Pyramid scheme spoils good business

The U.S. Federal Trade Commission (FTC) launched investigation into Herbalife, the world famous nutritional supplement corporation. The company posted the official inquiry on its website. Giving feedback, Herbalife spokesperson said that the investigation “would put an end to the rumors spreading on the market.” However, he did not go into details about what exactly triggered the investigating action. Herbalife clients who are using these products do not have to worry concerning the contents and health properties. According to the informed sources, it is the products distribution that drew attention of the commission. Thus, some experts think that Herbalife has been operating a vast pyramid scheme. The Federal Trade Commission’s officers have not made any official comments so far while the investigation is being underway. Otherwise, a defense lawyer could take advantage of any information leakage. Interestingly, the Commission resorts to an official inquiry procedure only in cases when illegal schemes are exposed in a company’s operation. The first signs about the legal action against Herbalife appeared in February, 2014. Thousands of complaints about the company’s pyramid structure had been filed to the commission by February. However, the management fiercely denied the allegation and demanded to publish a refutation in the mass media. Nowadays, the company does not insist on it. Therefore, it means that the investigation is a real thing. Amid such accusations against the corporation management and the FTC statement, Herbalife stock sank 12%. However, the shares’ decline was put on hold for a while. The market paused awaiting the new batch of rumors.