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  1. #1
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    Top Herbalife Distributor Throws Herbalife Way, Way Under the Bus

    This deserves it's own thread. A top Herbalife Distributor, Stephan P. Gratziani, was recorded at a meeting of senior and mid-level Herbalife Distributors exposing everything exploitative and evil about the Herbalife Business Opportunity. Pershing Square Capital Management got a hold of these recordings and prepared a scathing report based on this evidence.

    The site:

    http://www.factsaboutherbalife.com/h...ual-deception/

    The paper by Pershing Square Capital (Ackman):

    http://www.factsaboutherbalife.com/m...r-12.17.14.pdf

    This paper is a gold mine of anti-MLM fodder. It's lengthy, but I found it absolutely captivating. All of the negative attributes of MLM and the shady business practices that pro-MLM'ers say never happen or are only committed by a few people are in the paper

    There were some very damning quotes found towards the top of the paper committed by Gratziani:

    ―We sell people on a dream business, that they can make it. Yet
    deep down inside, what
    do we really know? Yeah. We know that
    the reality is that most of them aren‘t going to make it.‖
    (Disc 1, 1:00:16.)

    ―Who wants to bring their family into a struggle to make it? Who
    wants to bring their family into an eventual deception?‖
    (Disc 2, 7:20.)

    ―We tell people, hey, you know, sign on the dotted line, you know,
    start working from home, it‘s going to be unbelievable, you‘re
    going to have this incredible life. . . . So there really is this
    situation or this level of inauthenticity
    that‘s there.‖
    (Disc 2, 8:28.)

    ―The Herbalife business model is based on distributors purchasing
    volume from them. . . . The Herbalife business model, at this point
    in time, is not based on customers purchasing, it‘s based on
    distributors purchasing volu
    me.‖
    (Disc 2, 14:34.)

    ―These sixty thousand people [whom the speaker lost as
    distributors over the preceding five years], primarily, why do you
    think they came into the business? Primarily? Primarily?
    Opportunity! Money! Right?‖ (Disc 1, 46:05.)


    [S]uccessful people in retailing in our business, it‘s a very small
    percentage.‖ (Disc 2, 28:08.) ―The majority of our people have a
    difficulty in selling products, in general.‖ (Disc 2, 29:46.)

    ―‘Fake it ̳til you make it.‘ Some of us got so good at f
    aking it, we
    forgot to make it!‖ (Disc 1, 54:04.)

    I love the part where Graz. tells how the last two days before the end of the month many distributors' orders double - clear evidence that garage qualifying is alive and well, and occurs often. Check out the bottom of page 14/top of page 15 for details!

    Pages 7 and 8 goes directly against Herbalife's claim that 73% of distributors were just customers. I love it!

    What's the most disturbing is that Graziani doesn't say anything about the products whatsoever. Direct recruitng, not direct selling, for sure! Graziani's admission can be found on the lower part of page 13 and the top of page 14.

    One of Pershing Square's observations condensed the problem with MLM into one paragraph:

    "In legitimate direct selling and multi-level marketing companies, recruitment
    efforts serve the broader goal of increasing retail activity. In Herbalife, the model is precisely opposite: the constant recruitment of new distributors is the goal, regardless of whether those distributors have any hope of earning retail profits."

    Regarding the last paragraph, this goes with my consistent position that MLM's that have little to no retail (basically all of them that are not direct sales-based like Pampered Chef and Thirty-One) very much operate like a pyramid, despite being technically "legal." You can thank the lobbyists for keeping them legal (for now).

    MLM's Mission Statement:

    "The primary product is opportunity. The strongest, most powerful motivational force today is false hope."

    "Almost everyone is not going to learn the skills and use them consistently over time, you would be better off joining Costco" -Dank111

  2. #2
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    Re: Top Herbalife Distributor Throws Herbalife Way, Way Under the Bus

    great post!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
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  3. #3

    Re: Top Herbalife Distributor Throws Herbalife Way, Way Under the Bus

    Quote Originally Posted by BoxAlarm126 View Post
    This deserves it's own thread. A top Herbalife Distributor, Stephan P. Gratziani, was recorded at a meeting of senior and mid-level Herbalife Distributors exposing everything exploitative and evil about the Herbalife Business Opportunity. Pershing Square Capital Management got a hold of these recordings and prepared a scathing report based on this evidence.

    The site:

    http://www.factsaboutherbalife.com/h...ual-deception/

    The paper by Pershing Square Capital (Ackman):

    http://www.factsaboutherbalife.com/m...r-12.17.14.pdf

    This paper is a gold mine of anti-MLM fodder. It's lengthy, but I found it absolutely captivating. All of the negative attributes of MLM and the shady business practices that pro-MLM'ers say never happen or are only committed by a few people are in the paper

    There were some very damning quotes found towards the top of the paper committed by Gratziani:

    ―We sell people on a dream business, that they can make it. Yet
    deep down inside, what
    do we really know? Yeah. We know that
    the reality is that most of them aren‘t going to make it.‖
    (Disc 1, 1:00:16.)

    ―Who wants to bring their family into a struggle to make it? Who
    wants to bring their family into an eventual deception?‖
    (Disc 2, 7:20.)

    ―We tell people, hey, you know, sign on the dotted line, you know,
    start working from home, it‘s going to be unbelievable, you‘re
    going to have this incredible life. . . . So there really is this
    situation or this level of inauthenticity
    that‘s there.‖
    (Disc 2, 8:28.)

    ―The Herbalife business model is based on distributors purchasing
    volume from them. . . . The Herbalife business model, at this point
    in time, is not based on customers purchasing, it‘s based on
    distributors purchasing volu
    me.‖
    (Disc 2, 14:34.)

    ―These sixty thousand people [whom the speaker lost as
    distributors over the preceding five years], primarily, why do you
    think they came into the business? Primarily? Primarily?
    Opportunity! Money! Right?‖ (Disc 1, 46:05.)


    [S]uccessful people in retailing in our business, it‘s a very small
    percentage.‖ (Disc 2, 28:08.) ―The majority of our people have a
    difficulty in selling products, in general.‖ (Disc 2, 29:46.)

    ―‘Fake it ̳til you make it.‘ Some of us got so good at f
    aking it, we
    forgot to make it!‖ (Disc 1, 54:04.)

    I love the part where Graz. tells how the last two days before the end of the month many distributors' orders double - clear evidence that garage qualifying is alive and well, and occurs often. Check out the bottom of page 14/top of page 15 for details!

    Pages 7 and 8 goes directly against Herbalife's claim that 73% of distributors were just customers. I love it!

    What's the most disturbing is that Graziani doesn't say anything about the products whatsoever. Direct recruitng, not direct selling, for sure! Graziani's admission can be found on the lower part of page 13 and the top of page 14.

    One of Pershing Square's observations condensed the problem with MLM into one paragraph:

    "In legitimate direct selling and multi-level marketing companies, recruitment
    efforts serve the broader goal of increasing retail activity. In Herbalife, the model is precisely opposite: the constant recruitment of new distributors is the goal, regardless of whether those distributors have any hope of earning retail profits."

    Regarding the last paragraph, this goes with my consistent position that MLM's that have little to no retail (basically all of them that are not direct sales-based like Pampered Chef and Thirty-One) very much operate like a pyramid, despite being technically "legal." You can thank the lobbyists for keeping them legal (for now).

    Damning for sure. But don't use his comments to validate that these are necessarily current issues within Herbalife. After all the video was made in 2005.

  4. #4
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    Re: Top Herbalife Distributor Throws Herbalife Way, Way Under the Bus

    Quote Originally Posted by noagenda View Post
    Damning for sure. But don't use his comments to validate that these are necessarily current issues within Herbalife. After all the video was made in 2005.
    Same old thing with Amway. That was 1983, that was 2001, that was 2010, same things resurfacing, lawsuits forcing changes. IBOs claiming "we don't do that anymore". Yet you can search the internet and find evidence that the same things are said in meetings.

    My question with food for thought. What would have forced any changes in Herbalife? If the answer is nothing, why would we expect or believe anything has changed?

    While I don't believe the FTC will have the fortitude to shut down Herbalife, I do believe that Herbalife will be required "on paper" to make changes. Then like Amway, the old practices will resurface (in real life) because the real opprtunity is the hopes ad dream and not the MLM products.
    Originally Posted by nomaxim
    Sorry there ''ohein56', but it appears that 'Joecool44' does not have the position that you envision on this topic.

    'Joecool44' has, as a matter of routine, refuted most of your accusations
    Quote Originally Posted by Jax74 View Post
    Some people have the ability to think critically, some do not. ohein obviously doesn't.

  5. #5
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    Re: Top Herbalife Distributor Throws Herbalife Way, Way Under the Bus

    Quote Originally Posted by noagenda View Post
    Damning for sure. But don't use his comments to validate that these are necessarily current issues within Herbalife. After all the video was made in 2005.
    Avon left the DSA, and Tupperware put out their White Paper. Both of them are trying hard to disassociate themselves from MLM as it's currently known, following the Herbalife court case. I'm going to say that things are pretty much the same as they've always been.
    MLM's Mission Statement:

    "The primary product is opportunity. The strongest, most powerful motivational force today is false hope."

    "Almost everyone is not going to learn the skills and use them consistently over time, you would be better off joining Costco" -Dank111

  6. #6
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    Re: Top Herbalife Distributor Throws Herbalife Way, Way Under the Bus

    Just been reading about this so called damning video; Ackman has cherry picked certain bits from a 3 hour video that was about distributors and executives discussing ways to improve retention. Nothing to see here, move along.

  7. #7
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    Re: Top Herbalife Distributor Throws Herbalife Way, Way Under the Bus

    Quote Originally Posted by BoxAlarm126 View Post
    Avon left the DSA, and Tupperware put out their White Paper. Both of them are trying hard to disassociate themselves from MLM as it's currently known, following the Herbalife court case. I'm going to say that things are pretty much the same as they've always been.
    They can't disassociate from MLM unless they change the way they compensate people which there is no evidence of them doing . Stop lying Boxy.

  8. #8

    Re: Top Herbalife Distributor Throws Herbalife Way, Way Under the Bus

    Quote Originally Posted by Joecool44 View Post
    Same old thing with Amway. That was 1983, that was 2001, that was 2010, same things resurfacing, lawsuits forcing changes. IBOs claiming "we don't do that anymore". Yet you can search the internet and find evidence that the same things are said in meetings.

    My question with food for thought. What would have forced any changes in Herbalife? If the answer is nothing, why would we expect or believe anything has changed?

    While I don't believe the FTC will have the fortitude to shut down Herbalife, I do believe that Herbalife will be required "on paper" to make changes. Then like Amway, the old practices will resurface (in real life) because the real opprtunity is the hopes ad dream and not the MLM products.
    In my opinion an FTC requirement isn't even necessary as that "on paper" edict is already in place in California.

    http://www.mlmwatch.org/04C/Herbalife/1986order.html

    5. A. defendants shall not establish, maintain or operate a marketing program in which:
    (1) A participant pays a valuable consideration for the chance in whole or in part, to receive, either directly or indirectly, compensation, which is based on other than retail sales for introducing one or more additional persons into participation in defendants' marketing program or for the chance to receive compensation., either directly or- indirectly, when the newly introduced participant introduces a new participant into defendants' marketing program;
    (2) Any compensation, however denominated (including but not limited to “commissions,” “overrides,” “achievement bonuses,” or any term of similar import), defendants pay or participants receive is based upon anything other than the retail sale of defendants' products; and
    (3) A participant can obtain any specific level in defendants' Marketing program based upon criteria other than the amount of retail sales made by the participant or person (s) introduced into defendants' marketing program by the participant.


    B. defendants shall be in compliance with this Section 5, as long as a verification or documentation system they implement allows them, at any given point in time, to verify or: document to plaintiffs that any and all participants who receive commissions, bonuses, overrides and/or advancement from defendants in defendants marketing program, after entry of this judgment, are based on retail sales made by or through such participant(s) or others introduced directly or indirectly under participant(s). Plaintiffs shall not seek such verification or documentation prior to 90 days after entry of this judgment., and defendants shall be in compliance with this verification or documentation requirement it their records are current and accurate to a point in time which does not precede plaintiffs' request for verification or documentation by more than 90 days. Plaintiffs' request for verification or documentation of retail sales shall be made to defendants counsel of record.

    C. The term “retail sale” as used in this Section 5 means a sale at defendants' product(s) in any of the following situations: (1) to persons who are not part of defendant's marketing program or distribution system; or, (2) to persons who are not buying to become part of defendants marketing program or distribution system; or, (3) to persons who, although desirous of becoming or who are a part of defendants' marketing plan or distribution system are buying for their own personal or family use.
    The 1986 Permanent Injunction decision allows the Attorney General (if they so want) to demand documentation of proof of retail sales. If the California AG has the cajones to implement this decision then we wouldn't have to wait on the FTC as the whole house of cards would fall.

  9. #9
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    Re: Top Herbalife Distributor Throws Herbalife Way, Way Under the Bus

    Quote Originally Posted by noagenda View Post
    In my opinion an FTC requirement isn't even necessary as that "on paper" edict is already in place in California.

    http://www.mlmwatch.org/04C/Herbalife/1986order.html



    The 1986 Permanent Injunction decision allows the Attorney General (if they so want) to demand documentation of proof of retail sales. If the California AG has the cajones to implement this decision then we wouldn't have to wait on the FTC as the whole house of cards would fall.
    And as a couple of us keep saying on here, the official definition of a retail sale is a sale to an end user, not for resale. In other words, a distributor/IBO ordering products from the company for their own use is therefore the end user and this is a ''retail sale''. This has been confirmed in the Burn Lounge appeal judgement.

  10. #10
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    Re: Top Herbalife Distributor Throws Herbalife Way, Way Under the Bus

    Quote Originally Posted by ChrisDoyle View Post
    And as a couple of us keep saying on here, the official definition of a retail sale is a sale to an end user, not for resale. In other words, a distributor/IBO ordering products from the company for their own use is therefore the end user and this is a ''retail sale''. This has been confirmed in the Burn Lounge appeal judgement.
    Super. So we're all in agreement that distributors looking to build a business are the sole consumers of MLM products. Business Insider has some sobering news for the last twenty MLM defenders:

    Shares of Herbalife have fallen about 50% this year. It looks like Ackman is back in the money.
    Cat Police - SF

  11. #11
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    Re: Top Herbalife Distributor Throws Herbalife Way, Way Under the Bus

    Quote Originally Posted by Richard 3 View Post
    Super. So we're all in agreement that distributors looking to build a business are the sole consumers of MLM products. Business Insider has some sobering news for the last twenty MLM defenders:

    Shares of Herbalife have fallen about 50% this year. It looks like Ackman is back in the money.
    You may be in agreement that they are the sole consumers but I'm not.

    The share price means very little, what really counts is the result of any investigation.

  12. #12
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    Re: Top Herbalife Distributor Throws Herbalife Way, Way Under the Bus

    Quote Originally Posted by BoxAlarm126 View Post
    This deserves it's own thread. A top Herbalife Distributor, Stephan P. Gratziani, was recorded at a meeting of senior and mid-level Herbalife Distributors exposing everything exploitative and evil about the Herbalife Business Opportunity. Pershing Square Capital Management got a hold of these recordings and prepared a scathing report based on this evidence.
    Read all this the other day. Most of it isn't damning at all. There is one aspect that is.

    [quote]―We sell people on a dream business, that they can make it. Yet
    deep down inside, what
    do we really know? Yeah. We know that
    the reality is that most of them aren‘t going to make it.‖

    The reality is the dream is possible and most of them aren‘t going to make it.

    That's not contradictory at all. The issue is whether you're being up front about that when presenting the opportunity. I've no idea if that was happening in 2005 with HLF, but their current income disclosure makes it pretty clear.

    ―Who wants to bring their family into a struggle to make it? Who
    wants to bring their family into an eventual deception?‖
    In the context of the full video he was talking about being realistic about how much work it takes to succeed, and not oversell. We've discussed this on other threads and elsewhere, for example saying you can succeed working 2-5hr/wk when you almost certainly need to work a lot more than that. So here we have, 10 years ago, a top distributor teaching not to do that.

    That's a *good* thing, not a bad thing.

    ―The Herbalife business model is based on distributors purchasing
    volume from them. . . . The Herbalife business model, at this point
    in time, is not based on customers purchasing, it‘s based on
    distributors purchasing volu
    me.‖
    (Disc 2, 14:34.)
    Yes, a consumer network. Contrary to Ackman's assertion this is a "smoking gun" that proves it's a pyramid, there's is in fact no problem with this at all, given legitimate demand.

    ―These sixty thousand people [whom the speaker lost as
    distributors over the preceding five years], primarily, why do you
    think they came into the business? Primarily? Primarily?
    Opportunity! Money! Right?‖ (Disc 1, 46:05.)
    Again, in the context of the full video, this guy is encouraging people to develop customer bases and have your qualifying PV in the bag from that at the beginning. He's encouraging people *not* to just be a consumer network. HLF was in a bit of a slump at this time, and since then has quadrupled sales, so clearly they changed something. Maybe they listened?


    ―‘Fake it ̳til you make it.‘ Some of us got so good at f
    aking it, we
    [FONT=sans-serif]forgot to make it!‖ (Disc 1, 54:04.)
    Again, he's *criticising* this approach. A top distributor teaching that people *should not* do this.

    This video is *proof* that HLF is (or was) teaching people *not* to oversell and be authentic.

    [SIZE=3][FONT=Verdana]I love the part where Graz. tells how the last two days before the end of the month many distributors' orders double - clear evidence that garage qualifying is alive and well, and occurs often. Check out the bottom of page 14/top of page 15 for details!
    This doesn't prove anything. Whether "distributing" or "consuming" there's absolutely nothing wrong with looking at what kind of discount you'll get give your current volume, seeing you'll get a bigger discount if you buy some more stuff now, and doing so. Happens every time you decide to take the "buy 3 get 1 free" discount in your supermarket.

    Nothing inherently wrong with it at all, and in fact it's completely predictable

    What's the most disturbing is that Graziani doesn't say anything about the products whatsoever. Direct recruitng, not direct selling, for sure! Graziani's admission can be found on the lower part of page 13 and the top of page 14.
    That's simply not true at all. He talks *a lot* about the products in the video, and about the importance of customers.

    Regarding the last paragraph, this goes with my consistent position that MLM's that have little to no retail (basically all of them that are not direct sales-based like Pampered Chef and Thirty-One) very much operate like a pyramid, despite being technically "legal." You can thank the lobbyists for keeping them legal (for now).
    Hypothetically, what do you see wrong with building a "consumer network" where some people simply consume (thus providing profit margin) and others both consume and actively market the concept to others (an earn some of the volume margin)?

    On a separate note, you've completely missed the part that actually IS a problem for Herbalife, and which I've said Ackman should focus on all along, and forget all the misleading anti-mlm smoke and mirrors -

    Gratziani's talk clearly indicates that many people were almost certainly "garage qualifying" for Supervisor, and that volume (at least in 2005) was making up a significant amount of the network's volume. That *is* an indicator of a pyramid.
    Last edited by IBOFightBack; 12-19-2014 at 10:04 AM.

    New to scam.com? This is what you can expect from MLM critics in support of their claims ....


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  13. #13
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    Re: Top Herbalife Distributor Throws Herbalife Way, Way Under the Bus

    Did IBOFB begin shilling for Herbalife now?
    Originally Posted by nomaxim
    Sorry there ''ohein56', but it appears that 'Joecool44' does not have the position that you envision on this topic.

    'Joecool44' has, as a matter of routine, refuted most of your accusations
    Quote Originally Posted by Jax74 View Post
    Some people have the ability to think critically, some do not. ohein obviously doesn't.

  14. #14
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    Re: Top Herbalife Distributor Throws Herbalife Way, Way Under the Bus

    Quote Originally Posted by Joecool44 View Post
    Did IBOFB begin shilling for Herbalife now?
    You're so blinded by bias you didn't even notice the part where I said Ackman finally provided evidence HLF may be a pyramid?

    New to scam.com? This is what you can expect from MLM critics in support of their claims ....


    Why the f-u-c-k do you need evidence all the time? - Zapticon
    You know that I don't provide proof of my claims - Once Upon A Time
    I have the information but I'm not posting it - Joecool


  15. #15
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    Re: Top Herbalife Distributor Throws Herbalife Way, Way Under the Bus

    Quote Originally Posted by IBOFightBack View Post
    You're so blinded by bias you didn't even notice the part where I said Ackman finally provided evidence HLF may be a pyramid?
    The evidence has always been there. The FTC had no pressure to investigate until Ackman campaigned for it.

    You also (unsuccessfully) tried to deflect much of what was claims due to your myopic view of MLM.
    Originally Posted by nomaxim
    Sorry there ''ohein56', but it appears that 'Joecool44' does not have the position that you envision on this topic.

    'Joecool44' has, as a matter of routine, refuted most of your accusations
    Quote Originally Posted by Jax74 View Post
    Some people have the ability to think critically, some do not. ohein obviously doesn't.

  16. #16
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    Re: Top Herbalife Distributor Throws Herbalife Way, Way Under the Bus

    Quote Originally Posted by Joecool44 View Post
    The evidence has always been there. The FTC had no pressure to investigate until Ackman campaigned for it.
    I'm pretty certain the evidence aliens exist is real too. It's just on their home world. This is the first time Ackman has provided any evidence at all of their being anything of real concern.

    And it's a decade old.

    You also (unsuccessfully) tried to deflect much of what was claims due to your myopic view of MLM.
    I have disputed false and misleading information. I have consistently stated my concerns about Herbalife's Supervisor requirements.

    New to scam.com? This is what you can expect from MLM critics in support of their claims ....


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