Tuesday, 4 December 2012

HERBALIFE SIDE EFFECTS 1980 - 2012

              

HERBALIFE SIDE EFFECTS


Herbalife Side Effects
Some people experience unpleasant side effects when using various Herbalife products. These are described and addressed in this article for your safety and well-being.
Bloating:


If you experience bloating, try changing the portion size to reduce this feeling. Enjoy healthy snacks during the day and smaller meals to assist your digestion. If you are using the shake mix as a meal replacement you may want to reduce the portion size or frequency. 
Dry Mouth:

Some people report that their mouth is dry after black or fruit tea. Detox products often produce thirst so you can try increasing your intake of water. Dryness from using the shakes can be caused by acid reflux since it contains guar gum and psyllium husk. These have expanding properties, which can cause reflux. Guar bean is high in protein and oil and guar gum is used worldwide in many beverages, foods and supplements. In significant quantities, guar gum dehydrates the body and can cause some serious side effects. However, it is regulated by the FDA who only permits extremely small quantities of it in food. Guar gum in the shake mix is used to emulsify or bind the particles and has been determined to be of insignificant quantities.
Heart Palpitations:



Palpitations may be from caffeine sensitivity. The tea does have caffeine in it so you could either stop using the tea or eventually you will get used to caffeine and the palpations should recede. The shake mix does not contain any caffeine.
In the nineties it was found that Ephedra caused increased heart rate and Herbalife discontinued using Ephedra in any of its products.
Upset Stomach, Headache and Fevers:

 In the first few days, many years of accumulated toxins and waste in the body begin to be expelled. Diarrhea, headaches, fever or nausea can arise.
These are temporary symptoms and will subside whether you continue the diet or not. The discomfort is not very common but happens to some people. Once you are detoxified you should feel great however. The body has toxins or free radicals surrounded by fat molecules, and when burning these fat molecules, the toxins are released into the bloodstream for elimination. They circulate through the body and are filtered out by the kidneys and liver. This can take up to 2 weeks. Areas where toxins and pollutants are expelled from the body can display reactions. You can first use a detoxification program to cleanse your system before starting the weight loss program if you wish.

Unpleasant-Smelling Urine or Perspiration:
 This is another possible reaction to the body cleansing that is not caused by the products, but the waste you are cleaning out. The products are working just as they should.
Allergic Reaction and Blocked Sinuses:
 People who are very allergic to fish need to know that some Herbalife products contain fish oil. See a medical specialist to determine if this is an allergic reaction. Sinuses are especially sensitive because they are soft tissue. Sinus irritations should clear in 1 to 3 weeks but if they get worse, discontinue using the product and consult a medical professional.
Malnutrition:
Beware of nutrient deficiency when losing weight. The Herbalife ShapeWorks program recommends that along with the 2 shakes and one healthy meal, you should add the Multivitamins and Cell Activator to ensure that you are getting enough nutrition. Cell Activator helps increase your nutrient absorption from food.
Stimulants:

 Caffeine in green tea is not the same as in coffee. It is slower-acting and has a calmer quality. But if you feel too stimulated try half a cup instead of a whole cup for a while.
Swollen Legs:

 This might indicate an allergic reaction to an ingredient in the Herbalife products. Please show your doctor the product labels and ask his advice. It would be best to discontinue using the product until you know what the cause of your swelling is.
Stomach Acidity:



If you are using Cell-U-Loss, try discontinuing it and see if that reduces your symptoms. If so, then Cell-U-Loss is not for you. If acidity persists when you are not taking it, there is some other cause. Cell-U-Loss contains 3 ingredients which may be causing the acidity: Apple Cider Vinegar, Vitamin C and Iron. It also contains herbs that have diuretic properties such as couch grass and corn silk extract.
Pregnancy: 
Total Control (the metabolism booster) carries a warning to not be used by the pregnant, lactating (or those that want to get pregnant). Rapid weight loss and stimulants during breastfeeding can release too many toxins into your blood stream and thus into your milk. This can cause a decrease in your milk supply and be unhealthy for your baby. Avoid the stimulants in Total Control and the Herbal Tea, which contain caffeine. Herbalife products have nutrition labels that show warnings to guide women who are pregnant, nursing or who may become pregnant.
Rashes:

These are the most commonly reported side-effects that happen when the body is de-toxifying. Redness, blotchy skin and irritation can arise. Your skin being the largest organ, has the most cells to repair and also discharges toxins. It takes about 2 weeks to cleanse the blood stream and during this time the departing toxins can be irritating. Exercise produces sweat and will release toxins that can irritate the skin. Herbal Aloe Soothing Gel can provide symptomatic relief.

Hair Loss or Breakage:
 Formula 1 Nutritional Shake Mix has been shown to improve skin, hair and nail growth. If you experience hair loss early in your weight loss program, this is because damaged cells are being repaired or replaced. When beginning a weight loss program, your body will target the most damaged cells. Hair usually has the oldest cells and is thus the first target for renewal. Hair soon becomes healthier than before so you need not worry about this.
General Detoxing Effects:
   
It is very well known that at the beginning of a diet or fast there may be some adverse side effects. These usually subside within a few weeks however. If you detoxify for a few days using plain water, fruit or vegetables you will also experience some side effects. When we have better nutrition, or when toxic substances such as coffee, tea, chocolate, tobacco, salt, and pepper are discontinued, amazing changes take place. Our bodies discard the lower grade materials and tissues to make room for newer, healthier ones.
Weight Gain:

 An ideal weight-loss rate is between 3 and 5 pounds per week. If you lose weight gradually and are getting proper nutrition, it will stay off. Moderate exercise like walking is necessary to get the fat burning process going. Adequate hydration (drinking water regularly) is essential to flush the toxins.
Do not try to stop any Herbalife side effects by taking drugs. Either let the healing take its natural course or stop using the product if you experience an allergic reaction.



HERBLIFE HISTORY

Herbalife International, Inc. History

Mark Hughes
HERBALIFE
Founder and President
Died 5-21-2000
Age 44
 

 Address:


1800 Century Park East
Los Angeles, California 90067
U.S.A.

Telephone: (310) 410-9600
Fax: (310) 216-5169

Website:
Public Company
Incorporated: 1979
Employees: 2,391
Sales: $944 million (2000)
Stock Exchanges: NASDAQ
Ticker Symbol: HERBA
NAIC: 45439 Other Direct Selling Establishments; 445299 All Other Specialty Food Stores; 325412 Pharmaceutical Preparation Manufacturing

Company Perspectives:

Herbalife is united with a single purpose&mdashø capitalize on the core strengths that have raised Herbalife to the worldwide status it enjoys today and, through strategic decision-making, to lead Herbalife toward greater success in the future. Key Dates:

Key Dates:

1980:
Mark Hughes establishes Herbalife and begins selling diet aids out of the trunk of his car.
1982:
The FDA sends a 'Notice of Adverse Findings' to the company.
1985:
Herbalife is labeled one of the fastest-growing companies in the United States by Inc. magazine amidst negative publicity.
1986:
The company officially takes on the name Herbalife International and goes public.
1988:
The company continues aggressive international expansion into Japan, Spain, New Zealand, Israel, and Mexico.
1991:
With the help of international business, sales reach $191 million.
1993:
Sales reach $700 million.
1995:
The company introduces a line of personal care products.
1997:
The firm again becomes subject to negative publicity when Clint Fallows, a former distributor, files suit against Herbalife.
1999:
Hughes attempts to take the firm private.
2000:
The buyout attempt falls short and, in May, Hughes dies unexpectedly.

Company History:

Herbalife International, Inc. markets and distributes a broad spectrum of more than 150 herb- and botanicals-based weight management and dieting products, cosmetics, and general health and nutrition products, through a worldwide network of more than one million independent distributors in 50 countries. Herbalife products, sold under a variety of brand names, include the Thermojetics Weight-Management Program, the Health & Fitness Bulk & Muscle Program, the Dermojetics herbal and botanical skin care products, the Cell-U-Loss cellulite-attacking supplement, Colour cosmetic products, as well as perfumes for men and women under the Vitessence brand name. Herbalife has thrived despite negative claims against its marketing schemes, product ingredients, and distribution methods.
'Herbalife uses `network marketing' as a way to describe its marketing and sales programs as opposed to multi-level marketing,' according to the company's 1995 annual report, 'because multi-level marketing has had a negative connotation in certain countries in which Herbalife does business.' Nevertheless, Herbalife's distribution network closely resembles the typical multilevel marketing approach--sometimes referred to as a pyramid scheme--and has been accused of crossing the line into the illegal endless-chain marketing. Multilevel marketing remains legal in most states in the United States, with the condition that the company's sales force of distributors actually receive earnings by selling products to people not related to the company. In an illegal endless-chain scheme, earnings are achieved primarily through recruiting new salespeople into the pyramid.
In the Herbalife network marketing plan, potential distributors buy into the network by purchasing Herbalife products, generally at a 25 percent discount off the retail price, which they may then in turn sell to others. Once they place orders above a certain amount--ranging from $2,000 to $4,000--a distributor may become supervisor, at which point they receive a 50 percent discount on Herbalife products. Distributors also become supervisors by recruiting new distributors into the network. They then receive a percentage of each recruit's sales--usually about 8 percent. As supervisors rise higher in the pyramid, their earnings have the potential of rising dramatically, depending on the number of supervisors below them.
Herbalife distributors are supported by a range of company career and training programs. Among these are the company's annual distributor convention, called the Herbalife Extravaganza, which features five-day intensive training; HBN, a private satellite broadcasting network that provides training in recruitment and retention techniques, as well as marketing support and training; bonus vacation programs for top-selling distributors; and the company's own magazine, featuring testimonials of success stories by Herbalife distributors and customers. Top distributors may earn $250,000 per year and more; nonetheless, the average annual earnings among all Herbalife distributors has been estimated at $1,500. As independent contractors, distributors receive no salary or benefits from the company. 
Company founder and CEO Mark Hughes, owner of more than 60 percent of the company, died unexpectedly in 2000, just after failed attempts to take his company private.
American Success Story Beginning in 1980
Master salesman Mark Hughes began Herbalife in a Beverly Hills warehouse in 1980, selling the new company's dieting aids from his car. Hughes, whose parents were divorced soon after his birth in 1956, was raised in Lynwood, California, outside of Hollywood. By ninth grade, Hughes had dropped out of high school. He became involved in drug use and by the age of 16 was sent to the Cedu School, a private residential home for emotionally disturbed and troubled teenagers. It was there that Hughes developed a knack for salesmanship, rehabilitating himself by selling door-to-door raffle tickets in support of the school. By the end of his tenure, Hughes had joined the school's staff.
Another turning point for Hughes came at the age of 18, when his mother died due to an overdose of diet pills. As Hughes would tell it, according to Inc. magazine: 'My mom was always going out and trying some kind of funny fad diet as I was growing up. Eventually, she went to a doctor to get some help, and he prescribed ... a form of speed, or amphetamine. ... After several years of using it, she ended up having to eat sleeping pills for her to sleep at night. And after several years of doing that, her body basically began to deteriorate.' The death of his mother stimulated Hughes's interest in herbs and botanicals, the use of which had become popular during the 1960s. Hughes set out to develop a dieting program based on herbal and botanical products that would enable people to lose weight safely.
Before founding Herbalife, Hughes the salesman received another kind of training when, in 1976, he began selling the Slender Now diet plan from multilevel marketer Seyforth Laboratories. Hughes quickly rose to become one of the pyramid's top earners. When that operation collapsed, Hughes joined another multilevel marketer, selling Golden Youth diet products and exercise equipment. By 1979, however, Hughes, then 23 years old, decided to form his own company.
Together with Richard Marconi, former manufacturer of the Slender Now products, Hughes developed the first Herbalife line of diet aids. Marconi, who claimed to hold a Ph.D. in nutrition, would later admit that his doctorate was a mail-order certificate from a correspondence school; nevertheless, Marconi would remain an officer at D & F Industries, Inc., which would continue to manufacture much of the Herbalife line throughout the company's history. Also joining Hughes in the new venture was Lawrence Thompson, formerly of Golden Youth, and earlier, Bestline Products, which in 1973 was fined $1.5 million for violating California's pyramid scheme laws. At both Bestline and Golden Youth, Thompson worked with Larry Stephen Huff--later to become a Herbalife distributor--who was involved in what Forbes labeled the 'father of all pyramid schemes,' Holiday Magic, Inc., a multilevel marketer charged by the Securities and Exchange Commission (SEC) in 1973 with defrauding its distributors of $250 million.
The Herbalife plan involved limiting meals to one per day and supplementing the diet with protein powders and a regimen of as many as 20 pills per day. According to the company, Herbalife was an instant success, selling $23,000 in its first month and $2 million by the end of its first year. Hughes, described by Inc. as 'a honey-tongued spellbinder' and 'a tanned and blow-dried California swashbuckler,' and by Forbes as a 'firebrand preacher,' brought multilevel marketing to a new height, by taking the Herbalife message to television. Booking two- to three-hour slots on cable television, including the USA Cable Network, Herbalife was an early purveyor of the so-called 'infomercial.' The Herbalife television programs, led by Hughes himself, were, as described by Forbes, 'full of inspiring testimonials from common people and resemble[d] old-style revival meetings in their fervor.' At the same time, Herbalife published its own magazine, Herbalife Journal, equally filled with testimonials, for which the company reportedly paid $200 each, from distributor success stories to weight-loss victories of Herbalife customers. Within a short time, the Herbalife slogan, 'Lose Weight Now--Ask Me How,' began appearing on buttons and bumper stickers everywhere.
Legal Challenges in the Mid-1980s
Herbalife grew rapidly. By 1985, the company appeared on Inc. magazine's list of fastest-growing private companies. (That magazine labeled Herbalife's five-year growth 'from $386,000 to $423 million, an increase of more than 100,000 percent, [as] by far the highest growth rate in the history of INC. 500 listings.') In that year, the company claimed more than 700,000 distributors in the United States, Canada, the United Kingdom, and Australia, bringing annual (gross) revenues of nearly $500 million. Yet, as early as January 1981, the Food and Drug Administration (FDA) began receiving complaints of nausea, diarrhea, headaches, and constipation, which were attributed to the use of Herbalife products. Herbalife distributors reportedly were instructed to assure customers that these side effects were the result of the body purging itself of toxins. By 1982, when the company published that year's edition of the Herbalife Official Career Book--a guide given to distributors that contained a full product list and descriptions of the uses and benefits for each product, as well as advice on building their Herbalife sales--the FDA took action against the company.
Among the complaints leveled against the company was a number of the claims Herbalife made for its products in the Career Book. The Herbal-Aloe drink, for example, was said to help treat kidney, stomach, and bowel 'ulcerations'; and Herbalife Formula #2 was said to be a treatment for 75 conditions ranging from age spots to bursitis to cancer, herpes, and impotence. In the summer of 1982, the FDA sent Herbalife a 'Notice of Adverse Findings' requiring the company to remove the mandrake and poke root ingredients--both considered unsafe for food use--of Slim and Trim Formula #2, while finding questionable the existence of 'food-grade' linseed oil also in the product. In response, Herbalife removed the mandrake and poke root and promised to modify the product claims found in the 1982 Career Book.
Herbalife was well into its surging growth--and Hughes was riding high himself, purchasing for $7 million the former Bel-Air mansion of singer Kenny Rogers, and marrying Angela Mack, a former Swedish beauty queen--when the FDA released a 'Talk Paper' on its complaints against Herbalife to the press and public in August 1984. The company's troubles increased several months later when Canada's Department of Justice filed 24 criminal charges for false medical claims and misleading advertising practices against Herbalife. In December of that year, Hughes went on the attack, filing a suit against both the FDA and the U.S. Secretary of Health and Human Services, accusing them of 'grossly exceeding their authority by issuing false and defamatory statements and by engaging in a corrupt trial-by-publicity campaign against the company.' In a press release, Hughes said: '[We're] not about to stand around and let this agency or anyone else issue blatant lies about us or our products, or to lie down and roll over while they take pot shots at us. In the five years we've been in business, literally billions of portions of Herbalife products have been consumed by millions of people. And we have never been sued or subjected to any formal proceedings by the FDA.' In the same press release, Hughes also suggested that the FDA 'attack' on Herbalife was inspired by legislation pending in Congress that sought to regulate the rapidly expanding dietary supplement market. 
Although Hughes would withdraw the lawsuit the following year, Herbalife began to suffer from the negative publicity surrounding not only its products, but also its marketing tactics. After a still-strong first quarter, the company ended 1985 with only $250 million in retail sales. In March 1985, Herbalife itself was charged in a civil suit brought against it by the California attorney general, the California Department of Health, and the FDA. That suit, which included Hughes as a defendant, charged Herbalife with making false product claims, misleading consumers, and with operating an illegal endless-chain scheme. At the same time, both the U.S. Senate and U.S. Congress began investigations into the company, during which time the investigating subcommittees pursued allegations that Herbalife products had been responsible for as many as five deaths. While the civil suit was based in California, the Washington investigations brought the negative publicity surrounding the company nationwide.
With sales stalling, the company cut its workforce--which had reached approximately 2,000 people--laying off 270 in April 1985, and nearly 600 more the following month. Herbalife distributors were also hard hit, leaving many with unsalable inventories of Herbalife products and many others seeing their income drop to nothing overnight. Sales dropped even more precipitously the following year. Despite repeated vows to fight the charges against his company, Hughes reached an out-of-court settlement with the California attorney general's office. Under terms of the settlement, Herbalife paid $850,000 in civil penalties, investigation costs, and attorneys' fees. Herbalife also agreed to discontinue two of its products, Tang Quei Plus and K-8 at FDA insistence that, although the products posed no safety risks, the claims made for them by the company would require them to be considered as drugs under the Food, Drug and Cosmetic Act. In addition, the company agreed to make further changes to its Career Book, including dropping claims for its Cell-U-Loss product as a natural eliminator of cellulite. By the end of 1986, Herbalife posted a $3 million loss.
Going Overseas and Back Again in the 1990s
Herbalife's domestic sales were at a standstill, so Hughes took the company overseas to expand its international markets. To finance the expansion, the company went public in December 1986, merging with a public Utah-based shell company, which allowed the company to go public much faster than if it had been required to file an initial public offering. Hughes became chairman of the new company, now called Herbalife International, taking 14.8 million of 16.8 million shares of outstanding common stock. The remaining two million shares went to newly named director and executive vice-president, Lawrence Thompson.
By 1988, Herbalife had moved into Japan, Spain, New Zealand, and Israel, and soon added Mexico as well. The company's aggressive expansion forced it to take a loss of nearly $7 million that year, but international sales built quickly, raising worldwide sales to $191 million in 1991. Meanwhile, domestic sales continued their slide, reaching a low of $42 million that year. At the same time, critics of the company pointed to an emerging pattern: that in many of the countries Herbalife entered, sales would surge initially, then plunge, often in the face of government scrutiny.
Nonetheless, Herbalife continued to grow strongly through the first half of the 1990s. Retail sales doubled to $405 million in 1992 and jumped again to nearly $700 million in 1993. Although 80 percent of sales still came from international markets, Herbalife's U.S. sales began to climb, reaching $85 million. Buoyed by this growth, Herbalife filed for a secondary offering of five million shares in 1993.
The company came under attack again, however. An Herbalife program introduced in 1992 called Wealth Building--in which newly recruited distributors could achieve supervisor status, with an immediate discount of 50 percent, if they made a first purchase of $500--was seen as skirting the edge of an illegal endless-chain scheme. The company's newly introduced Thermojetics Program of products also was criticized by the FDA and others for containing the Chinese herb ma huang, which contains ephedrine. In response to a Canadian threat to ban Thermojetics, the company agreed to reformulate the product. Despite this publicity, sales of Thermojetics were credited with raising Herbalife's retail sales still higher, to $884 million in 1994 and to $923 million in 1995, for net earnings of $46 million and $19.7 million, respectively.
The company's international operations also was faced with problems. In France, claims that a group of Herbalife's distributors were part of an unpopular religious group led to falling sales in that region. In 1995, the firm suspended the sale of Thermojetics Instant Herbal Beverage in Germany after receiving complaints from government agencies about the product. The suspension led to a sharp increase in product returns and distributor resignations as well as a decline in sales of related products.
The firm continued to thrive, however, despite the conflicts in which it was involved. In 1994, the company began developing a new line entitled Personal Care, which focused on health awareness. The products were launched in 1995 and included The Skin Survival Kit, Parfum Vitessence fragrances, and Nature's Mirror, a line of facial products. Herbalife also entered the catalog sales market in 1994 and developed 'The Art of Promotion' catalog that was used by distributors and complemented existing product lines.
Continued Growth in the Mid-1990s
The company entered the mid-1990s focused on international expansion as well as continuing its growth in existing markets. By 1996, Herbalife was operating in 32 countries and international sales accounted for more than 70 percent of total sales--sales in the United States, however, declined by 16.2 percent to $279.6 million. The firm also began restructuring its European distribution system. It closed four warehouse facilities, leaving five in operation, and established new sales centers for distributor meetings. The company also opened a main sales office in the United Kingdom that could process telephone orders from European distributors.
The firm came under fire once again in 1997 when Clint Fallow, a former distributor, filed suit against Herbalife claiming that the firm withheld earned income. The suit, which Fallow detailed on a public web site, garnered negative attention and was the first of many filed against the company by disgruntled distributors.
Nevertheless, the company forged ahead, securing $54.7 million in net income in 1997, a 22.2 percent increase over the previous year. By 1998, the firm had expanded into Turkey, Botswana, Lesotho, Namibia, Swaziland, and Indonesia. The next year, Hughes set plans in motion to take the company private in a $17 per share buyout plan after claiming that Wall Street was undervaluing his firm. Although the Herbalife board approved the offer, many shareholders claimed that the offer was not fair and filed suit against the firm.
Problems Continuing into the New Millennium
Herbalife continued to battle problems into the new millennium. The use of ephedrine in its products raised issues as the FDA linked heart attacks and strokes and even death to its use. Then in April, Hughes abandoned his buyout efforts when he was unable to raise enough capital to fund the deal. The firm settled the suit with shareholders and stock price faltered, trading around $10 per share after the announcement--in spring 1998 the stock had traded at $27 per share.
The company was again faced with hardship when in May 2000, Hughes died unexpectedly. Rumors spread about his death claiming that Hughes himself had not been a picture of health and had died of an alcohol and antidepressant overdose. The MLM Watch, a group that investigates marketing schemes, also claimed that the story about Hughes's mother dying of an overdose of diet pills was false and that newly elected Chairman John Reynolds was not really Hughes's father, as the company claimed. For the first time in five years, sales declined and the firm recorded a 35.1 percent decrease in net income over the previous year.
The company moved forward as it had done in the past when faced with adversity. In 2001, Herbalife expanded into Morocco. Newly elected President and CEO Christopher Pair stated in a company press release, 'The addition of Morocco as our 50th market represents an important milestone for Herbalife. We are committed to strengthening our global presence by making our products available around the world and extending new business opportunities for our distributors.' Despite continuing negative publicity surrounding the company, management continued to focus its future efforts on growth markets.
Principal Competitors: Alticor Inc.; GNC Inc.; Nu Skin Enterprises Inc.

Further Reading:

  • Barrett, Amy, 'A Wonder Offer from Herbalife,' Business Week, September 13, 1993, p. 34.
  • Belgum, Deborah, 'Herbalife Stock Ailing After Unsuccessful Buyout Effort,' Los Angeles Business Journal, April 24. 2000, p. 42.
  • Cole, Benjamin Mark, 'Herbalife Plans Share Offering of $101 Million,' Los Angeles Business Journal, August 23, 1993, p. 1.
  • Day, Kathleen, 'Herbalife Lays off 573, Blames Slowing Sales,' Los Angeles Times, May 29, 1985, p. D1.
  • Evans, David, 'Herbalife Faced Struggle After Death of Founder Mark Hughes,' MLM Watch, August 11, 2000.
  • Evans, Heidi, 'Agencies Sue Herbalife, Alleging False Claims,' Los Angeles Times, March 7, 1985, p. D1.
  • Hartman, Curtis, 'Unbridled Growth,' Inc., December 1985, p. 100.
  • 'Herbalife Founder Dies,' Los Angeles Business Journal, May 29, 2000, p. 49.
  • Kravetz, Stacy, 'Bitter Herb Distributor Hopes,' Wall Street Journal, November 12, 1997.
  • Linden, Dana Wechsler, and William Stern, 'Betcherlife Herbalife,' Forbes, March 15, 1993, p. 46.
  • Lubove, Seth, 'But Where Are the Directors' Yachts?,' Forbes, October 20, 1997, p.43.
  • Paris, Ellen, 'Herbalife, Anyone?,' Forbes, February 25, 1985, p. 46.
  • 'Self-Healing,' Forbes, November 17, 1986, p. 14.
  • Shiver, Jube, Jr., 'Herbalife Says All Queries into Tactics Now Resolved,' Los Angeles Times, October 17, 1996, p. D4.
  • Svetich, Kim, 'Herbalife Seeking to Rebuild Its Domestic Market,' California Business, February 1990, p. 18.
  • Yoshihashi, Pauline, 'The Questions on Herbalife,' New York Times, April 5, 1985, p. D1.
Source: International Directory of Company Histories, Vol. 41. St. James Press, 2001.

HERBALIFE SIDE EFFECTS-1980

1980:
Mark Hughes establishes Herbalife and begins selling diet aids out of the trunk of his car. 

History of Herbalife



Herbalife is one of the largest nutritional supplement companies in the world. It relies on a network of independent distributors to sell its products and to recruit new sales personnel. Since its founding nearly three decades ago, Herbalife has faced persistent controversy based on unsupported product claims and a sales structure that many believe resembles a pyramid scheme. The company is based in Los Angeles, and had sales totaling $2.4 billion in 2008.




  1. Mark Hughes

    • The history of Herbalife dates back to Lynwood, California, in the 1970s. A 16-year-old man named Mark Hughes found himself in trouble with drugs and was sent to a residential home for troubled teens. Here Hughes learned he was a natural salesman, and began selling raffle tickets to support the residence. When he was 18 he was hired as a marketing consultant for the organization. That same year his mother died of a diet-pill overdose, prompting Hughes to explore safer weight-loss methods based on herbal supplements.

    Herbalife Founding

    • In 1979, Hughes partnered with Richard Marconi, a doctor with a Ph.D. in nutrition. Hughes and Marconi developed an herbal line of weight-loss supplements known as Herbalife and began selling their products out of their cars. The Herbalife plan involved consuming only one meal a day. This meal was supplemented with up to 20 vitamins and supplements. By the end of the first year the company had sales exceeding $2 million.

    Multi-Level Marketing

    • Throughout the mid-1980s, Herbalife sales soared, with gross revenue topping $500 million a year by 1985. The company relied on a network of distributors to sell its product, with many of these distributors earning commissions for finding new salespeople. In 1984, the U.S. Food and Drug Administration released a report outlining complaints against Herbalife. These included accusations of multi-level marketing (MLM) as well as false medical claims.

    Legal Troubles

    • In 1985, the Canadian Department of Justice filed a number of claims against the company related to false advertisement and unproven medical claims. Herbalife fought back by filing a lawsuit against the FDA and the U.S. Health and Human Services Division, accusing them of defamation. The FDA responded with a civil suit against Hughes himself, blaming him for five deaths associated with his product line. These stories made headlines and greatly affected the company's sales.

    The Late 1980s and Today

    • Hughes reached a settlement on the FDA suit in 1986, and the company posted a $3 million loss for the year. As part of the settlement, Herbalife was forced to discontinue a number of products and replace some ingredients linked to illness and death. Hughes pushed on and took the company international, building to sales of $700 million by 1993. By 2003, sales had reached $1.3 billion. Though the company is still subject to frequent FDA and MLM inquiries and lawsuits, it has managed to survive and create new products aimed at boosting sales.
      ---------------------



HERBALIFE SIDE EFFECTS-1984

Herbalife Criticized at Senate Hearings

Odom Fanning

Opening two days of hearings, Senator William V. Roth, Jr. (R-DE), chairman of the Senate Permanent Subcommittee on Investigations, made it clear that their purpose was not to "get" Herbalife or any other product, but resulted from five months of investigation into weight reduction products and plans of all types. The Subcommittee is authorized to investigate the efficiency and economy of all branches of the government and also has jurisdiction over "all aspects of crime and lawlessness within the U.S. which have impact upon or affect the national health, welfare, or safety."
Roth acknowledged that following announcement of the hearings (held in Washington, D.C., May 14th and 15th), he had received a "very large number of phone calls and letters from individuals who are very satisfied with the Herbalife products, and have lost large amounts of weight." Many of these correspondents, and an estimated 3,000 Herbalife distributors who marched on the second day, were obviously on the defensive. So was the Food and Drug Administration, for, as the senator put it, the purpose of the hearings was "to find out if the public is being adequately protected when it buys and consumes diet products."
In his opening remarks, Roth made a distinction between "miracle pills and creams," tinted sunglasses, plastic ear forms and other "patently fraudulent products" and the very low calorie (VLC) products that can actually produce weight loss but may not be safe. His major concern with the VLC products, he specified, "is with what the Food and Drug Administration is doing and what it is not doing, particularly when serious questions have been raised both within the FDA and outside this agency about the safety of such products....We are dealing with a multi-billion dollar industry which produces items ingested into the human body. Yet the FDA has been reticent to involve itself in low calorie diets. I want to know why, because I think the public deserves to know conclusively about the safety of individual products now in the marketplace."
On the first day Roth's subcommittee heard testimony from scientists and VLC product users, all of whom submitted written statements as well. Most of the scientists favored more regulation of such dietary products; the users were pro and con.
One scientific witness was Judith S. Stern, Sc.D., professor of nutrition and director of the Food Intake Laboratory at the University of California, Davis. She conceded:
The inadequacy of traditional medicine to provide a permanent cure for obesity has given rise to an entire industry of entrepreneurs who claim to be able to relieve the frustrations of the overweight. The ironic tragedy is that most diets work-at least initially-when they are followed. However, fad diets are usually quite restrictive in their food choices, may have unpleasant side effects, and most people cannot follow them for any length of time. In addition, when daily calories are restricted below 1,200, it becomes difficult to satisfy all other nutrient needs.
Dr. Stern also made the distinction between "miracle cures" and VLC products. Products in the former category include the hormone cholecystokinin (CCK), claimed to decrease hunger, and various amino acid pills, said to release growth hormone. Both have been promoted with false claims based on legitimate scientific discoveries that were overgeneralized and misrepresented, she noted.
Debunking claims that grapefruit or grapefruit extract can act in a catalytic manner enhancing breakdown of fat, Dr. Stern described her testimony last year which helped the U.S. Postal Service stop sales of Super Grapefruit Pills by a California company. Noting that these pills contained glucomannan, she reported that in 1980 she had conducted a double-blind study in which the test group received one gram of glucomannan while the control group was given a placebo. Both groups were placed on a behavior modification program. Both groups lost weight, she noted, but there were no statistically significant differences in hunger ratings or weight loss between them.
Dr. Stern also zeroed in on kelp/lecithin/cider vinegar/vitamin B6 combinations found in dietary products since 1974. Iodine-rich kelp is potentially harmful to a small number of individuals in whom high amounts of ingested iodine can cause thyroid trouble. The other three ingredients are worthless, she noted.
Another expert witness was Varro E. Tyler, Ph.D., professor of pharmacognosy (the science of medicines from natural sources) and dean of Purdue University's School of Pharmacy and Pharmacal Sciences. Here is my summary of Dr. Tyler's detailed analysis of various Herbalife products contained in the lengthy packet of written material released by Roth's subcommittee to the press:
  • Slim and Trim Formula #1 (46 cents per day), described in the sales literature "as a balanced protein powder made from natural vegetable soy, casein and whey protein." Tyler said the product is falsely represented in company literature because there is nothing about a protein powder, per se, that will curb the appetite any more than an equivalent amount of protein derived from eating lean meat, nuts, or the like. Further, no protein powder will "cleanse the system" or facilitate "burning excess calories." It will supply needed daily nutrients, but no more effectively than a low-calorie diet, carefully balanced for carbohydrates, minerals, and vitamins-as well as protein.
  • Slim and Trim Formula #2 (21 cents per day), described by the Herbalife organization as a special blend of 14 herbs plus kelp, lecithin, vitamin B6, and cider vinegar designed to cleanse the digestive system and naturally help curb the appetite. Tyler said that, of its many herbal ingredients, none is actually present in sufficient quantity to produce significant physiological effects by itself. But he noted that four ingredients-senna, cascara sagrada, dandelion root, and kelp-might work together to exert a laxative effect in sensitive individuals.
  • Slim and Trim Multivitamin and Multimineral Formula #3 (23 cents per day) is a fairly standard vitamin/mineral preparation with some herbal products added in such tiny amounts that they exert no significant effect. Unless vitamin deficiency was present, Tyler noted, the product would be a complete waste of money.
  • Slim and Trim Linseed Oil Formula #4 (10 cents per day) contains small amounts of linseed oil but has no advantage over less expensive vegetable oils ordinarily used in the kitchen of the average home. (Moreover, as noted by the next witness, the amount found in the formula will be obtained in food consumed in just one balanced meal per day.)
  • Cell-U-Loss (43 cents per day) is described in Herbalife literature as a product designed to attack cellulite, promote circulation, and eliminate excess fluids, is recommended for use with the Slim and Trim formulas. Tyler noted that its tiny amounts of herbs would at most cause a slight diuresis (output of body water), but would have no effect whatsoever on appetite or body fat.
  • Herbal-aloe is said to aid digestion and cleanse the system. Although uncertain of the type of aloe contained in this product-which may be a laxative-Tyler expressed deep concern over two of its other herbal ingredients. Comfrey, he said, is a known carcinogen, shown to produce malignant tumors in the livers of rats when included in their diet. And the active constituent of chapparal, nordihydroguaiaretic acid (NDGA), was removed from the FDA's GRAS (Generally Recognized As Safe) list many years ago after it was shown to cause cysts and kidney damage in rats.
  • N.R.G. (Nature's Raw Guarana) (80 43 cents per day), claimed to increase energy, aid in mental alertness and produce a nutritional lift, is sold in tablets that contain small amounts of granular guarana, the seed of a South American plant known to contain about 5% caffeine. The amount of caffeine in the recommended dose of N.R.G. is about the same as that in a cup of strong coffee-but the presence of caffeine is not revealed in product labeling or literature. Thus, individuals sensitive to caffeine might be unwittingly harmed.
  • Schizandra Plus tablets are said to help combat stress and damage leading to premature aging. Although he suspected that the dosage of its ingredients was too low to exert pharmacological effects, Tyler indicated that tests are needed to determine whether chemicals extracted from schizandra can protect or harm the liver [see NF 2:29].
  • Tang Kuei (50 cents per day), said to help establish menstrual regularity and provide "herbal nutrition" for the whole body, contains dong quai (also known as dang gui and pinyan) and chamomile. These drugs -- used in traditional Chinese medicine -- have not been proved by Western standards. Tyler noted that even if they are effective, the amounts contained in Tang Kuei are far below those used in China. Moreover, under federal law, Schizandra Plus and Tang Kuei are unapproved new drugs that are not legal to sell in the United States.
Overall, Tyler objected that
  • Some Herbalife products may well be toxic, at least to some consumers.
  • Herbalife literature and word-of-mouth recommendations build up false hopes in consumers, most of whom are not able to benefit from the placebo effect.
  • It is particularly deceptive because they lead the public to believe that Herbalife products "contain a lot of wonderful herbs with marvelous health-giving properties when the amounts present in the products are too small to have any significant physiological effects in normal persons.
  • Consumers are thus paying good money for products which have no proven value. 
  •  
Many of the same points were reiterated in an analysis of the various Herbalife formulas by F. Xavier Pi-Sunyer, M.D., associate professor of Medicine, Columbia University College of Physicians and Surgeons, and a division chief at St. Luke's Roosevelt Hospital Center, New York City.
"With very rapid weight loss, and particularly with diets low in carbohydrate, there is an early diuresis, that is, loss of water via the urine. This accounts for much of the weight loss of crash diets and much of this water is reaccumulated when the diet is stopped," said Dr. Pi-Sunyer. "With this water loss, great amounts of sodium, potassium, and chloride are lost, as well as lesser but substantial amounts of calcium, magnesium, and other minerals. These must be replaced. If they are not, the electrical integrity of biological membranes may be lost, and one outcome of this may be cardiac arrhythmias."
Because dieters wish "to get on with it," there may be a tendency to take only the protein preparation, without supplementing it, as sometimes recommended, by a meal to bring the daily intake to at least 800 to 1,000 calories (of which 300 to 400 may be provided by the dietary product). Consumers also may ignore the limited period, say four weeks, recommended by some diet purveyors, and incur added risk by consuming the preparation for a longer time, said Dr. Pi-Sunyer.
He also reported that a colleague, Theodore B. Van Itallie, M.D., had reexamined data of the victims of the liquid protein diets of 1977-1978 and found that "the less fat you are the more dangerous these diets are for you, the more likely you are to lose life-requiring protein, and the more at risk of dying you are. Since these preparations are bought without restriction, many people take them who are not very fat, and these people seem to be particularly at risk."
 
Two of the four laypersons who testified were constituents of Senator Roth's-one for Herbalife, the other against. Patricia Stombaugh, of Smyrna, Delaware, began taking Herbalife in August 1984. "After taking it for two months, losing five pounds and feeling much better," she was asked by friends "for more information about Herbalife." She soon became a distributor. She and her representatives since have sold it to over 300 people. "Herbalife has worked for me and my customers," she told Roth and the subcommittee. "I believe the people who said they felt better using the Herbalife products are stating the facts: their health problems improved through weight loss and sound nutrition. They are not saying that Herbalife is like a medicine that cures a disease. No one I know has ever claimed this."
Another user, Greg Martin, of Dover, Delaware, lost about 13 pounds in three months and "felt better than I had in years," after starting on Herbalife products in September 1984. He and his wife began selling the products in October, eventually building a customer list of 100 with ten distributors. But most of his customers suffered from constipation when using Slim and Trim Formulas, and 10 -15%t had other problems, he reported. One man who had had two previous heart bypass operations was taking Herbalifeline because Martin "understood from the literature that it was good for heart problems. This man became extremely constipated."
Because he was unable to get answers to his questions from Herbalife headquarters, Martin stopped selling its products to retail customers at the end of February. "I do not want to be associated with a company who claims its products are safe for everyone to use and then will not deal with [health] problems," he testified. He expressed the conviction "that diet products and food supplements can do a lot of good. I would not want to see them prohibited." He suggested, however, that standards be established and that the FDA "enforce these standards so that the public can be confident that these products are safe."
The final two lay witnesses testified to personal tragedies. Bernard Lehman, of Anaheim, California, formerly from a town near Nashville, Tennessee, said that he is not able to work because he has Hodgkin's lymphoma, a form of cancer. A few months ago, while "basically bedridden," he claimed that a distributor in Tennessee told him and his wife that she could lose weight taking Herbalife products, that both could earn needed income, and that "the Herbalife products would help to cure my cancer."
Lehman named the distributor and charged, "He told us this orally and showed us some brochures which said this" in writing. "However, he gave us different brochures without this information and said that he only had one copy of the special brochure, and he had to keep it for his use." Lehman summarized by saying that the distributor "basically said that the Herbalife products would act as a cure-all."Although he and his wife had "bad reactions" to the Herbalife products, they continued taking them "because we believed that we could make lots of money and we thought our own bad reactions to taking the products were unusual." They spent about $1,800 for inventory and publications and sold about $100 worth of Herbalife products before asking to get out and get their money back. They eventually received $1,000 from the distributor and still have $700 worth of product they "would just like to get rid of...and forget about."
Cynthia Guillaume Lee, of New Orleans, told the pitiful story of her late husband, Bivian Lewis Lee, Jr., who had retired as a National Football League player in 1976. He became a Herbalife distributor in October 1984 because "the extra money sounded real good," said Mrs. Lee. Although he was not overweight and "was very much against taking any kind of diet product," he began taking a Herbalife product because "he said that if he was going to sell it, he would at least try it out."
Two weeks later, Bivian, age 35, was dead. His widow testified:
I know that I'm not a doctor. I know that I'm not qualified to give medical opinions. But I do know that my husband was a perfectly healthy man. I saw him deteriorate from the perfectly healthy man to his death. And it all began when he started taking Herbalife. I want to tell what happened to me-it's not easy for me to do this-because I want this subcommittee, or the Federal Food and Drug Administration or somebody to investigate why my husband was alive and well until he started on the Herbalife products and now he's dead. I want to encourage the subcommittee to look into this so that other young mothers won't find themselves in my position.
 
Mrs. Lee submitted an affidavit by Dr. Van Itallie, who had reviewed the autopsy protocol prepared by the Orleans Parish Coroner's Office and other records relating to Bivian Lee's death. The affidavit cites an article Van Itallie co-authored, entitled "Cardiac dysfunction in obese dieters: a potentially lethal complication of rapid, massive weight loss" [American Journal of Clinical Nutrition 39:695-702, 1984]. The article discusses the cases of 17 obese but otherwise healthy persons on VLCs who died of cardiac arrhythmia. "Basically," the affidavit says, "severe restriction of caloric intake causes the body to ulitize and deplete its protein. The heart is a muscle, made of protein, and it is not spared . . . . depletion of protein from the heart may be followed by cardiac arrhythmia and death. I refer to this as the 'liquid protein syndrome', but it may develop from any drastic reduction in caloric intake. My thesis further holds that persons with lesser stores of body fat are more likely to experience the cardiac dysfunction. Fatter dieters seem to survive longer because they are better able to conserve their body protein."
Van Itallie found this thesis consistent with Bivian Lee's case, particularly because he was "persuaded by Lee's Body Mass Index, indicating that he had lesser stores of body fat."
This article was published in the September 1985 issue of Nutrition Forum, when Mr. Fanning edited and published a newsletter called Con$umer New$weekly. Before that, he was a science writer for The Atlanta Journal and director of information for the U.S. Centers for Disease Control and Prevention. Bivian Lee's lawsuit was settled out of court for an undisclosed sum which was undoubtedly substantial.

HERBALIFE SIDE EFFECTS -1985

Report Criticizes Weight-Loss Products : Four Deaths, Illnesses Linked to Herbalife, Senate Study Says

May 14, 1985|ROBERT L. JACKSON | Times Staff Writer


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WASHINGTON — Promoters of weight-reduction products, including those of Los Angeles-based Herbalife International, often make exaggerated claims for pills and powders that can pose serious health hazards, Senate investigators have concluded.
In a study to be released this morning, the staff of the Senate Governmental Affairs permanent investigations subcommittee says that four deaths since last November have been associated with Herbalife products.
Allegations of Fraud
In addition, the Food and Drug Administration has received 90 complaints of illnesses allegedly caused by Herbalife products as well as 32 allegations of fraud against the company, according to the staff report. Such a volume of complaints warrants more attention by the FDA to the side effects of "very low calorie" diet plans, investigators said.
Herbalife, the nation's largest distributor of weight-loss and nutrition products, says it has 800,000 independent distributors in the United States, Canada, Australia and Great Britain. Attempts to obtain comment Monday from Herbalife officers on the report's charges were unsuccessful.
Prepared as Introduction
The staff report, a copy of which was obtained by The Times, was prepared as an introduction to two days of Senate hearings on how major diet products are marketed. Mark Reynolds Hughes, Herbalife's founder and president, is among witnesses who have been subpoenaed.
Sen. William V. Roth Jr. (R-Del.), the subcommittee chairman, said that Herbalife and other weight-reduction plans amount to a multibillion-dollar industry. Some smaller marketing schemes, Roth said, involve "a variety of worthless products such as pills that promise to help you reduce while you sleep and creams that you rub in which are supposed to take fat off."
"These items reduce nothing but the pocketbooks of the consumers who use them," Roth said in a statement.
The subcommittee staff said that it had interviewed a number of persons who had had adverse reactions to Herbalife products, including nausea, dizziness, headaches, diarrhea and constipation, and that some Herbalife distributors had claimed the products could cure cancer. Herbalife officers insisted that the company does not support such medical claims but noted that the firm has little or no control over its independent distributors, according to the subcommittee staff.
Disclaimers in Small Print
The Senate staff report said that some promoters of low-calorie products fail to emphasize that their pills and milkshake-type powders are intended to be used only as part of an overall diet plan under medical supervision. To avoid enforcement actions by the Federal Trade Commission, such disclaimers often are carried in small print on the packages, it said--but the impression is left that the products themselves are responsible for the weight reduction.
Other promoters--but not Herbalife--market exotic products like plastic devices to be worn on the ear that touch acupuncture points and allegedly help suppress a person's appetite, the subcommittee report said.
The Senate hearings will be the latest in a series of government actions involving Herbalife. The FDA, based on a lengthy investigation, cited the company for six violations of the Food, Drug and Cosmetic Act in 1982 but never issued any sanctions. Herbalife subsequently sued the FDA, alleging that the agency had engaged in a "widespread, even corrupt, trial-by-publicity campaign" against the firm. But Herbalife recently withdrew the suit.
Last November, Canada's Ministry of Health and Welfare cited Herbalife for 24 violations of the Canadian Food and Drug Act, and last March three agencies in California took similar action.
The state attorney general, the state Department of Health and the Santa Cruz County district attorney filed a civil lawsuit against Herbalife alleging that the company makes false medical claims about some of its products and employs an illegal pyramid-type scheme to market them.

Testifies at Stormy Senate Hearing : Herbalife President Calls Diet Powders, Pills Safe

May 16, 1985|ROBERT L. JACKSON | Times Staff Writer
WASHINGTON — The founder and president of Herbalife International told a stormy Senate hearing Wednesday that his controversial diet powders and pills are absolutely safe and he derided some of his medical critics for being overweight.
Referring to a panel of three nutrition and weight-control authorities who had questioned the safety of Herbalife products Tuesday, founder Mark Reynolds Hughes, 29, asked senators: "If they're such experts, then why are they fat? I've lost 16 pounds in the last few years."
For nearly two hours, Hughes responded with breezy, clipped answers to hostile questioning by members of the Senate Governmental Affairs permanent investigations subcommittee, which has been prodding the Food and Drug Administration to investigate the diet formulas and sales techniques of Los Angeles-based Herbalife.
Rapid-Fire Questioning
At one point, Dr. David B. Katzin, a consultant to the firm, interrupted rapid-fire questioning by Sen. Warren B. Rudman (R-N.H.) to exclaim: "I don't feel the gentlemen here (from Herbalife) are getting a fair shake!"
Rudman charged that Katzin, a physician, had been put on the firm's payroll only three months ago to deal with the subcommittee in place of Richard Marconi, the manufacturer of Herbalife's food supplements who, Rudman said, had avoided testifying by going on a trip to China.
Rudman asked Hughes if he knew that Marconi, who says he is a doctor of nutrition, had received a mail-order doctorate degree from Donsbach University School of Nutrition, a non-accredited correspondence school in Huntington Beach, as disclosed last month by The Times. Hughes turned away the question by terming Marconi "one of the most brilliant men I know."
 
Sales of $1 Billion
Pressed by Rudman, Hughes acknowledged that his own formal education had stopped at the ninth grade. Asked how he was qualified to take issue with criticism of Herbalife from some leading medical authorities, Hughes snapped: "I defy anybody to be able to produce results as this company has."
Hughes said his 5-year-old firm, which projects sales of $1 billion this year, has sold 9.6 billion portions of its nutrition and diet formulas.
Sen. William V. Roth Jr. (R-Del.), the subcommittee chairman, reminded Hughes of criticism by some physicians that Herbalife--unlike similar products sold under the Cambridge diet plan--does not recommend that consumers seek guidance on their diets from doctors.
"Do you believe it's safe to use your products without consulting a doctor?" Roth asked.
"Sure," replied Hughes. "Everybody needs good, sound basic nutrition. We all know that."
Two Controversial Herbs
Sen. William S. Cohen (R-Me.) asked Hughes about the use of two controversial herbs, comfrey and chaparral, in a formula called Herbal-Aloe. A panel of nutritionists on Tuesday said the substances had cancer-causing properties.
But Hughes said neither he nor the FDA was concerned because quantities were well below the unsafe level. Hughes said Herbalife was cooperating with the FDA, although FDA Commissioner Frank E. Young told the subcommittee that the agency is considering action against Herbalife for unfounded medical claims for its products.
Asked about previous testimony by doctors that Herbalife products sometimes induce nausea, diarrhea or constipation in consumers, Hughes said that these "transient side effects" occur in 10% to 15% of all users and usually last only a week. There are no warnings on Herbalife's labels about such occurrences, he said, because warnings are made "basically by word of mouth" through independent distributors.
"A change in anyone's diet would have the same effects," Hughes said. His testimony concluded two days of hearings by the subcommittee into weight-reduction products and devices being sold by mail or through multilevel marketing plans.

HERBALIFE SIDE EFFECTS-1986

Herbalife Settles Suit Filed by State on Medical Claims

October 16, 1986|JUBE SHIVER Jr. | Times Staff Writer
Herbalife International, which has been criticized for the way it markets its controversial weight-loss pills and powders, agreed Wednesday to pay $850,000 to settle allegations by the California attorney general's office that it had made false medical claims.
The agreement, which state officials call the largest civil damage penalty of its kind, will require Herbalife to "make major changes in its (product) representations" and "control future behavior so that the wrongs that we perceive don't continue," said Albert Norman Shelden, a deputy attorney general. "They are not going to be making the claims they had made in the past regarding the efficacy of various herbs and weigh-loss products."
The $850,000 will pay for reimbursement of attorney's fees, investigative expenses and civil penalties, government officials said.
By settling, Los Angeles-based Herbalife, which has said it has a sales force of 800,000 people and annual revenue of $500 million, has resolved the last of a wave of government inquiries and legal proceeding that had cast a shadow over the 6-year-old company and slowed its meteoric financial growth.
Besides the California attorney general, Herbalife has faced and settled inquiries from the Canadian Ministry of Health and Welfare, two U.S. congressional panels and the federal Food and Drug Administration, which had been investigating Herbalife for four years for six alleged violations of the Food, Drug and Cosmetic Act in 1982, said Herbalife's lawyer, Conrad Lee Klein.
However, Herbalife spokesman Jack Lund declined to comment on the outcome of any of the actions, saying that the company would issue a complete statement on the resolution of the various government actions today.
Wednesday's agreement stems from a civil lawsuit filed March 6 against Herbalife by the California attorney general, the state Department of Health and the district attorney of Santa Cruz County. The government alleged that Herbalife made false medical claims about some of its products and employed an illegal pyramid-type scheme to market them.
Herbalife's diet and nutritional supplement plan involves replacing two meals a day with two 160-calorie liquid shakes. A third meal was to consist of a variety of generally low-fat foods that the company recommends, but no calorie amount is specified.
Herbalife product literature also instructed dieters to take an array of herb-based vitamins and minerals "to ensure proper weight control." Among the ingredients are vitamin B6, lecithin, senna leaves, kelp, chickweed and dandelion.
The settlement agreement reached Wednesday, however, would restrict several advertising claims surrounding Herbalife products.
The company could not represent that its "Cell-U-Loss" product contains herbs that on their own naturally eliminate "cellulite" or that the product directs weight loss to particular portions of the body. Herbalife also agreed not to claim that its products "contain herbs that in and of themselves naturally curb the appetite or burn off calories."
In addition, Herbalife agreed to disclose that there is caffeine in its N.R.G. product. With respect to allegations that it maintained a pyramid-type selling scheme, Herbalife agreed to maintain a system "to show that commissions, bonuses, overrides and/or advancements that participants in their marketing program received are based on retail sales."

Herbalife Agrees to Pay $850,000 Penalty (1986)

Stephen Barrett, M.D.In 1986, 
Herbalife International, Inc., and its president Mark Hughes, agreed to pay $850,000 to settle charges by the California Attorney General that the company made false medical claims and engaged in an illegal pyramid-style marketing scheme. Herbalife has been selling its products through a multilevel marketing program in which the amount of money received by its distributors depended upon the amounts purchased by them and by those whom they recruit as distributors. The Attorney General's suit, filed in 1985, cited the following questionable claims made for Herbalife products:

  • Slim and Trim Formulas comprise an effective weight loss program which can produce a typical weight loss of 10-29 excess pounds a month.
  • Cell-U-Loss can attack "cellulite," eliminate inches, suppress appetite, improve circulation, and help many other conditions.
  • Herbal-Aloe can aid digestion, "heal" and "cleanse the system."
  • N.R.G. can increase energy, increase mental alertness, and provide a "nutritional lift." (The fact that caffeine is one of its active ingredients was not disclosed.)
  • Lifeline aids the cardiovascular system.
  • Schizandra Plus can combat damage that leads to premature aging.
  • Tang Kuei is effective against hot flashes and can help the regularity of the menstrual system and relieve menstrual disorders.
  • Flora-Fiber "scrubs and cleanses" the intestine with fiber and prevents disease.
  • K-8 stops "induced depression" and "elevates your mood so you can handle stress."
The suit also charged:
  • Early editions of the Herbalife Official Career Handbook made illegal claims that various herbal ingredients were effective against more than 70 diseases and conditions. Although most of these claims were deleted in subsequent editions of the handbook, the company had not replaced the original pages sent to distributors with the revised pages or asked these distributors to destroy them.
  • Similar testimonial claims were made in company broadcasts over cable television.
  • To attract new distributors, the TV programs and company magazine contained stories of individuals who made large amounts of money by building large networks of Herbalife distributors. These representations are misleading because there is no reasonable basis to assert that most people who become distributors will earn large sums.
  • Although the company offered a "full warranty" on all of its products, customers who tried to invoke the warranty were often thwarted in their efforts by the defendants.
The court order settling the case, dated October 14, 1986, forbids representations without reasonable basis that:
  • Herbalife products contain herbs that can curb appetite, burn off calories, or cleanse the system.
  • Product users can lose weight without reducing caloric intake.
  • Cell-U-Loss can eliminate "cellulite."
  • Other products or their ingredients are effective as specified in the Attorney General's complaint.
The court ordered strict limits on testimonials and said that the caffeine content of N.R.G. should be disclosed in the career book and on the product's label. It also ordered Herbalife to change its marketing program so that distributors can profit only from retail sales and are discouraged from maintaining (and possibly becoming stuck with) large product inventories in order to qualify for bonuses.
The $850,000 penalty-payable over a five-year period-was assessed to reimburse the state for costs, attorneys' fees, expenses of investigation, and other expenses. Mark Hughes was ordered to post a $400,000 security deposit to cover possible default by the company.
On December 3, 1986, The Wall Street Journal reported that Herbalife had merged with a Utah-based shell corporation and plans to raise $14 million with a public stock offering. The company netted $7.6 million on sales of $115.7 million during the first half of 1986 and $12.4 million on $462.9 million of sales in 1985.

Herbalife Says All Queries Into Tactics Now Resolved October 17, 1986|JUBE SHIVER Jr. | Times Staff Writer

The president of Herbalife International, the Los Angeles-based diet and food supplement company, said Thursday that all government inquiries into the company's controversial marketing methods for its pills and powders have been resolved.
Herbalife President Mark Hughes said the experience "has given us a deeper understanding and a greater appreciation for the crucial roles" that the Food and Drug Administration, the California attorney general's office and the state Department of Health "play in protecting the safety of the American consumer."
For more than 18 months, Herbalife has faced a wave of government inquiries and legal proceedings initiated by the federal Food and Drug Administration, the Canadian Ministry of Health and Welfare, two U.S. congressional panels and the California attorney general.
Herbalife agreed Wednesday to settle the last of the claims by agreeing to pay California $850,000 to settle allegations by the state attorney general's office, the state Department of Health and the Santa Cruz district attorney that it had made false medical claims in marketing its diet and nutritional supplement products.
Thursday, Hughes released a letter from John M. Taylor, acting associate FDA commissioner for regulatory affairs, detailing the results of an Oct. 10 meeting at which the two men agreed that Herbalife would discontinue marketing Tang Quei Plus, a tablet intended for the temporary relief of menstrual cramps, and K-8, a tablet promoted for its calming effect, after all existing supplies are sold.
The FDA had alleged that although the two products "do not pose any safety concerns . . . the therapeutic claims made for those products cause" the FDA to object to their continued sale.
Hughes said that the tablets would have required approval by the FDA in order for the firm to make any claims about their effectiveness. He said the FDA would have allowed the firm to continue marketing the products as long as no claims were made about them. Herbalife chose to stop marketing the products.