Herbalife And Its Distributors Face RICO Complaint
Herbalife, a Los Angeles-based multi-level marketing (MLM) company that sells nutrition products and weight-loss supplements, and dozens of its top-earning distributors were sued this week in a class action complaint over alleged civil racketeering (RICO) violations.
 
The 82-page complaint, filed in federal court in Florida, claims:
 
[t]he Herbalife success story is a fraud; a predatory scheme intentionally rigged against newcomers playing by the rules. The success claimed – and promised – by Defendants at Circle of Success events across the country is impossible to attain under its own terms.
 
A little over a year ago, Herbalife agreed to a $200 million settlement with the Federal Trade Commission (FTC) that required it to revamp its compensation system to reward distributors for sales to customers rather than for recruitment. According to the complaint filed Monday,
 
But untouched by the FTC’s action . . . is the single most effective fraud in the arsenal of Herbalife and its top distributors – the Circle of Success event system. The event system lures and ensnares people such as Plaintiffs with the guarantee of significant income, a better lifestyle, and even happiness – all to be easily attained through event attendance.
 
The complaint goes on to state that, “through lies, omissions and misrepresentations, Defendants aggressively encouraged Plaintiffs and Class Members to attend a Circle of Success event every month.” The cost of these events ranged from $30 to $120, not including the outlay for travel and accommodations, according to the complaint, and resulted in the named plaintiffs spending thousands of dollars per person. Specifically, the complaint asserts that, “[r]epresentative Plaintiffs have collectively attended more than 150 Circle of Success events, each spending more than a year trapped in a cycle of manipulation calculated to produce financial loss.”
 
The overarching theme of this five-count complaint is that there is no correlation between event attendance and success with Herbalife, but along the way the complaint is filled with claims of nepotism, bankruptcy, a failed marriage, money laundering, downline manipulation, and currency arbitrage. The complaint asserts that Herbalife and 44 of its distributors “have collectively persuaded hundreds of thousands of victims to invest substantial sums into attending events which are held out as the secret to becoming financially successful in a fraudulent scheme to which Defendants know financial success is not possible.”
 
Two years ago, Herbalife settled another class-action lawsuit in California federal court that alleged the company was operating a pyramid scheme that rewarded recruitment over actual product sales. Instead of achieving financial freedom by marketing the supplements, distributors said they had lost hundreds of thousands of dollars because of the company’s fraudulent business structure. That settlement, which TINA.org objected to, ultimately paid out just $7 million to distributors in the class while Herbalife’s revenues exceeded $4 billion in 2015.
 
This is the fourth class-action lawsuit alleging RICO violations filed against a DSA member company in the last year. Top 20 DSA members Arbonne and Advocare, along with Jeunesse Global are facing lawsuits that allege the companies are operating pyramid schemes. This latest action against Herbalife also marks the third case filed within the last 10 months in which high-ranking distributors were sued as alleged co-conspirators of the illegal enterprise.
 
TINA.org reached out to Herbalife for comment but has yet to hear from the company.
 
To read more of TINA.org’s coverage of pyramid scheme lawsuits against MLMs click here.
 
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COMMENTS

Prakashkumar Bhavsar

1 year ago

Product are Costly.& Not Gaied Properly & Event Attened not free so it is wrong

What We Do and Don’t Know About Facebook’s New Political Ad Transparency Initiative
On Thursday, Facebook Chief Executive Mark Zuckerberg announced several steps to make political ads on the world’s largest social network more transparent. The changes follow Facebook’s acknowledgment earlier this month that $100,000 worth of political ads were placed during the 2016 election cycle by “inauthentic accounts” linked to Russia.
 
The changes also follow ProPublica’s launch of a crowdsourcing effort earlier this month to collect political advertising from Facebook. Our goal was to ensure that political ads on Facebook, which until now have largely avoided scrutiny, receive the same level of fact-checking by journalists, advocacy groups and political opponents as do print, broadcast and radio political ads. We hope to have some results to share soon.
 
In the meantime, here’s what we do and don’t know about how Facebook’s changes could play out.
 
How does Facebook plan to increase disclosure of funders of political ads?
 
In his statement, Zuckerberg said that Facebook will start requiring political advertisers to disclose “which page paid for an ad.”
 
This is a reversal for Facebook. In 2011, the company argued to the Federal Election Commission that it would be “inconvenient and impracticable” to include disclaimers in political ads because the ads are so small in size.
While the commission was too divided to make a decision on Facebook’s request for an advisory ruling, the deadlock effectively allowed the company to continue omitting disclosures. (The commission has just reopened discussion of whether to require disclosure for internet advertising).
 
Now Facebook appears to have dropped its objections to adding disclosures. However, the problem with Facebook’s plan of only revealing which page purchased the ad is that the source of the money behind the page is not always clear.
 
What is Facebook doing to make political ads more transparent to the public?
 
Zuckerberg also said that Facebook will start to require political advertisers to place on their pages all the ads they are “currently running to any audience on Facebook.”
This requirement could mean the end of the so-called “dark posts” on Facebook — political ads whose origins were not easily traced. Now, theoretically, each Facebook political ad would be associated with and published on a Facebook page — either for candidates, political action committees or interest groups.
 
However, the word “currently” suggests that such disclosure could be fleeting. After all, ads can run on Facebook for as little as a few minutes or a few hours. And since campaigns can run dozens, hundreds or even thousands of variations of a single ad — to test which one gets the best response — it will be interesting to see whether and how they manage to display all those ads on their pages simultaneously.
 
“It would require a lot of vigilance on the part of users and voters to be on those pages at the exact time” that campaigns posted all of their ads, said Brendan Fischer, a lawyer at the Campaign Legal Center, a campaign finance reform watchdog group.
 
How will Facebook decide which ads are political?
 
It’s not clear how Facebook will decide which ads are political and which aren’t. There are several existing definitions they could choose from.
The Federal Communications Commission defines political advertising as … Continue Reading
 
 
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California Regulators Require Auto Insurers to Adjust Rates
This story was co-published with Consumer Reports.
 
California regulators said they have required Nationwide and USAA to adjust their auto insurance rates as a result of a report by ProPublica and Consumer Reports that many minority neighborhoods were paying more than white areas with the same risk.
 
The regulators said their review confirmed our finding that linked the pricing disparities to incorrect applications of a provision in California law. The statute allows insurers to cluster neighboring zip codes together into a single rating territory.
 
“The companies were making some subjective determinations,” as a basis for calculating rates in some zip codes, said Ken Allen, deputy commissioner of the rate regulation branch of the California Department of Insurance. Nationwide and USAA are two of the 10 largest auto insurance providers in the country by market share.
 
The department said that the adjustments would largely erase the racial disparities we found in the two companies’ pricing. According to our analysis, USAA charged 18 percent more on average, and Nationwide 14 percent more, in poor, minority neighborhoods than in whiter neighborhoods with similarly high accident costs. Allen said it’s not possible to quantify how these adjustments would affect customers’ premiums because the revisions are too complex. In addition, they’re taking effect at the same time as an overall rate increase.
 
Allen said the department is now requiring more justification from insurers for their measurements of risk in the poor, minority neighborhoods that California designates as “underserved” for auto coverage.
 
California’s action marks a rare regulatory rebuke of the insurance industry for its longtime practice of charging higher premiums to drivers living in predominantly minority-urban neighborhoods than to drivers with similar safety records living in majority-white neighborhoods. Insurers have traditionally defended their pricing by saying that the risk is greater in those neighborhoods, even for motorists who have never had an accident. 
 
The department’s investigation was prompted by a ProPublica and Consumer Reports analysis published in April of car insurance premiums in California, Texas, Missouri and Illinois. ProPublica found that some major insurers were charging minority neighborhoods rates as much as 30 percent more than in other areas with similar accident costs.
 
The disparities were not as widespread in California, which is a highly regulated insurance market, as in the other states. Even so, within California, we found that units of Nationwide, USAA and Liberty Mutual were charging prices in risky minority neighborhoods that were more than 10 percent above similar risky zip codes where more residents were white.
 
California regulators said they approved rate increases from Nationwide and USAA last week that contained corrections to the disparities revealed by ProPublica. The regulators said they are still investigating the proposed rates of Liberty Mutual, which had the largest disparities in ProPublica’s analysis. Liberty Mutual spokesman Glenn Greenberg said the company is cooperating with the investigation.
 
The rate changes will only affect premiums charged from now on. The insurance commission chose not to look into whether, or the extent to which, drivers in California’s underserved neighborhoods may have been mischarged in the past.
Department spokeswoman Nancy Kincaid said there was no need to examine past rates. “After hundreds of hours of additional analysis, department actuaries and analysts did not find any indication the ProPublica analysis revealed valid legal issues,” she said.
 
Some consumer advocates disagreed with this approach. “We think the commissioner should go back and seek refunds for people who were covertly overcharged by the discriminatory practices that ProPublica uncovered,” said Harvey Rosenfield, founder of Consumer Watchdog. Consumers Union, the policy and action arm of Consumer Reports, has also sent a letter to the department, urging it to… Continue Reading… 
 
 
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