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Selling the American Dream: Investigations, Inc.
News
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After a 10-month investigation, CNBC found many people who had trouble selling Herbalife and sometimes lost thousands of dollars in the process. Herbalife's stock is now in the middle of a major hedge fund battle.
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"Let's be honest with each other, here," Herbalife CEO Michael Johnson told CNBC Thursday. "He's going to donate all of his profits to charity? He's got participants in that(hedge) fund...Who knows where it's really going?"
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Two of the richest and most prominent hedge fund managers in Manhattan are locked in a battle over nutritional supplement provider Herbalife. The New York Times reports.
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SEC's Director of Enforcement, Robert Khuzami responds to rumor of Herbalife inquiry.
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Des Walsh, Herbalife president, responds to claims made by activist investor Bill Ackman that the company is a "pyramid scheme."
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Multi-level marketers were a key target of the FTC's Business Opportunity Rule when it was originally proposed. But it turns out the new rule doesn't cover MLMs.
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The trouble, according to Joe Mariano, president of the Direct Selling Association, that "there are a lot of pyramid schemes that like to disguise themselves as legitimate direct-selling companies."
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Multi-level marketing companies offer promises of riches to those who sign up. But keep these six questions in mind before you do:
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Multi-level marketing is a form of knocking on doors and making calls to directly pitch a product to a customer. But not every company admits to being a direct seller.
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Multi-level marketing critic Robert Fitzpatrick talks about pyramid schemes and the MLM industry.
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CNBC's Andrew Ross Sorkin reports Third Point's Dan Loeb has bought more than a five percent stake in Herbalife.
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CNBC's Herb Greenberg and Gary Kaminsky share their perspective on the battle looming between titans Dan Loeb and Bill Ackman over Herbalife.
Watch the Show
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Industry critic Robert Fitzpatrick calls multi-level marketing "the Main Street bubble" that will eventually burst.
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MLM attorney Kevin Thompson says there's currently no law in the U.S. that clearly delineates good companies from bad.
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MLM sales pitch may not be for everybody. Former Herbalife distributors share their stories.
More
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Hedge Fund guru Bill Ackman strongly defended his characterization of Herbalife,as a "pyramid scheme" on Thursday, telling CNBC that the nutrition company was luring "millions of low income people around the world" into a system he called fraudulent.
About Selling the Dream
They promote the good life: An opportunity to own a business and “earn what you’re worth.” In a bad economy, millions of people from around the world buy into these spectacular “income opportunities.” But critics like Robert Fitzpatrick say there’s a catch: chances of success are slim, and people who buy into multi-level marketing opportunities lose more than $10 billion every year. Another wall street critic claims that Herbalife, one of the biggest MLM’s is a “pyramid scheme” that has done “enormous harm” to millions of people. Something Herbalife vehemently denies. “Selling the American Dream” goes inside the world of multi-level marketing, which hawks products like weight-loss shakes, skin creams and vitamins, but also is in the business of selling the dream of riches. Our investigation shows how quickly people can find themselves in financial ruin, when investments they are encouraged to make in MLM businesses turn into unmanageable debt.
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Greenberg is senior stocks commentator for CNBC appearing throughout business day programming and on CNBC.com.