Monday, July 25, 2016
Herbalife and the end of the world
The term in the industry is "inventory loading". The FTC in their press releases mention inventory loading but do not specifically allege Herbalife is a pyramid scheme.
Inventory loading seems unlikely to me because Herbalife offers a 100 percent refund to distributors for unsold inventory including postage. (The length of time that refund is offered however is increased by the FTC settlement.)
I have looked hard for excess inventory (for example contacting sellers on EBAY or the like) and cannot find it. Truly I never found anyone who had $6000 worth of Herbalife sitting unsold, uneaten in their cellar.
There are it seems a small class of customers who have signed as distributors and buy tens of thousands of dollars worth of Herbalife product precisely so they can store it in their cellars. They also shatter my preconception that personal use is limited to $200 or so worth per month.
They are millennial members of the Church of the Latter Day Saints who carry vast food stores in their cellars awaiting the end of the world. Herbalife shakes with a variety of flavours and long shelf lives are part of that store.
No I am not kidding. Sure it is an edge case - but the FTC settlement limits distributors to "reasonable personal use" volumes and members of the LDS millennial community are prone to buy quantities of Herbalife for personal storage far in excess of FTC/Company agreed volumes.
These people are real. And the Government is enforcing a deal which financially disadvantages them for their religious beliefs.
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