Herbalife, the diet shake seller being probed over pyramid scheme accusations, is making another move to keep regulators at bay.
The Los Angeles company is banning independent web sites run by US distributors and migrating their businesses to a corporate-controlled hub (goherbalife.com).
The change, which goes into effect Nov. 15, is an attempt to exert more control over Herbalife’s sales force and follows some instances in which distributors were accused of making false health claims about the company’s products.
“The web sites are designed to be in compliance with applicable requirements about product claims and they provide a consistent brand image for Herbalife products,” the company said in its advisory, adding the goal is to “promote a level playing field for all members.”
The Federal Trade Commission opened an investigation into Herbalife after hedge fund activist Bill Ackman lobbied hard for a probe and placed a $1 billion short bet on the company.
Ackman, whose big Herbalife short is now closer to $2 billion, claims the company is a pyramid scheme in which distributors earn more money from recruiting other distributors than by selling products to the end user.
While Herbalife denies the allegations, it has taken steps to address some potential trouble spots, including a