Photographer: Scott Eells/Bloomberg

FTC Sending 350,000 Herbalife Refunds as Part of Settlement

  • Most refunds range from $100 to $500, with some topping $9,000
  • Payouts stem from FTC accord that Herbalife signed last year

The Federal Trade Commission, following through on a settlement reached last year, is sending refunds to 350,000 of Herbalife Ltd.’s U.S. distributors who the agency says were wronged by the nutrition company.

The checks are being taken from $200 million Herbalife paid as part of its accord with the agency reached in July. That agreement followed an FTC investigation that was prompted by allegations from hedge-fund manager Bill Ackman, who called the direct seller an illegal pyramid scheme four years ago and bet $1 billion against its stock.

“We are pleased to announce that hundreds of thousands of hard-working consumers victimized by Herbalife’s deceptive earnings claims will receive money back,” Jessica Rich, director of the agency’s Bureau of Consumer Protection, said in a statement Tuesday. “Along with changes the company will make to its business structure, this is a win for consumers.”

Herbalife has had to rein in its business practices in the wake of the FTC settlement, and that’s weighed on the stock. It fell 10 percent last year, though it’s still above its range when Ackman began shorting the shares. They were little changed on Tuesday, trading at $49.50.

“Our business in the U.S. remains strong due to the robust consumer demand for our science-based products,” Herbalife said in an e-mailed statement. “We look forward to continuing to build an even stronger company.”

Most of the refunds range from $100 to $500, with the highest exceeding $9,000. The payments, which only partially recoup losses, are going to people who ran an Herbalife business in the U.S. between 2009 and 2015. The recipients paid at least $1,000 to Herbalife but got little or nothing back from the company.

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE