"Lose weight now, ask me how" was the familiar slogan you may have seen around town in years past. What you may not have known was that this catchy phrase was really advertising Herbal Life products. The company has survived litigation and the tragic death of its founder Mark Hughes in 2000, twenty years after he started it. Since then, the business has recovered and continues to grow worldwide under new leadership. That it continues is a testimony to the resilience of those involved in the company and the ever expanding global opportunities that weight loss industry offers; Americans alone are estimated to spend $50 billion a year on shedding pounds, and the forecast is for continued growth.



Yet for all its ability to rebound and expand, this company still has its share of doubters. Obviously it is not a complete scam, or it would not exist today. But its marketing tactics have led to past and present legal action for misrepresentation and other unethical practices up the line. On the other hand, there are more legal protections in place because of the company's missteps, and it could be that they have learned from the error of their ways.

Here's what the business looks like currently. The compensation for these distributors follows the stair-step breakaway plan. According to the company website, the percentage of distributors that become supervisors is about 25 percent. These supervisors earned an average of $549 in the year 2006 on top of their profits from selling the products themselves. But how much do people typically earn selling the products as distributors? That information is not as easy to find. It seems that more than 90% of distributors leave the business in the first year. Also, supervisors must make an investment of several thousand dollars to attain that rank, which the average supervisor will not recover with $549 in income from the distributors under them. So they too would need to sell the products just to break even. The starting discount for the products is 25%, which would be your commission if you sell them at full price. The more you sell, and/or the higher your rank, the greater your discount.

But how much a distributor can earn is not always clear and reportedly subject to change. In at least one of the lawsuits against the company, distributors alleged that the company reduced the amount they would pay them without clear reasons. They complained that the company was showing favoritism and misleading them as to how much they could earn. Such complaints are not uncommon.

The lesson seems to be that Herbal Life has learned how to be one of the most resilient companies around. Throughout its 28-year history there have been numerous complaints about it misrepresenting itself to draw people to join the sales team. The ways the company markets its opportunity seem to be more transparent than before, but complaints about distributors and investors being misled have not slowed significantly. Thus it seems to still be a company on ethically shaky ground. Anyone about to join the team should be cautious, try to get clear written agreements, and be prepared to take legal action if promises are broken.