Gary Moller: [DipPhEd PGDipRehab PGDipSportMed(Otago)FCE Certified, Kordel's and Nutra-Life Certified Natural Health Consultant]. ICL Laboratories registered Hair Tissue Mineral Analysis and Medical Nutrition Consultant.

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Monday, August 04, 2014

Is Herbalife a MLM pyramid scheme that markets ineffective supplements?

Illustration by Colin Livingstone
"You buy goods from the company and try to resell those goods to others whom you also try to recruit as sellers themselves to build what’s called a “down line.” You get money from the company based on orders placed by your down line, so, if you manage to recruit enough people into selling the products, you could make some serious money."
http://www.outsideonline.com/fitness/bodywork/performance-plate/The-Huge-Supplement-Scams-That-Arent-Going-Anywhere.html


This article highlights a few key points that I want to emphasise:

  • It looks and behaves like an illegal pyramid marketing scheme but Herbalife insist it is a Multi Level Marketing scheme (MLM).  
  • While the success of a MLM will benefit from selling products that actually work, this is secondary to the model.  You can sell anything from crap to top quality via a MLM.  The key to MLM success is the hype and the ability to pull in new recruits with fresh money into the bottom of the pyramid.
  • The people who make the money are the ones at the top of the pyramid, or the agents who start a new territory (a new pyramid within a larger pyramid).  90% of those who are sucked into these schemes end up losing more than they will ever make.
  • With regards to the vitamins being sold by agencies like Herbalife, a disproportionate percentage of the cost goes into the flash marketing.  The ingredients may end up being the cheapest synthetics available from wholesale sources and of dubious benefit.
  • If you are going to take vitamins and other health supplements it is advisable to enlist the advice of a trained nutritionist and one that tests scientifically for nutritional status (sadly, very few do!).  Otherwise how do you know you need extra of this or that?  Its hardly any surprise then that most research shows that taking these supplements is usually without benefit.





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