FTC Herbalife meeting spicy
By MICHELLE CELARIER Last Updated: 12:46 AM, July 17, 2013 Posted: 11:21 PM, July 16, 2013
The Federal Trade Commission told consumer activists Monday that it finds Herbalife’s practices “disturbing” and is “looking into” the company, The Post has learned.
As expected, the regulator declined to tell attendees at an hour-long meeting whether it has launched a full-scale probe into the Los Angeles company, according to interviews with several attendees.
The activists met with top FTC consumer fraud officials, including Jessica Rich, the recently appointed director of the Bureau of Consumer Protection, they said.
The $5 billion global multi-level marketing behemoth was labeled a pyramid scheme in December by hedge fund activist Bill Ackman, who placed a $1 billion short on the stock.
Herbalilfe has denied the charges. Its shares, which have soared 58 percent this year, closed yesterday at $52.07, down 23 cents.
“It’s a question of resources,” one activist at the meeting told The Post, saying the regulator feels it may be difficult to launch a probe into the company alone.
In the FTC’s recent shutdown of pyramid Fortune Hi-Tech Marketing, the Kentucky Attorney General convinced the FTC to join his case. The possibility that a state attorney general might help the FTC investigate Herbalife was suggested at the meeting.
FTC officials at the meeting were particularly bothered by the high percentage of Hispanic distributors — said by Herbalife to be 65 percent — the vast majority of whom lose money, said Brent Wilkes, the national executive director of the League of United Latin American Citizens.
“The FTC understands this is a problem and that Herbalife is taking advantage of the immigrant community,” said one activist there.
The FTC is also upset that Herbalife quit disclosing its distributor turnover rate, which it last said was 90 percent in 2005.
Herbalife and the FTC declined to comment.
mcelarier@nypost.com |
