In an effort to make the company less vulnerable to charges made by Bill Ackman of Pershing Square that it is nothing more than a pyramid scheme, Herbalife is banning distributors’ websites starting November 15. Directing potential customers and distributors to a central, company-controlled website is intended to prevent distributors from making extravagant, false claims about products on their own sites, something for which the company is currently being investigated.
The New York Post reports that management said, “The web sites are designed to be in compliance with applicable requirements about product claims and they provide consistent brand image for Herbalife products.” In addition, the move will “create a level playing field for all members.”
Bill Ackman of Pershing Square has a $2 billion short position on Herbalife, a stake he has nearly doubled, and has alleged the company is a pyramid scheme with the ultimate aim of recruiting people to buy, rather than sell, its products to those outside the company. Herbalife has denied allegations, and has been trying to improve its image with a return policy and banning sales of leads. Herbalife recently hired Pamela Jones Harbour, former FTC Commissioner to head up its compliance division.