In 1986, the company settled a case that called into question the medical claims of some of their products and their pyramid scheme-style business model. Nobel Prize-winning scientist Louis J. Ignarro was noted for creating their Niteworks® product (a mix of Vitamin C, Vitamin E, folic acid, lemon balm extract, α-lipoic acid, L-taurine, and L-arginine and L-citrulline), which claimed to be able to increase the functioning efficiency of all the body's major organs. Ignarro's promotion of the product caused a flap when his undisclosed ties to Herbalife were revealed after he co-authored a paper hawking the product in the Proceedings of the National Academies of Science in 2004.
In February 2016, Herbalife agreed to pay a $200 million fine and change its business practices as a result of a legal settlement with the Federal Trade Commission. The settlement required that Herbalife track retail sales in the US (which it had previously not done) and require that at least two-thirds of the rewards be based on retail sales. The settlement did not resolve the accusation by billionaire investor William Ackman that Herbalife has operated as an illegal pyramid scheme.
- Herbalife homepage, start your long journey up the pyramid scheme here.
- Herbalife Agrees to Pay $850,000 Penalty, MLM Watch
- Nobel Prize Winner Didn't Disclose Herbalife Contract, Bloomberg News
- The Dubious Promotion of Herbalife's Niteworks, MLM Watch
- Herbalife agrees to pay $200-million settlement and change its business practices by Jim Puzzanghera and Melody Petersen (July 15, 2016). Los Angeles Times.