Saturday, April 19, 2014

The Better Business Bureau does not agree with Bill Ackman on Herbalife

Here is a screenshot of the page from the Better Business Bureau on Herbalife:


Yes, that is an A+ rating.

The alert is for pending government investigations (something that has been in the press lately).

The text is as follows:


BBB Accreditation
A BBB Accredited Business since 04/19/1990

BBB has determined that Herbalife International of America, Inc. meets BBB accreditation standards, which include a commitment to make a good faith effort to resolve any consumer complaints. BBB Accredited Businesses pay a fee for accreditation review/monitoring and for support of BBB services to the public.

BBB accreditation does not mean that the business' products or services have been evaluated or endorsed by BBB, or that BBB has made a determination as to the business' product quality or competency in performing services.

Reason for Rating

BBB rating is based on 16 factors. Get the details about the factors considered.

Factors that raised Herbalife International of America, Inc.'s rating include:

Length of time business has been operating.
Complaint volume filed with BBB for business of this size.
Response to 8 complaint(s) filed against business.
Resolution of complaint(s) filed against business.
BBB has sufficient background information on this business.
- See more at: http://www.bbb.org/sanjose/business-reviews/multi-level-selling-companies/herbalife-international-of-america-in-los-angeles-ca-20585#sthash.yOlIBr6k.dpuf


I have seldom seen a position where the New York intelligentsia and the facts on the ground disagree so strongly.




John

17 comments:

Anonymous said...


My HLF distributor is a middle-aged white lady, who reminds me of a typical Avon lady.

She offered a wellness consultation, talked about the products for ten minutes or so, and then set me up so I could get product shipped directly to me. There was no sales pressure at all.

It's my one data point from a less diverse and less urban part of America.

P.S.
Formula 1 shakes taste better than your blog led me to believe. You wouldn't happen to be a food snob, would you?

John Hempton said...

You have picked me well. Desperate food snob. Cooking blog too.

J

Philip Jaskow said...

Bernie Madoff would probably do no worse than HLF considering the criteria to get an A+ /Philip Jaskow

Mike said...

The BBB?! You are aware that the BBB is a private business that sells good ratings for money right?

I am hoping this staggeringly naieve post can be chalked up to your foreign status.

Aharon said...

Have to agree with Philip and Mike above. BBB is opaque and manipulable, spending its trustworthiness.

And though you've previously laid out a plausible argument about the shorts' white-shoe, white-glove approach which supposedly ignores the facts in the field, I think that reference to NY intelligentsia is gratuitous and misdirected. On what planet is Bill Ackman a member of an elite that doesn't also admit Carl Icahn?

Iain Worsley said...

So you have seen such a position before then. Go on.

Anonymous said...

The BBB rating is not completely meaningless but I tend to agree with the readers who have pointed out that they do extract fees. When Yelp is caught doing this there is an unholy uproar. For the BBB it's an accepted part of doing business. In addition, I don't know how many people actually file complaints with the BBB. Although I've been the victim of dozens of customer abuse acts over the years, I don't think I've ever filed a BBB complaint. It seems like a relic from some prehistoric age.

Anonymous said...

"BBB accreditation does not mean that the business' products or services have been evaluated or endorsed by BBB, or that BBB has made a determination as to the business' product quality or competency in performing services."

Pershing Square HAS evaluated these things. And we all know what they found.

Anonymous said...

"BBB accreditation does not mean that the business' products or services have been evaluated or endorsed by BBB, or that BBB has made a determination as to the business' product quality or competency in performing services."

Pershing Square HAS evaluated these things. And we all know what they found.

Anonymous said...

Mike is right, BBB is a for-profit business that does very well. Largely an unknown fact even in the US. I imagine this helps their profitability as people trust them more than is warranted. BBB might be okay on average and I don't want to make mountains out of molehills, but non-member small businesses have been done in by the BBB when disputes arose with a paying customer.

Kid said...

With all do respect, as a fellow some-time short seller, BBB ratings are very, very poor predictors of the quality of the business. You can find incredible discrepancies between BBB ratings and customer reviews, for instance. You may want to dig a bit more into how BBB are put together before using it as a thesis point. Again, respect the blog very much, as well as your willingness to stick your neck out.

Cire Gastavi said...

Ridiculous post. Why don't you make a case based on an overall positive review on one of their products on Amazon.com.

CrocodileChuck said...

And in other news, Fitch awards Magnetar paper 'AAA'

;)

Anonymous said...

John, never marry a trade

Anonymous said...

The posters are correct...the BBB has no credibility. 60 Minutes did an expose a few years back that proved the BBB hands out good ratings for fees paid.

BTW...your prior analysis on HLF is very strong.

darms said...

Learned first-hand about the utter worthlessness of BBB ratings after having been ripped off by local businesses over the decades and trying to file BBB reports to that effect. Caveat emptor...

Anonymous said...

Haha yah. The BBB rated the company I worked for A+ with an alert for cfpb investigation (for processing pmt for debt settlement companies). It took a couple of years for the investigation to complete but they did shut us down....Just for being affiliated with debt settlement even though we were not taking the fees or initiating the contracts.

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The content contained in this blog represents the opinions of Mr. Hempton. Mr. Hempton may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Hempton's recommendations. The commentary in this blog in no way constitutes a solicitation of business or investment advice. In fact, it should not be relied upon in making investment decisions, ever. It is intended solely for the entertainment of the reader, and the author.  In particular this blog is not directed for investment purposes at US Persons.