

Slim and Trim Formula #1 (46 cents per day), described in the sales literature "as a balanced protein powder made from natural vegetable soy, casein and whey protein." Tyler said the product is falsely represented in company literature
because there is nothing about a protein powder, per se, that will curb the appetite any more than an equivalent amount of protein derived from eating lean meat, nuts, or the like.

Further, no protein powder will "cleanse the
system" or facilitate "burning excess calories." It will supply needed daily nutrients, but no more effectively than a low-calorie diet, carefully balanced for carbohydrates, minerals, and vitamins-as well as protein.

Slim and Trim Formula #2 (21 cents per day), described by the Herbalife organization as a special blend of 14 herbs plus kelp, lecithin, vitamin B6, and cider vinegar designed to cleanse the digestive system and naturally help
curb the appetite. Tyler said that, of its many herbal ingredients, none is actually present in sufficient quantity to produce significant physiological effects by itself.

But he noted that four ingredients-senna, cascara sagrada,
dandelion root, and kelp-might work together to exert a laxative effect in
sensitive individuals.
Slim and Trim Multivitamin and Multimineral Formula #3 (23 cents per day) is a
fairly standard vitamin/mineral preparation with some herbal products added in
such tiny amounts that they exert no significant effect. Unless vitamin
deficiency was present, Tyler noted, the product would be a complete waste of
money.
Slim and Trim Linseed Oil Formula #4 (10 cents per day) contains small amounts
of linseed oil but has no advantage over less expensive vegetable oils
ordinarily used in the kitchen of the average home. (Moreover, as noted by the
next witness, the amount found in the formula will be obtained in food
consumed in just one balanced meal per day.)
Cell-U-Loss (43 cents per day) is described in Herbalife literature as a
product designed to attack cellulite, promote circulation, and eliminate
excess fluids, is recommended for use with the Slim and Trim formulas. Tyler
noted that its tiny amounts of herbs would at most cause a slight diuresis
(output of body water), but would have no effect whatsoever on appetite or
body fat.
Herbal-aloe is said to aid digestion and cleanse the system. Although
uncertain of the type of aloe contained in this product-which may be a
laxative-Tyler expressed deep concern over two of its other herbal
ingredients. Comfrey, he said, is a known carcinogen, shown to produce
malignant tumors in the livers of rats when included in their diet. And the
active constituent of chapparal, nordihydroguaiaretic acid (NDGA), was removed
from the FDA's GRAS (Generally Recognized As Safe) list many years ago after
it was shown to cause cysts and kidney damage in rats.
N.R.G. (Nature's Raw Guarana) (80 43 cents per day), claimed to increase
energy, aid in mental alertness and produce a nutritional lift, is sold in
tablets that contain small amounts of granular guarana, the seed of a South
American plant known to contain about 5% caffeine. The amount of caffeine in
the recommended dose of N.R.G. is about the same as that in a cup of strong
coffee-but the presence of caffeine is not revealed in product labeling or
literature. Thus, individuals sensitive to caffeine might be unwittingly
harmed.
Schizandra Plus tablets are said to help combat stress and damage leading to
premature aging. Although he suspected that the dosage of its ingredients was
too low to exert pharmacological effects, Tyler indicated that tests are
needed to determine whether chemicals extracted from schizandra can protect or
harm the liver [see NF 2:29].
Tang Kuei (50 cents per day), said to help establish menstrual regularity and
provide "herbal nutrition" for the whole body, contains dong quai (also known
as dang gui and pinyan) and chamomile. These drugs -- used in traditional
Chinese medicine -- have not been proved by Western standards. Tyler noted
that even if they are effective, the amounts contained in Tang Kuei are far
below those used in China. Moreover, under federal law, Schizandra Plus and
Tang Kuei are unapproved new drugs that are not legal to sell in the United
States.
Overall, Tyler objected that
Some Herbalife products may well be toxic, at least to some consumers.
Herbalife literature and word-of-mouth recommendations build up false hopes in
consumers, most of whom are not able to benefit from the placebo effect.
It is particularly deceptive because they lead the public to believe that
Herbalife products "contain a lot of wonderful herbs with marvelous
health-giving properties when the amounts present in the products are too
small to have any significant physiological effects in normal persons.
Consumers are thus paying good money for products which have no proven value.
Many of the same points were reiterated in an analysis of the various Herbalife
formulas by F. Xavier Pi-Sunyer, M.D., associate professor of Medicine, Columbia
University College of Physicians and Surgeons, and a division chief at St.
Luke's Roosevelt Hospital Center, New York City.
"With very rapid weight loss, and particularly with diets low in carbohydrate,
there is an early diuresis, that is, loss of water via the urine. This accounts
for much of the weight loss of crash diets and much of this water is
reaccumulated when the diet is stopped," said Dr. Pi-Sunyer. "With this water
loss, great amounts of sodium, potassium, and chloride are lost, as well as
lesser but substantial amounts of calcium, magnesium, and other minerals. These
must be replaced. If they are not, the electrical integrity of biological
membranes may be lost, and one outcome of this may be cardiac arrhythmias."
Because dieters wish "to get on with it," there may be a tendency to take only
the protein preparation, without supplementing it, as sometimes recommended, by
a meal to bring the daily intake to at least 800 to 1,000 calories (of which 300
to 400 may be provided by the dietary product). Consumers also may ignore the
limited period, say four weeks, recommended by some diet purveyors, and incur
added risk by consuming the preparation for a longer time, said Dr. Pi-Sunyer.
He also reported that a colleague, Theodore B. Van Itallie, M.D., had reexamined
data of the victims of the liquid protein diets of 1977-1978 and found that "the
less fat you are the more dangerous these diets are for you, the more likely you
are to lose life-requiring protein, and the more at risk of dying you are. Since
these preparations are bought without restriction, many people take them who are
not very fat, and these people seem to be particularly at risk."
Two of the four laypersons who testified were constituents of Senator Roth's-one
for Herbalife, the other against. Patricia s****.> taking Herbalife in August 1984. "After taking it for two months, losing five
pounds and feeling much better," she was asked by friends "for more information
about Herbalife." She soon became a distributor. She and her representatives
since have sold it to over 300 people. "Herbalife has worked for me and my
customers," she told Roth and the subcommittee. "I believe the people who said
they felt better using the Herbalife products are stating the facts: their
health problems improved through weight loss and sound nutrition. They are not
saying that Herbalife is like a medicine that cures a disease. No one I know has
ever claimed this."
Another user, Greg Martin, of Dover, Delaware, lost about 13 pounds in three
months and "felt better than I had in years," after starting on Herbalife
products in September 1984. He and his wife began selling the products in
October, eventually building a customer list of 100 with ten distributors. But
most of his customers suffered from constipation when using Slim and Trim
Formulas, and 10 -15%t had other problems, he reported. One man who had had two
previous heart bypass operations was taking Herbalifeline because Martin
"understood from the literature that it was good for heart problems. This man
became extremely constipated."
Because he was unable to get answers to his questions from Herbalife
headquarters, Martin stopped selling its products to retail customers at the end
of February. "I do not want to be associated with a company who claims its
products are safe for everyone to use and then will not deal with [health]
problems," he testified. He expressed the conviction "that diet products and
food supplements can do a lot of good. I would not want to see them prohibited."
He suggested, however, that standards be established and that the FDA "enforce
these standards so that the public can be confident that these products are
safe."
The final two lay witnesses testified to personal tragedies. Bernard Lehman, of
Anaheim, California, formerly from a town near Nashville, Tennessee, said that
he is not able to work because he has Hodgkin's lymphoma, a form of cancer. A
few months ago, while "basically bedridden," he claimed that a distributor in
Tennessee told him and his wife that she could lose weight taking Herbalife
products, that both could earn needed income, and that "the Herbalife products
would help to cure my cancer."
Lehman named the distributor and charged, "He told us this orally and showed us
some brochures which said this" in writing. "However, he gave us different
brochures without this information and said that he only had one copy of the
special brochure, and he had to keep it for his use." Lehman summarized by
saying that the distributor "basically said that the Herbalife products would
act as a cure-all."
Although he and his wife had "bad reactions" to the Herbalife products, they
continued taking them "because we believed that we could make lots of money and
we thought our own bad reactions to taking the products were unusual." They
spent about $1,800 for inventory and publications and sold about $100 worth of
Herbalife products before asking to get out and get their money back. They
eventually received $1,000 from the distributor and still have $700 worth of
product they "would just like to get rid of...and forget about."
Cynthia Guillaume Lee, of New Orleans, told the pitiful story of her late
husband, Bivian Lewis Lee, Jr., who had retired as a National Football League
player in 1976. He became a Herbalife distributor in October 1984 because "the
extra money sounded real good," said Mrs. Lee. Although he was not overweight
and "was very much against taking any kind of diet product," he began taking a
Herbalife product because "he said that if he was going to sell it, he would at
least try it out."
Two weeks later, Bivian, age 35, was dead. His widow testified:
I know that I'm not a doctor. I know that I'm not qualified to give medical
opinions. But I do know that my husband was a perfectly healthy man. I saw him
deteriorate from the perfectly healthy man to his death. And it all began when
he started taking Herbalife. I want to tell what happened to me-it's not easy
for me to do this-because I want this subcommittee, or the Federal Food and
Drug Administration or somebody to investigate why my husband was alive and
well until he started on the Herbalife products and now he's dead. I want to
encourage the subcommittee to look into this so that other young mothers won't
find themselves in my position.
Mrs. Lee submitted an affidavit by Dr. Van Itallie, who had reviewed the autopsy
protocol prepared by the Orleans Parish Coroner's Office and other records
relating to Bivian Lee's death. The affidavit cites an article Van Itallie
co-authored, entitled "Cardiac dysfunction in obese dieters: a potentially
lethal complication of rapid, massive weight loss" [American Journal of Clinical
Nutrition 39:695-702, 1984]. The article discusses the cases of 17 obese but
otherwise healthy persons on VLCs who died of cardiac arrhythmia. "Basically,"
the affidavit says, "severe restriction of caloric intake causes the body to
ulitize and deplete its protein. The heart is a muscle, made of protein, and it
is not spared . . . . depletion of protein from the heart may be followed by
cardiac arrhythmia and death. I refer to this as the 'liquid protein syndrome',
but it may develop from any drastic reduction in caloric intake. My thesis
further holds that persons with lesser stores of body fat are more likely to
experience the cardiac dysfunction. Fatter dieters seem to survive longer
because they are better able to conserve their body protein."
Van Itallie found this thesis consistent with Bivian Lee's case, particularly
because he was "persuaded by Lee's Body Mass Index, indicating that he had
lesser stores of body fat."
______________________
This article was published in the September 1985 issue of Nutrition Forum, when
Mr. Fanning edited and published a newsletter called Con$umer New$weekly. Before
that, he was a science writer for The Atlanta Journal and director of
information for the U.S. Centers for Disease Control and Prevention. Bivian
Lee's lawsuit was settled out of court for an undisclosed sum which was
undoubtedly substantial.
Herbalife Hearings, Part II
Index to Information about Herbalife
MLM Watch Home Page

Here's some good info...I suggest you read it.

Ten Big Lies of Multilevel Marketing
1. Robert L. Fitzpatrick
The multilevel marketing (MLM) field grows, and its member companies multiply. Solicitations to join seem to be everywhere. Its promoters would like you to believe that it is the wave of the future, a business model that is gaining momentum, growing in acceptance and legitimacy, and will eventually replace most other forms of marketing. Many people are led to believe that success will come to anyone who believes in the system and adheres to its methods.
Unfortunately, the MLM business model is a hoax that is hidden beneath misleading slogans. Calling it a "great business opportunity" makes no more sense than calling the purchase of a lottery ticket a "business venture" and winning the lottery a "viable income opportunity for everyone." MLM industry claims of distributor income potential, its glorified descriptions of the "network'" business model, and its prophecies of dominating product distribution have as much validity in business as UFO sightings do in the realm of science.
The very legality of the MLM system rests tenuously upon a single 1979 court ruling on one company. The guidelines for legal operation set forth in that ruling are routinely ignored by the industry. Lack of governing legislation or oversight by any designated authority also enables the industry to endure despite occasional prosecutions by state attorneys general or the FTC.
MLM's economic scorecard is characterized by massive failure rates and financial losses for millions of people. Its structure in which positions on an endless sales chain are purchased by selling or buying goods is mathematically unsustainable, and its system of allowing unlimited numbers of distributors in any market area is inherently unstable. MLM's espoused core business -- personal retailing -- is contrary to trends in communication technology, cost-effective distribution, and consumer buying preferences. The retailing activity is, in reality, only a pretext for the actual core business, which is enrolling investors in pyramid organizations that promise exponential income growth.
As in all pyramid schemes, the incomes of those distributors at the top and the profits to the sponsoring corporations come from a continuous influx of new investors at the bottom. Viewed superficially in terms of company profits and the wealth of an elite group at the pinnacle of the MLM industry, the model can appear viable to the uninformed, just as all pyramid schemes do before they collapse or are prosecuted by authorities.
The growth of MLM is the result of deceptive marketing that plays upon treasured cultural beliefs, social and personal needs, and some economic trends, rather than its ability to meet any consumer needs. The deceptive marketing is nurtured by a general lack of professional evaluation or investigation by reputable business media. Consequently, there is widespread belief that MLM is a viable business investment or career choice for nearly everyone and that the odds of financial success in the venture are comparable or better than other employment or business ventures.
MLM's true constituency is not the consuming public but hopeful investors. The market for these investors grows significantly in times of economic transition, globalization, and employee displacement. Promises of quick and easy financial deliverance and the linking of wealth to ultimate happiness also play well in this market setting. The marketing thrust of MLM is directed to prospective distributors, rather than product promotions to purchasers. Its true products are not long distance phone services, vitamins, or skin creams, but the investment propositions for distributorships which are deceptively portrayed with images of high income, low time requirements, small capital investments, and early success.
Here are ten lies I have identified during more than 20 years of observing the MLM marketplace:
Lie #1: MLM offers better opportunities than all other conventional
business and professional models for making large amounts of money.
Truth: For almost everyone who invests, MLM turns out to be a losing financial proposition. Fewer than 1% of all MLM distributors ever earn a profit and those earning a sustainable living at this business are a much smaller percentage still.
Extraordinary sales and marketing obstacles account for much of this failure, but even if the business were more feasible, sheer mathematics would severely limit the opportunity. The MLM business structure can support only a small number of financial winners. If a 1,000-person downline is needed to earn a sustainable income, those 1,000 will need one million more to duplicate the success. How many people can realistically be enrolled? Much of what appears as growth is in fact only the continuous churning of new enrollees. The money for the rare winners comes from the constant enrollment of armies of losers. With no limits on numbers of distributors in an area and no evaluation of market potential, the system is also inherently unstable.
Lie #2: Network marketing is the most popular and effective new way to bring products
to market. Consumers like to buy products on a one-to-one basis in the MLM model.
Truth: Personal retailing -- including nearly all forms of door-to-door selling -- is a thing of the past, not the wave of the future. Retailing directly to friends on a one-to-one basis requires people to drastically change their buying habits. They must restrict their choices, often pay more for goods, buy inconveniently, and engage in potentially awkward business relationships with close friends and relatives. In reality, MLM depends on reselling the opportunity to sign up more distributors.
Lie #3: Eventually all products will be sold by MLM. Retail stores, shopping malls,
catalogs and most forms of advertising will soon be rendered obsolete by MLM.
Truth: Fewer than 1% of all retail sales are made through MLM, and much of this is consists of purchases by hopeful new distributors who are actually paying the price of admission to a business they will soon abandon. MLM is not replacing existing forms of marketing. It does not legitimately compete with other marketing approaches at all. Rather, MLM represents a new investment scheme couched in the language of marketing. Its real products are distributorships that are sold through misrepresentation and exaggerated promises of income. People are buying products in order to secure positions on the sales pyramid. The possibility is always held out that you may become rich if not from your own efforts then from some unknown person ("the big fish") who might join your "downline."
MLM's growth does not reflect its value to the economy, customers, or distributors, but the high levels of economic fear, insecurity, wishes for quick and easy wealth. The market dynamics are similar to those of legalized gambling, but the percentage of winners is much smaller.
Lie #4: MLM is a new way of life that offers happiness and fulfillment.
It provides a way to attain all the good things in life.
Truth: The most prominent motivational themes of the MLM industry, as shown in industry literature and presented at recruitment meetings, constitute the crassest form of materialism. Fortune 100 companies would blush at the excess of promises of wealth, luxury, and personal fulfillment put forth by MLM solicitors. These appeals actually conflicts with most people's true desire for meaningful and fulfilling work at something in which they have special talent or interest.
Lie #5: MLM is a spiritual movement.
Truth: The use of spiritual concepts like prosperity consciousness and creative visualization to promote MLM enrollment, the use of words like "communion" to describe a sales organization, and claims that MLM fulfills Christian principles or Scriptural prophecies are great distortions of these spiritual practices. Those who focus their hopes and dreams upon wealth as the answer to their prayers lose sight of genuine spirituality as taught by religions. The misuse of these spiritual principles should be a signal that the investment opportunity is deceptive. When a product is wrapped in the flag or in religion, buyer beware! The "community" and "support" offered by MLM organizations to new recruits is based entirely upon their purchases. If the purchases and enrollment decline, so does the "communion.'"
Lie #6: Success in MLM is easy. Friends and relatives are the natural prospects.
Those who love and support you will become your life-time customers.
Truth: The commercialization of family and friendship and the use of"'warm leads" advocated in MLM marketing programs are a destructive element in the community and very unhealthy for individuals involved. People do not appreciate being pressured by friends and relatives to buy products. Trying to capitalizing upon personal relationships to build a business can destroy one's social foundation.
Lie #7: You can do MLM in your spare time. As a business, it offers the greatest flexibility
and personal freedom of time. A few hours a week can earn a significant supplemental income
and may grow to a very large income, making other work unnecessary.
Truth: Making money in MLM requires extraordinary time commitment as well as considerable personal skill and persistence. Beyond the sheer hard work and talent required, the business model inherently consumes more areas of one's life and greater segments of time than most occupations. In MLM, everyone is a prospect. Every waking moment is a potential time for marketing. There are no off-limit places, people, or times for selling. Consequently, there is no free space or free time once a person enrolls in MLM system. While claiming to offer independence, the system comes to dominate people's entire life and requires rigid conformity to the program. This is why so many people who become deeply involved end up needing and relying upon MLM desperately. They alienate or abandon other sustaining relationships.
Lie #8. MLM is a positive, supportive new business that
affirms the human spirit and personal freedom.
Truth: MLM is largely fear-driven. Solicitations inevitably include dire predictions about the impending collapse of other forms of distribution, the disintegration or insensitivity of corporate America, and the lack of opportunity in other occupations. Many occupations are routinely demeaned for not offering"unlimited income." Working for others is cast as enslavement for "losers." MLM is presented as the last best hope for many people. This approach, in addition to being deceptive, frequently discourages people who otherwise would pursue their own unique visions of success and happiness. A sound business opportunity does not have to base its worth on negative predictions and warnings.
Lie #9. MLM is the best option for owning your own
business and attaining real economic independence.
Truth: MLM is not true self-employment. "Owning" an MLM distributorship is an illusion. Some MLM companies forbid distributors to carry other companies' products. Most MLM contracts make termination of the distributorship easy and immediate for the company. Short of termination, downlines can be taken away arbitrarily. Participation requires rigid adherence to a "duplication" model, not independence and individuality. MLM distributors are not entrepreneurs but joiners in a complex hierarchical system over which they have little control.
Lie #10: MLM is not a pyramid scheme because products are sold.
Truth: The sale of products does not protect against anti-pyramid-scheme laws or unfair trade practices set forth in federal and state law. MLM is a legal form of business only under rigid conditions set forth by the FTC and state attorneys general. Many MLMs are violate these guidelines and operate only because they have not been prosecuted. Recent court rulings are using a 70% rule to determine an MLM's legality: At least 70% of all goods sold by the MLM company must be purchased by nondistributors. This standard would place most MLM companies outside the law. The largest MLM acknowledges that only 18% of its sales are made to nondistributors.
Accountability Needed
An FTC trade regulation rule that forces honest disclosure of potential MLM distributor income is desperately needed. Toward this end, Pyramid Scheme Alert has launched a petition drive urging the FTC to force multilevel companies to disclose the true income of their distributors. The requested data would include: (a) the total number of distributors involved in the company for at least three years (or since the company's founding if less than three years); (b) the average incomes of all distributors who have signed up for a distributorship by percentiles, not just the ones deemed "active"; and (c) a "weighted" overall average income of all distributors so that the extraordinary high incomes of the small number at the top are not calculated in with vast majority so as to give a more statistically valid figure.
_________________
Mr. FitzPatrick consults and writes about trends in manufacturer/distributor relationships. He founded and is president of Pyramid Scheme Alert, a consumer advocacy group focused on exposing and preventing pyramid schemes. He has served as an expert witness in several cases involving pyramid schemes and MLM companies. He writings include False Profits (a book about MLM deception) and "Pyramid Nation" (a booklet that laments the growth and "legalization" of pyramid schemes.)
MLM Watch Home Page
The article was posted on August 4, 2002.

JUST GETTING STARTED

Nobel Prize Winner Didn't Disclose His Herbalife Contract Bloomberg News/December 6, 2004
By David Evans

Louis Ignarro, who won a Nobel Prize for Medicine in 1998, endorsed a diet supplement for the heart sold by Herbalife International Inc. in exchange for royalties and then touted the ingredients in a scientific journal, without disclosing his financial interest to the publication. Ignarro's consulting company received at least $1 million as its share of sales of Herbalife's Niteworks between June 2003 and September 2004, according to a filing with the Securities and Exchange Commission. The bottles sell for $90 each for a month's supply and display Dr. Ignarro's signature and Nobel Laureate status on the label.

"He's a paid consultant, so it should have been disclosed,'' said Marcia Angell, editor in chief of the New England Journal of Medicine in 1999 and 2000, now a senior lecturer on ethics at Harvard Medical School in Cambridge, Massachusetts. "He had an interest in the substance he was evaluating.''

Herbalife pays Ignarro's consulting firm - Hermosa Beach, California-based Healthwell Ventures LLC - a share of Niteworks revenue "sold with the aid of Dr. Ignarro's consulting, promotional or endorsement services,'' Herbalife wrote in a Dec. 2 SEC filing.

Herbalife has 1 million distributors in 59 countries with reported 2003 revenue of $1.16 billion.

Ignarro, 63, is the featured speaker in a one-hour Los Angeles based-Herbalife promotional video in which he claims Niteworks protects against heart disease, strokes, Alzheimer's and other diseases.

Hearts of Mice
The Nobel Prize winner didn't return telephone calls to his office and to the public relations department of the University of California at Los Angeles, where he teaches. Herbalife spokeswoman Barbara Henderson said the company won't comment, on advice from its lawyers, because it's planning an initial stock sale to the public. Ignarro's article, which appeared in the June 8 issue of the Proceedings of the National Academy of Sciences, described positive affects on the hearts of mice fed vitamins C and E, and arginine, an amino acid that produces nitric oxide in the body. All of those are in the Herbalife product.

Ignarro didn't disclose his Herbalife ties to the journal, according to Bridget Coughlin, managing editor of the Washington- based publication. "There is indeed a conflict of interest that should have been included in this article,'' she said. "There's a financial disclosure that should have been made.'' She said the journal has decided to issue a correction.

'They Jumped the Gun'
Ignarro formed Healthwell, the consulting company, in January 2003 with David Brubaker to receive royalties from Herbalife, according to state corporation records. Brubaker, 58, said in an interview that he estimates Herbalife has sold $50 million of Niteworks. Brubaker said Herbalife pays Healthwell 1% of Niteworks sales revenue, and it received an advance against royalties in 2003.

Ignarro shared the Nobel Prize for discoveries about nitric oxide's function in the cardiovascular system. Pharmacologist Robert Furchgott, 88, who won the 1998 Nobel Prize with Ignarro for his own, independent research on nitric oxide, said in an interview that Ignarro's claims about Herbalife's effectiveness are improperly founded. "They jumped the gun,'' he said." I haven't seen any properly controlled studies. It just seems to me a mouse model isn't transferable to humans.''

Sued in 1985
Herbalife spends less than $2 million each year on research and development, according to its prospectus filed with the SEC on Dec. 2. The company, previously named Herbalife International, was sued by the California attorney general in 1985 for making false claims about its products. It settled the suit in 1986 for $850,000, agreeing not to make misleading statements. It didn't admit wrongdoing.

Mark Hughes, who started the company in 1980, served as Herbalife chairman and chief executive officer until 2000, when he died from an overdose of alcohol and antidepressants, according to the Los Angeles coroner. Michael Johnson, who became CEO of Herbalife in April 2003, was an executive at Walt Disney Co. for 17 years before joining Herbalife. He was president of its Walt Disney International unit when he departed. He didn't answer written questions, referring comment to the company spokeswoman.

IPO This Month
Herbalife has hired Merrill Lynch & Co. and Morgan Stanley, both based in New York, to raise as much as $193 million in an initial public offering later this month. Herbalife is incorporated in the Cayman Islands, with its headquarters in Los Angeles.

UCLA summarized the journal article in a May news release. Vitamins C and E, taken with arginine, along with moderate exercise, significantly reduce the risk of heart disease, the release said. The release didn't name Herbalife and didn't say Ignarro is a paid company consultant. He is a professor of pharmacology at the university's school of medicine.

"It shows that supplements work well even in the absence of exercise,'' Ignarro was quoted as saying in the release, which recommended humans take dietary supplements." What's good for mice is good for humans.''

UCLA Conflict
Angell, the Harvard ethics lecturer, said UCLA had the responsibility to include Ignarro's financial arrangement with Herbalife in its news release. "It seems an elementary conflict of interest,'' she said.

Roxanne Moster, director of media relations for UCLA Health Sciences, said the university doesn't research potential conflicts. "We rely on our faculty members to let us know if there is a conflict,'' she said.

Former New England Journal editor Angell said Ignarro needs more than mouse studies to support his claims. "There's a way to find out if it works in humans,'' by conducting clinical trials on people, she said. "Until you do the trial, you don't know. There's a lot more work to do. You can't assume it will work for people.''

Herbalife markets Niteworks as a food supplement, so the Food and Drug Administration doesn't require it to be tested for safety or efficacy. Herbalife hasn't disclosed the results of any human testing of Niteworks.

"I think with the sort of money they're raking in, they could have done some human studies,'' said Ignarro's co-Nobel Prize winner Furchgott.

Clinical Studies Needed
U.S. Senator Richard Durbin, an Illinois Democrat, said dietary supplement companies will twist facts to sell products. "The actions attributed to Herbalife are yet another example of how the dietary supplement industry is the Wild West of the American health sector - complete with medicine shows,'' he said.

Ignarro's consulting company partner Brubaker, a trustee of the University of Southern California in Los Angeles, sells Herbalife products from his house in Hermosa Beach. He said their consulting company is spending more than $150,000 to fund a clinical trial on the effectiveness of Niteworks. "Mice are a good indication of the benefit of nitric oxide,'' Brubaker said." But it goes without saying that human studies are closer to the real world.'' Brubaker said he was aware of Ignarro's article in the medical journal. "I don't know why it wouldn't have been disclosed,'' Brubaker said. "Maybe it would have been an oversight on his part.''

"No More Heart Disease"
Ignarro's video was taped during a training session for hundreds of company distributors at Herbalife's Las Vegas Extravaganza in June 2003 at the Mandalay Bay Resort. The video is streamed on Brubaker's Herbalife distributor Web site.

"Guess what - no more heart disease,'' Ignarro said on the tape. "This is the nitric oxide story. The nitric oxide that is generated by this product is a vasodilator. It lowers the blood pressure. That's a good thing.'' Ignarro also said: "I really think that soon there will be no heart disease. I really believe that.''

His Nobel Prize co-winner Furchgott said unproven claims like these shouldn't be used to sell the product to the public. "I'm worried that Lou has gone into making a big thing of it before it's been thoroughly shown by controlled studies,'' Furchgott said. Furchgott said he regrets Ignarro has become a pitchman for an unproven product, linked to their shared prize. "That's sad,'' he said. "Sometimes I get angry. Right now, I'm just sorry.''

I HOPE YOU LIKE TO READ, BECAUSE THERE IS PLENTY MORE WHERE THAT JUST CAME FROM.

Herbalife: Sells but Weeds and Illusions
The Belgian consumer protection magazine: "Test-Achats" sues the company for multi-level-sales practices forbidden by the law.

Test-Achats/November 1, 2004

Herbalife, a well-known multinational specialised in the sale of slimming products and food supplements, benefits mainly from its far reaching network of hierarchically organised independent salesmen. As in the past, Test Achats draws the attention of consumers to the ineffectiveness of the slimming products of the Herbalife range. What is new, however, is that Test Achats has decided to sue this company for its practice of multi-level-sales which is illegal.

The diet products of Herbalife: expensive and not good - For various reasons (not enough proteins, low energy value, too expensive), "Test- Achats" was always very critical with regard to the diet products of the Herbalife range. Their usefulness in weight control is far from proven.

The reasons for the ineffectiveness of Herbalife's diet treatment are the following: no education to better food practices, products are systematically hypocaloric with health risks, a medicalisation of the way of life by the absorption of special products, disproportionate price compared to results obtained. All the indices of an inadequate approach of the diet coincide to create doubt as to the effectiveness of these supposedly miracle products.

Herbalife, a multi-level-sales network
These last months, "Test-Achats" has scrupulously analysed the techniques used by the firm. The principal objective of the Herbalife system is to recruit new distributors who must work with a statute of independent. No direct sales to the consumer occur. The methods of recruitment and distribution are varied. However, lately, and in a very aggressive way, disguised "offers of employment" (insofar as Herbalife does not appear as such) flower on the Internet and in the "employment" columns and in free for all letter box distribution. "Budget et Droits" recently carried out a fully fledged investigation (B&D 175, July 2004).

Once attracted, the interested people must take part in training courses which are real brain washing operations. During these courses a distribution contract and a basic parcel (Business pack) are proposed for a sum of 100. However, at this stage, the sale of these products is not of primary importance. The supervisors and other members of the "PRESIDENT'S TEAM" are quick to make the trainees understand that in order to rise within the hierarchy they may find it very beneficial to purchase large volumes of products and resell them to other new distributors whom they will have had the good taste to recruit. The higher the level one reaches in the hierarchy, the higher the commissions and the no-claims bonus and the cheaper the purchase price of the products. Regularly, consumers approached to buy products are in fact pushed to become distributors themselves, for example, to obtain reductions on the price of the products for themselves or their family. But obviously the market soon becomes saturated, and the promotion and recruitment campaigns then become increasingly aggressive.

"Test-Achats" wants to put an end to these dangerous and illegal practices! "Test-Achats" reckons that the sales system founded by Herbalife is an infringement of article 84 of the law on trade practices.

All the signs of pyramidal sales are cumulated: each member of the network grows rich primarily thanks to the purchases made by the new recruit in a completely closed sales circuit. The most important benefits are obtained not by the sale to the ultimate consumer or by the royalties obtained on the sales of the hierarchically low distributors but by the sales being carried out in a closed circuit. The benefit is mainly due to the extension of the system and this is expressly forbidden by the law. The consumers' organisation has therefore recently instituted Court proceedings against Herbalife, in the form of an action in ceasing of trading under the terms of the law on trading practices.

"Test Achats" thus wants the law to be respected in the interest of consumers. These latter are too often exposed to such harmful practices. They are unfortunately influenced by unrealisable promises, and this in a precarious economic context where more and more consumers are the faced with financial difficulties and unemployment.

AND WHILE WE ARE STILL ON THE SUBJECT.

"An emotional and financial trap"
August 2002
By a former Herbalife distributor
I am an Herbalife distributor, but am currently sending back inventory and resigning from the company.

My husband and I spent over $8,000.00 in this business through inventory, promotions, "trainings," travel, and marketing. We blame ourselves for our ignorance, but feel that it was the obligation of Herbalife International and our upline support, to inform us of all the costs. That means the marketing costs, and before having us sign on the bottom line.

Herbalife's promotional materials are clever. The costs are in the decision packets behind all the wonderful testimonials, but the numbers were either played down about costs and/or over inflated for profits. It is our fault for not reading everything more carefully.

We don't even have the means to go up against Herbalife, even if we could prove false disclaimers. How clever is that?

When we first thought about backing out of the business, when hidden costs started to surface, we asked our upline. Big mistake. We asked if we could get our money back. But we were told, "No" or "I don't know." Uplines need your monthly HAP order commitment, to get the commissions to cover their own costs.

We then asked Herbalife Distributor Relations for our money back. They said, "No."

So we went forward and worked harder, thinking, "It will work, it will work." And that all we needed to do was improve ourselves. You see we felt it was our fault, when things didn't work out.

But I was not getting results and our marriage was falling apart.

We were having trouble selling and recruiting. We poured our hearts into personal development. I even started to have anxiety attacks over finances. Our monthly business meeting felt more like a confessional, than a business discussion. There was nothing professional about it. Just talk about hard times and personal stories. And everyone was high on "personal development tapes." I really felt emotionally trapped.

We are good people and we wanted to believe that there might be a better way to make a living. We wanted out of the "rat race."

We finally closed it all down. At last I got the correct information about product return, but our savings is gone and we are starting from scratch again. And it seems that we were no big loss. Our upline didn't even care. But they sure cared when we had the money!

So now we eat humble pie. We are definitely looking at EVERYTHING now before leaping.

My advice to anyone considering Herbalife is don't fall for the emotional testimonies. And don't allow your money to fly away the way we did. Be smart and research all the facts independently by yourself first.



Copyright 2002 Rick Ross.

HOW ABOUT SOME STUFF ON MARK HUGHS?

Death and Denial at Herbalife
The Untold Story of Mark Hughes' public image, Secret Vice and Tragic Destiny

Los Angeles Times/February 18, 2001
By Matthew Heller
There's a star on the stage of the Great Western Forum. Immaculately dressed as always, 6-foot-1, tanned, not a hair out of place, he is a veteran of such very public appearances. In seminar after seminar, convention after convention, he has captivated thousands of people around the world with his charisma, sincerity and enthusiasm.

But this appearance, on Feb. 19, 2000, is something special for Mark Reynolds Hughes. It's part of a five-day celebration of the 20th anniversary of Herbalife International, the company he started in a former Beverly Hills wig factory. There is a lot to celebrate. At 44, Hughes is the ruler of a $956-million business empire that sells weight-management and personal-care products through a network of more than 1 million distributors in 50 countries.

So-called multilevel or network marketers are lucky to stay in business for several years. Hughes has racked up 20--and become extremely rich in the process. In the preceding fiscal year, he earned more than $2 million in salary and bonuses; he controls 60% of Herbalife stock, worth about $250 million, and has interests in suppliers of the company's products. In 1998, he collected a tidy $43 million in a leveraged buyout of one manufacturer. He owns homes in Beverly Hills, Malibu and Maui, and is planning to build a veritable San Simeon on a mountaintop above Benedict Canyon.

From the Forum stage, Hughes looks out on an audience of acolytes, about 4,000 Herbalife distributors who have followed his prescription for health and wealth with almost messianic fervor. To them, he is the manifestation of how a flair for salesmanship, hard work and a belief in your product can make just about anyone a millionaire. Like his followers, he sports one of the ubiquitous "Lose Weight Now, Ask Me How" badges--the slogan that also adorns telephone poles and car bumpers everywhere. "The dream he had has helped so many people like me," says Paco Perez, a distributor who was a hotel bellboy when he first met Hughes.

The faithful focus their attention as the Forum Diamondvision displays a video montage of highlights from Hughes' past, from the early days of selling a protein powder out of his car trunk to his current status as chairman and chief executive of a multinational corporation headquartered in a Century City high-rise.

There, on screen, is Hughes crying at Herbalife's fourth anniversary rally--"I can't believe what's happened with all of this," he sobs--hobnobbing with the likes of Milton Berle and Merv Griffin, handing out $1-million bonus checks to distributors, globe-trotting in the company's private jet, promising to "take Herbalife around the entire world."

On the Forum stage, moved by the nostalgia, Hughes again allows a tear or two to roll onto his cheeks. "I will never forget that moment," recalls Perez. "It was emotional for him and me."

Three months later, on May 21, Mark Hughes is lying on the four-poster bed in the master bedroom suite of his beach retreat, a Mediterranean-style mansion on 71/2 acres with 300 feet of Pacific Ocean shoreline that he recently bought for a Malibu-record $25 million.

It is late in the morning after another celebration. The 87th birthday party for Hughes' beloved maternal grandmother, Hazel, known affectionately as Mimi, had been a private affair, just a few family members joining him at home for the evening. Out of the public limelight, Hughes drank white wine, smoked a cigar and played his drum set, protected by security gates, round-the-clock guards and surveillance cameras.

From an adjoining part of the suite, Darcy LaPier Hughes--his fourth wife and, like her three predecessors, a former beauty queen--enters the master bedroom. Her husband's back is facing her. He is wearing only a black T-shirt and black bikini briefs. Something about him doesn't look right. Darcy calls the guards, who realize something is very wrong. They carry him to the floor and lay him on his back to perform CPR. Unsuccessfully.

The Los Angeles County coroner's office concludes he died of a toxic combination of alcohol and Doxepin, an antidepressant he was taking to help him sleep. His blood-alcohol level was measured at 0.21, more than 2 1/2 times the legal limit for driving.

The death was ruled an accident, an eerie echo of the ruling on the drug-related death of Hughes' mother 25 years earlier. Hundreds of mourners grieved the loss of a man struck down in his prime who had helped so many get so rich.

But the real story is even sadder, the tale of a troubled man who grew up amid discord and drug abuse and, as an adult, turned a mythical video version of his past--the Herbalife story--into his reality. It's also the story of how Mark Hughes, the super-salesman, may have become a prisoner of his public image.

Mark Hughes' version of his life story was a remarkable tale of tragedy, resolve and triumph. He said he grew up underprivileged on the gritty streets of a Latino neighborhood in La Mirada, tucked away in the southeast corner of Los Angeles County. "I was basically brought up by my grandparents," he said on the Herbalife 20th anniversary video, referring to his mother's parents, Lawrence and Hazel Hughes. And according to the myth, his mother, Jo Ann, who lived off welfare, had this weight problem.

"My mom was always going out and trying some kind of funny fad diet as I was growing up," he remembered in a speech to a 1985 Herbalife rally that was reprinted as part of an Inc. magazine article on Hughes. "Eventually she went to the doctor to get some help, and he prescribed to her Dexamyl, kind of a fad diet then. For those of you who don't know about it, it's a drug, a narcotic. It's a form of speed, or amphetamine. You're not able to eat or sleep." (In fact, Dexamyl combines an amphetamine stimulant with a barbiturate depressant to offset the amphetamine's side effects.)

Hughes continued: "After several years of using it, she ended up having to eat sleeping pills for her to sleep at night. And after several years of doing that, her body basically started to deteriorate. And she started seeing four or five doctors to keep her habit up."

Hughes, described by Inc. as "a tanned and blow-dried California swashbuckler resplendent in black tie and diamonds, brown eyes flashing over a perfect, polished smile," then reached the climax of his story, mustering a tear: "I was 19 years old when she died from an overdose."

As recently as November 1999, Hughes repeated a similar story to a trade publication, Network Marketing Lifestyles. He "transformed the tragedy into fuel for a higher purpose," the magazine said, making it his life's ambition to "develop an organization that would put the kind of reliable information and safe, effective products his mother never had into the hands of millions."

The real story was a lot more complex, and fit less neatly into an inspirational parable. Jo Ann Hughes did die of an overdose, and Mark Hughes did spend his first years in La Mirada. But he lived in a new tract home in a neighborhood sprinkled with citrus groves and mostly populated by upwardly mobile white suburbanites. And his mother died addicted to painkillers, not diet drugs.

Hughes was raised by Jo Ann and Stuard Hartman, one of two men who claim to be his biological father. Hartman now lives with his second wife in a modest L-shaped house in Camarillo. The retired businessman is tall and handsome, with a weathered face framed by tufts of white hair. He raised Mark, along with two other boys, Guy and Kirk. Tears sometimes well in his blue eyes as he tells his story, but he keeps his composure, arms crossed over his chest as if to ward off the pain.

He shows off photographs of Mark as a young boy. There he is, skinny, bangs of dark hair falling over his forehead, with a protective arm over the shoulders of each of his younger brothers; in another, he is posed with a softball and plastic bat as Hartman holds Guy and Kirk. A third photograph shows Mark smiling as he sits on a sparkling red bicycle equipped with training wheels. Behind him stands a petite, well-dressed young woman, her hands on her hips. This is Jo Ann, Hughes' mother and Hartman's first wife.

In the early '60s, the family moved to Camarillo, which was being transformed from an agricultural community into a suburban outpost of L.A. They acquired a custom-built ranch-style home, and with Hartman prospering as an entrepreneur--he had started a business supplying aircraft parts to the U.S. government--the boys enjoyed more riches than rags. "They always had the best toys, the best stuff, the best clothes," says Duane Livingston, a close friend of young Mark.

Of the three boys, Mark was the quietest, the least rambunctious, not academically brilliant but with a certain focus and intensity. He looked the most like his mother, sharing her dark hair and complexion.

His Camarillo lifestyle also included a housekeeper and fishing trips to the Channel Islands in Hartman's Chris-Craft Constellation cruiser. His mother drove a gold-colored Cadillac and spent a great deal of time on her wardrobe and appearance. But friends could detect all was not right. For one thing, there was a tension between Hartman and Jo Ann over disciplining the children. "It was always an issue--he was too strict and she wasn't," says Livingston.

Hartman adamantly denies Jo Ann had a weight problem. "This whole story is not true," he insists. But she did have a problem. "She was addicted to pain pills," Hartman says, singling out the popular painkillers Darvon and Percodan, which have never been prescribed for weight loss. "She used them in combination to prolong the high."

In a court declaration filed later as part of their divorce, Hartman alleged that Jo Ann's prescription Percodan habit in the early 1960s cost more than $2,000 a year. Because of her addiction, he said, she neglected her sons, even using money he gave her for groceries to buy drugs. "The children began to complain to me about being hungry," he recalled. And the house in Camarillo was "so filthy dirty it was on the verge of being unsanitary."

After Jo Ann suffered a s

Competition Bureau Media Room News Releases

Herbalife Marketers Plead Guilty to Pyramid Selling Global Online Systems Inc. Fined $150,000 for Operating Illegal Pyramid Scheme

OTTAWA, November 23, 2004 - A Competition Bureau investigation into a Vancouver-based multi-level marketing firm has led to a $150,000 fine and guilty pleas on two counts under the deceptive marketing provisions of the Competition Act. The matter has been resolved with Global Online Systems Inc. (GOLS) voluntarily pleading guilty and signing a Prohibition Order filed today with the Federal Court of Canada.

An investigation by the Bureau revealed that GOLS was operating a scheme of pyramid selling. Participants in the GOLS multi-level marketing plan were selling health-related products marketed by Herbalife Canada Ltd.

Contrary to the Act, participants were compensated for the recruitment of new participants and had to buy specific quantities of products as a condition of joining the plan. In addition, GOLS and its participants - through its Web sites and other promotional materials - recruited new participants by exaggerating income expectations without disclosing the income of a typical participant.

"Those who join pyramid schemes are often enticed by promises of easy money, but only the very few at the top ever see any real benefit," said Raymond Pierce, Deputy Commissioner of Competition. "The Bureau is committed to pursuing these offences under the Competition Act and ensuring that Canadians do not fall prey to such scams."

According to the Prohibition Order, Global Online Systems Inc. and its directors, Deborah Jane Stoltz and Marilyn Thom, have agreed to:

pay a $150,000 fine;
disclose the average income actually received by all participants in GOLS; inform all of its existing distributors and participants of the terms of the Order; and not become involved directly or indirectly in any business operation engaged in a scheme of pyramid selling.
Consumers who suspect they have been the victim of deceptive business practices or who want information on the application of the Competition Act should contact the Bureau's Information Centre at 1-800-348-5358, or visit our Web site at www.cb-bc.gc.ca.

The Competition Bureau is an independent law enforcement agency which ensures that all Canadians enjoy the benefits of a competitive economy. It oversees the application of the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act.

For media enquiries, please contact:
Maureen McGrath
Senior Communications Advisor
Communications Branch
(819) 953-8982, or (613) 296-2187 (cell)

For general enquiries, please contact:
Information Centre
Competition Bureau
1-800-348-5358

Competition Bureau Media Room News Releases

Herbalife Marketers Plead Guilty to Pyramid Selling Global Online Systems Inc. Fined $150,000 for Operating Illegal Pyramid Scheme

OTTAWA, November 23, 2004 - A Competition Bureau investigation into a Vancouver-based multi-level marketing firm has led to a $150,000 fine and guilty pleas on two counts under the deceptive marketing provisions of the Competition Act. The matter has been resolved with Global Online Systems Inc. (GOLS) voluntarily pleading guilty and signing a Prohibition Order filed today with the Federal Court of Canada.

An investigation by the Bureau revealed that GOLS was operating a scheme of pyramid selling. Participants in the GOLS multi-level marketing plan were selling health-related products marketed by Herbalife Canada Ltd.

Contrary to the Act, participants were compensated for the recruitment of new participants and had to buy specific quantities of products as a condition of joining the plan. In addition, GOLS and its participants - through its Web sites and other promotional materials - recruited new participants by exaggerating income expectations without disclosing the income of a typical participant.

"Those who join pyramid schemes are often enticed by promises of easy money, but only the very few at the top ever see any real benefit," said Raymond Pierce, Deputy Commissioner of Competition. "The Bureau is committed to pursuing these offences under the Competition Act and ensuring that Canadians do not fall prey to such scams."

According to the Prohibition Order, Global Online Systems Inc. and its directors, Deborah Jane Stoltz and Marilyn Thom, have agreed to:

pay a $150,000 fine;
disclose the average income actually received by all participants in GOLS; inform all of its existing distributors and participants of the terms of the Order; and not become involved directly or indirectly in any business operation engaged in a scheme of pyramid selling.
Consumers who suspect they have been the victim of deceptive business practices or who want information on the application of the Competition Act should contact the Bureau's Information Centre at 1-800-348-5358, or visit our Web site at www.cb-bc.gc.ca.

The Competition Bureau is an independent law enforcement agency which ensures that all Canadians enjoy the benefits of a competitive economy. It oversees the application of the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act.

For media enquiries, please contact:
Maureen McGrath
Senior Communications Advisor
Communications Branch
(819) 953-8982, or (613) 296-2187 (cell)

For general enquiries, please contact:
Information Centre
Competition Bureau
1-800-348-5358

Competition Bureau Media Room News Releases

Herbalife Marketers Plead Guilty to Pyramid Selling Global Online Systems Inc. Fined $150,000 for Operating Illegal Pyramid Scheme

OTTAWA, November 23, 2004 - A Competition Bureau investigation into a Vancouver-based multi-level marketing firm has led to a $150,000 fine and guilty pleas on two counts under the deceptive marketing provisions of the Competition Act. The matter has been resolved with Global Online Systems Inc. (GOLS) voluntarily pleading guilty and signing a Prohibition Order filed today with the Federal Court of Canada.

An investigation by the Bureau revealed that GOLS was operating a scheme of pyramid selling. Participants in the GOLS multi-level marketing plan were selling health-related products marketed by Herbalife Canada Ltd.

Contrary to the Act, participants were compensated for the recruitment of new participants and had to buy specific quantities of products as a condition of joining the plan. In addition, GOLS and its participants - through its Web sites and other promotional materials - recruited new participants by exaggerating income expectations without disclosing the income of a typical participant.

"Those who join pyramid schemes are often enticed by promises of easy money, but only the very few at the top ever see any real benefit," said Raymond Pierce, Deputy Commissioner of Competition. "The Bureau is committed to pursuing these offences under the Competition Act and ensuring that Canadians do not fall prey to such scams."

According to the Prohibition Order, Global Online Systems Inc. and its directors, Deborah Jane Stoltz and Marilyn Thom, have agreed to:

pay a $150,000 fine;
disclose the average income actually received by all participants in GOLS; inform all of its existing distributors and participants of the terms of the Order; and not become involved directly or indirectly in any business operation engaged in a scheme of pyramid selling.
Consumers who suspect they have been the victim of deceptive business practices or who want information on the application of the Competition Act should contact the Bureau's Information Centre at 1-800-348-5358, or visit our Web site at www.cb-bc.gc.ca.

The Competition Bureau is an independent law enforcement agency which ensures that all Canadians enjoy the benefits of a competitive economy. It oversees the application of the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act.

For media enquiries, please contact:
Maureen McGrath
Senior Communications Advisor
Communications Branch
(819) 953-8982, or (613) 296-2187 (cell)

For general enquiries, please contact:
Information Centre
Competition Bureau
1-800-348-5358

You know it just amazes me that you still just don't understand. No I did not make the products, but yes I DO know what is in them in fact I have done extensive research on the products themselves. Oh by the way, I am the one that does the marketing for the product. I do not rely on "getting new people to make my business work" I am indeed the ultimate variable as to weather my business works or not. I consistently sell over $3000.00 in retail every single month all by my little self. How? you may ask. Because I do give good customer service, I do have an open door policy for my customers when they need. So you see, you just don't have a valid argument here, with me anyway. Have a great day!

PS Just admit your failure and take resposibility for your losses and stop blaming everyone else for your mistakes.

You know it just amazes me that you still just don't understand. No I did not make the products, but yes I DO know what is in them in fact I have done extensive research on the products themselves. Oh by the way, I am the one that does the marketing for the product. I do not rely on "getting new people to make my business work" I am indeed the ultimate variable as to weather my business works or not. I consistently sell over $3000.00 in retail every single month all by my little self. How? you may ask. Because I do give good customer service, I do have an open door policy for my customers when they need. So you see, you just don't have a valid argument here, with me anyway. Have a great day!

PS Just admit your failure and take resposibility for your losses and stop blaming everyone else for your mistakes.

You know it just amazes me that you still just don't understand. No I did not make the products, but yes I DO know what is in them in fact I have done extensive research on the products themselves. Oh by the way, I am the one that does the marketing for the product. I do not rely on "getting new people to make my business work" I am indeed the ultimate variable as to weather my business works or not. I consistently sell over $3000.00 in retail every single month all by my little self. How? you may ask. Because I do give good customer service, I do have an open door policy for my customers when they need. So you see, you just don't have a valid argument here, with me anyway. Have a great day!

PS Just admit your failure and take resposibility for your losses and stop blaming everyone else for your mistakes.

Jacquelyn I love hearing sheep like you claim that this scheme is not only a business, but YOUR business...BULLS&*T!!! You lazy people decide to sign up for a scheme that's already mapped out and planned FOR you!! You didn't create the product you're selling, you didn't contact marketing and ad agencies yourself to get this "product" known, you don't have any property that sells this stuff in a window or mall, you have no control over the way it is presented, you probably don't even know what these products are made of.

Does your "company" even have a legit help line that CUSTOMERS can call and get their valid concerns addressed to their SATISFACTION? People people people, if you want to have your own business, start one with something YOU really believe in, not one that was pitched to you over the internet by some sucker who needed more people under him to make his "business" work! By the way, any work at home opportunities that are not offered by legitimate companies that have a main location you can visit in person, like a corporate headquarters, BEWARE...some of these bogus companies buy cheap and poorly maintained office space in some part of town, where it looks more like a party room and not a business when you get there.

If the main room you go into when meeting wit this so-called business has no office equipment, desks, phones, water cooler, etc., don't waste your time listening to these young idiots speak from a scripted pitch. Watch their eyes, they have a hard time actually looking at you in the face for more than 15 seconds.

Oh, just look at the enthusiasm they feign!!!!Am i supposed to believe that a young person the same age as me would actually act like that? I know when these presentations are over that they breathe a sigh of relief and change into their jeans and jerseys and roll their eyes. The same thing with these internet based opportunities, except you can't really see the people who are pulling you in, and you can't see them rolling their eyes. SUCKER!!!

Since we are talking about factual proof, I for one would like to see the actual proof of the pudding so to speak about this fine that GOS had received for being a Pyramid Scheme. I find it really hard to believe that the New York Stock Exchange would allow such a type a of company that you are outlying to be publicly traded. I also don't think that Michael O Johnson would be the CEO of such a company.

I have been with Herbalife since August of 2003, so I have the time and experience in this company to properly asses your slanderous allegations towards the company.

I have not been brain washed, I simply work my but off and I absolutely love it. I understand that this is not a job it is a business, its my business. If you started this business thinking that you would not have to work hard and that you would get rich quick then your stupid. There is no such thing as getting rich overnight unless you win the lottery or inherit.

I have been in this business for over a year and I DO NOT have any debt. In fact I have been able to pay off other debts that I had accumulated previously before joining Herbalife. I have completely replaced my income and am very close to replacing my husbands income.

So what does my success tell me about your situation, your full of crap. You complain about every little detail which is a most definitely a formula for the easy way to fail. Some people were just not meant for success because they are to afraid to fail. Some people just don't have the intelligence to make there home based business succeed.

If you would have followed the plan that is outlined for you instead of trying to fight it the whole way and trying to reinvent what has already been proven to work and if you would have spent half the amount of effort in doing the business right as you do complaining, things could have been different for you.

We could sit here and talk about should have, could have, would have, ifs ands or buts. But for now all I can say more for me!..... good luck with the rest of your life.

Well, well, well Raymond J., thought you just faded away like Carl, of Clearwater Florida.



You never answered any of my qestions, so I'd like to ask you again, to tell us all, what all you had to do to go big time with Herbalife?



Then furnish some documentation to back-up all your claims of success. Otherwise, don't bother to spew the same drivel that countless other Herbabots have before you, when confronted with questions or statements that would show that Herbalife is nothing more than a pyramid scheme.



Tell us again, how you decided to get in the biz, you pathetic, college math major. (LMAO)



D, of Akron, I cant tell you how refreshing it was to read your post. I beleive you are the first ex-Herbalifer to tell it like it is. You got Raymonds number, as you were not just a dabbler in the biz. You know the the

types. The starrey eyed prospects, with visions of granduer, who will be that special one, who makes the 1% of all distributors who somehow realises a profit after all the expenses have been subtracted from the gross.



You should read the book "Merchants of Deception" by Eric Scheibeler. He blows the whistle on Amway, and the MLM industry. Its available to read online for free. He was a rep for amway, who made it all the way to the Diamond Level, and never grossed a dollar one. In fact he just about lost everything he had, house, family, friends, sanity. I'm sure you will find his situation parallels much of your own.



Thanks again for your post, it will surely help others, to not buy into the "Dream" (I know Raymond...I'm a dream stealer, right?)



I'm outta here.

Did you read the first sentence, Raymond? This business was found to be operating an illegal pyramid scheme and fined for such.



And don't even respond with a bunch of assumptions and allegations about work ethics, blame, complaints, etc. You don't have enough facts about me or my downline to even go there!! This is merely factual information regarding the ultimate results of many people who undertook this business venture; nothing more, nothing less.



If you're satisfied reciting those scripts over and over and over each and everyday, dealing with all the hostility and frustration of potential new recruits who are dissatisfied with the Decision Package, dealing with unprofitable, frustrated people in your downline, and you somehow can make a reasonable living, then more power to you.



Let me know how things are going a year from now. Until then, put a lid on it. You're not informed enough to adequately respond to the facts that are cited. You're making a whole bunch of assumptions; I simply stated the facts, all of which I have supporting documentation for. Did you ever break down the word "assume" into its component parts: a*s-U-me.



Furthermore, you better focus all of your efforts on that telephone, not spending an inordinate amount of time surfing the internet. Believe me, you will have to work your butt off throughout this entire venture. The only value-added activity for this business is constantly working that phone. If nothing else, take heed to that advice, and get to work!

wow...ok, so I've been involved for 3 months...using the system (advertising and all) that you've completely outlined here...I made 3700+ the month of January...and that's take home...now my advertising costs since I've started have not been met, but I'm approaching breaking even...



it's sad that you're looking for something and not willing to work for it...don't you know you own a franchise? don't you know you have to advertise yourself?



don't you know that you shouldn't invest all of your money in one method or simply rely on one person? That's just bad business sense...don't be a freakin' sore loser...if you bought a McDonald's franchise for 500,000 (cash up front),



ALL OF YOUR MATERIALS WOULD HAVE TO COME FROM MCDONALD'S...ALL OF THEM FROM UNIFORMS TO MANUALS TO THE FREAKIN' KETCHUP...get over it...you didn't want to do the work...if you'd made any advances in your business, your people would not have been complaing...



you're just pathetic...sorry to say it but when you complain that "they made me fail" and don't hold yourself accountable for anything, it's pathetic dude...do us all a favor and just get a 9-5 (which is what you believe to be the best thing) and keep quiet...