Despite not being a pyramid scheme, Herbalife has come to the attention of the federal government a couple of times before. In 2016, Reuters reported that Herbalife paid the government $200 million and altered its business model so that it wouldn’t count as a pyramid scheme. The FTC still noted that most of the distributors in Herbalife’s network either make no money or make next to nothing from their “investment.” The money was intended to go to the distributors who had suffered due to the company’s business model. Part of its restructure involved no longer using recruitment as the company’s metric of success and focusing instead on supplement sales.
However, according to distributors who talked to Amy McCarthy, distributors can sell $100,000 worth of products in months but still be left with no money (via Eater). This is in part because Herbalife does not offer the same “deep discounts” to distributors who buy in bulk that other companies do. So, Herbalife arguably treats its distributors as the main source of money, not the people who buy from the distributors.
In 2019, Herbalife paid $20 million after facing allegations that it lied about its business model in China, which does not permit multilevel marketing, per Reuters. However, the company made no admissions of wrongdoing addressing those charges. While its operations in the U.S. are technically legal, some distributors feel the company works to their detriment.