Alma Morales Riojas, the president of MANA, a national Latina advocacy organisation,
wrote a strongly worded letterto the Federal Trade Commission asking them to investigate Herbalife. (via
In the MANA letter, Riojas says that Herbalife uses a “deceptive claim” by making “unattainable promises of wealth and success.”
What’s more is she writes that she has witnessed this firsthand.
“On a personal level, I believe they prey on our most vulnerable, and I have seen some of my own friends in my home state of Texas fall victim to these terrible practices.”
There’s no mention of “pyramid scheme” in the letter, though.
Herbalife, a multi-level marketing firm that sells nutrition products, is the company that has been at the center of a heated hedge fund war.
Bill Ackman, who runs Pershing Square Capital, publicly declared in December that he’s shorting $US1 billion worth of the stock because he believes Herbalife is a “pyramid scheme” that targets lower income people, especially from the Hispanic population.
A number of hedge fund managers, including his arch nemesis Carl Icahn, have piled on by going massively long the stock. Icahn thinks Ackman will be the victim of the “mother of all short squeezes.”
Still, Ackman has stood by his thesis. He thinks regulators, particularly the FTC, will be persuaded to investigate the company.
Here’s the letter (emphasis ours):
Dear Chairwoman Ramirez,
The principle mission of MANA — A Latina Organisation, is to support and empower Latinas through leadership development, community service and advocacy. MANA’s membership is wide ranging from young up- and- coming middle school Latinas who want to make a difference to 70 year old- plus “abuelitas” who have advocated for their communities their whole lives.Together, we have proudly served the Latino community for almost 40 years, providing and expanding access to educational, health, and leadership opportunities.
As our economy continues to experience steady but slow progress, we understand first hand our community’s desire to seek out reliable, alternative ways to supplement their incomes. Furthermore, as a woman of colour and the past national executive director of Federally Employed Women, Inc., a nonprofit working to improve the status of women employed by the Federal government, I am well aware of the punishing wage gap that many Latinas in this country face. These wage gaps can cost Latinas critical income annually that could be better used to help meet their families’ daily fundamental needs. This is why I write today, to urge the Commission to conduct a full investigation of the multi-level marketing company Herbalife and their deceptive business practices and abuses.
Herbalife is very popular among Latinas throughout the U.S. and throughout Latin America, and has historically won distributors over with the guarantee of an exciting business opportunity, by making unattainable promises of wealth and success. Herbalife claims it is both a product company and a business opportunity, but clearly this is a deceptive claim since the majority of Herbalife distributors make little or no income. According to Herbalife’s own 2012 data, 88 per cent of their participants received no payments from the company at all. I firmly believe this company benefits mainly from its far reaching network of hierarchically organised independent sales people, who recruit others and in turn make a profit off of them. On a personal level, I believe they prey on our most vulnerable, and I have seen some of my own friends in my home state of Texas fall victim to these terrible practices.
As a community, Latinas are always looking for ways to advance, get ahead, support our families and achieve our own piece of the American dream. There have been far too many troubling claims about Herbalife this year and with more conflicting issues continuing to come up, we strongly encourage the Commission to carry out a full investigation and thoroughly examine this company’s practices as soon as possible. An investigation like this will serve an educational tool for many of our organisation’s members and their families who may have fallen prey to these schemes in the past.
Thank you for your prompt attention to this matter.
Alma Morales Riojas
President and CEO
MANA, A National Latina Organisation