Under Pressure, FTC Opens Inquiry Into Herbalife

Under Pressure, FTC Opens Inquiry Into Herbalife

Multilevel marketing company Herbalife is being investigated by the U.S. Federal Trade Commission in connection with allegations that it’s a pyramid scheme.

As Dan McCrum explains on The Financial Times website, rival billionaires have been betting on whether the company is legitimate since Pershing Square hedge fund manager Bill Ackman accused it of being a pyramid scheme and began a campaign in December 2012 to put it out of business. Consumer groups and members of Congress have also called for the investigation.

Los Angeles-based Herbalife sells nutritional shakes and supplements through and to a network of independent distributors in more than 80 countries. McCrum reports that Herbalife says the company welcomes the inquiry and is confident that it is complying with all applicable laws and regulations.

McCrum explains that investigating this type of case usually takes 12 to 18 months, noting that the FTC can only bring civil claims. However, the agency may work with criminal prosecutors if it decides there may be a possibility of criminal charges.

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