FTC Cuts Checks From $200 Million Herbalife Settlement To Victims Of 'Multi-Level Marketing Scheme'

The Federal Trade Commission said it is now mailing checks to nearly 350,000 people who lost money running Herbalife Ltd. HLF businesses, which the regulator calls a “multi-level marketing scheme.”

Not A Pyramid Scheme

The funding for the checks stems from a July 2016 settlement with the FTC that required Herbalife to pay $200 million and fundamentally restructure its business.

The FTC declined to call Herbalife a pyramid scheme (as termed by Pershing Square’s Bill Ackman) when the settlement was reached in July 2016, but terms it a “multi-level marketing scheme.”

Partial Refunds

The FTC is providing partial refunds to people who ran a Herbalife business in the United States between 2009 and 2015 and paid at least $1,000 to Herbalife but got little or nothing back from the company.

Most checks range between $100 and $500, with the largest exceeding $9,000. Recipients should deposit or cash checks within 60 days. The agency said the mailing of checks is “one of the largest redress distributions the agency has made in any consumer protection action to date.”

“We are pleased to announce that hundreds of thousands of hard-working consumers victimized by Herbalife’s deceptive earnings claims will receive money back,” Jessica Rich, director of the agency’s Bureau of Consumer Protection, said in a press release.

At last check, shares of Herbalife were down 0.59 percent at $49.24.

Posted In: Bill AckmanBureau of Consumer ProtectionJessica Richmulti-level marketing schemePershing SquarePyramid SchemeNewsLegalMoversGeneral