If the FTC or other Federal authorities are going to try and demonstrate that Herbalife is a Pyramid or Ponzi scheme, then the prosecutors will obviously have to prove that Herbalife fits the definition of a Pyramid or Ponzi scheme.
But, let's look at the definition of a Pyramid scheme given by Dr. Vander Nat in the previous post: (1) the design of Herbalife dooms the vast majority of participants to financial failure and (2) it pays rewards based upon the purchases of product by new recruits that are unrelated to the sale of a product or service to people outside the network of the Multi-Level Marketing.
Is this the definition of a Pyramid scheme? It is not the traditional definition: A pyramid scheme is an unsustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public.
But, if it is true that Herbalife pays rewards based on the purchases of products by new recruits that are unrelated to the sale of a product or service outside the MLM network, then it could be argued that Herbalife resembles a Pyramid scheme.
But, let's look at the definition of a Pyramid scheme given by Dr. Vander Nat in the previous post: (1) the design of Herbalife dooms the vast majority of participants to financial failure and (2) it pays rewards based upon the purchases of product by new recruits that are unrelated to the sale of a product or service to people outside the network of the Multi-Level Marketing.
Is this the definition of a Pyramid scheme? It is not the traditional definition: A pyramid scheme is an unsustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public.
But, if it is true that Herbalife pays rewards based on the purchases of products by new recruits that are unrelated to the sale of a product or service outside the MLM network, then it could be argued that Herbalife resembles a Pyramid scheme.
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