Herbalife is a 34-year old multi-level marketing company that sells diet shakes, nutritional supplements and cosmetics through an army of more than three million distributors, now called members. Some consumers sign up as members of the company in order to receive a discount on the products, while others are interested in becoming distributors who hope to profit through the sale of the product to others.
Walsh told ABC News that, contrary to impressions of the company formed during its early years, it is not a get rich quick scheme. He said fewer than four percent of people who come to Herbalife are seeking a full-time business opportunity.
Numbers disclosed by the company show roughly one-quarter of one percent of total members make $50,000 or more through the people they recruit.
“Many people who come to Herbalife, they come to it just as they do whether it's Avon or Amway or Mary Kay, because it's a low cost of entry,” Walsh said. “And once they've once they've earned some additional income, whether it be for seasonal purposes or Christmas or whether it's for a special occasion, then these people will come and go. That's the wonderful thing about the direct selling business. It's a low cost of entry. It's easy in. It's easy out.”
In the statement released Wednesday, Herbalife said the company would weather the federal examination. “Herbalife is a financially strong and successful company, having created meaningful value for shareholders, significant opportunities for distributors and positively impacted the lives and health of its consumers for over 34 years,” it said.