July 15, 2016
ATTORNEY GENERAL MADIGAN ANNOUNCES ADDITIONAL $3 MILLION HERBALIFE SETTLEMENT
Madigan Announces Additional $3 Million in Restitution for Illinois on Top of Federal Trade Commission’s $200 Million Nationwide Settlement
Chicago — In conjunction with a nationwide Federal Trade Commission (FTC) $200 million settlement with Herbalife, Attorney General Lisa Madigan today announced that Illinois Herbalife members will benefit from an additional $3 million settlement with the company to resolve numerous complaints about its false and misleading claims that lured people into a costly multi-level marketing scheme.
Under the Illinois agreement, Herbalife, which sells global nutrition and weight management products, must pay an additional $3 million in restitution to affected Illinois members who joined Herbalife from 2009 through the present. The FTC reached a separate $200 million settlement with Herbalife that will provide reimbursement to impacted members nationwide, including in Illinois.
Illinois Herbalife members who have not yet filed a complaint with Madigan’s office will have 60 days to submit a complaint online or by contacting Madigan’s Consumer Fraud Hotline:
“This scheme preyed on people looking to make a better life for themselves and their families,” said Madigan. “Herbalife created an incentive structure that made it easy for people to invest, but impossible for most people to make any money.”
Madigan alleged that Herbalife’s current business model involved luring members with promises of lavish rewards for selling the company’s products, when in fact, the majority of incentives were given to people who recruited others to sell the company’s products. As a result, most people who joined Herbalife never made any money from the company but lost the costs of starting a business.
The FTC settlement requires Herbalife to change its business model to ensure all compensation is based on retail sales that are verified. It also prohibits Herbalife from making statements that indicate that participation in Herbalife is likely to result in a lavish lifestyle, such as you “can quit your job,” “be set for life,” “earn millions of dollars,” or “make more money than they ever have imagined or thought possible.” That also includes images of opulent mansions, private helicopters, private jets, yachts and exotic automobiles in their promotions.
Division Chief Deborah Hagan, Senior Consumer Counsel Charles Fergus, and Assistant Attorneys General Jacob Gilbert and Gregory Jones handled the case for Madigan’s Consumer Fraud Bureau.