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Groups, FTC to talk Herbalife probe

By
Michelle Celarier
Published July 12, 2013, 4:00 a.m. ET

(
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Consumer advocates are planning to ask regulators on Monday for their commitment to investigate allegations that Herbalife is a pyramid scheme, The Post has learned.

The National Consumers League — the first group to call for an investigation in a March 12 letter — asked for the meeting with the Federal Trade Commission, according to sources. The Hispanic Federation, the League of United Latin American Citizens (LULAC) and Consumer Action are also expected to attend.

The activists are set to meet with Lois Greisman, the FTC’s head of consumer fraud. Jessica Rich, the new director of the Bureau of Consumer Protection, may also be there.

The debate about Herbalife has been raging since hedge-fund activist Bill Ackman called the company a pyramid scheme in December and placed a $1 billion short bet against the stock.

Herbalife has consistently denied his charges.

Still, at least six different letters have been sent to the FTC asking it to probe Herbalife’s practices.

Most of the concern has come from the Hispanic community, including local, state and federal lawmakers as well as consumer groups concerned that Herbalife is targeting minorities.

“I’m mad,” said LULAC’s National Executive Director Brent Wilkes. “I’ve seen Latinos ripped off by banks and others, but this scheme really takes the cake.”

After talking with Herbalife “and not getting the answers I wanted to hear, I concluded they are defrauding upwards of 300,000 Latinos a year,” he said.

Another consumer activist planning to attend the meeting said, “We think the problem is getting worse, and we think that the FTC is really important.”

Several sources told The Post that they believe the FTC is reluctant to launch an investigation of Herbalife because of the company’s financial resources and legal firepower.

Some FTC officials have even suggested to consumer activists that a plaintiff lawsuit against Herbalife would be a preferable way to address their concerns, according to sources.

The FTC declined to comment.

Herbalife has been sued over allegations that it is a pyramid scheme five times. It was found guilty in a Belgian court, a ruling that is on appeal. Other cases have been settled out of court while one is pending.

Critics say that litigation has not addressed their issues.

“Our plaintiffs have been injured because the FTC is not actively involved in regulating this industry,” said Phil Dracht, the lawyer for a failed California distributor who sued Herbalife in April.