One of the key challenges that all markets face is how to protect consumers while fostering legitimate commerce. For regulators and policymakers, it is part of their core mission, as reflected by Federal Trade Commission Chairman (FTC) Andrew Ferguson’s testimony at the recent Senate Commerce Hearing that there are “lots of honest workers, business owners in the direct selling industry, and it's important that we root out the bad apples.” These comments were reinforced by recent commentary from the Direct Selling Self-Regulatory Council (DSSRC). For Herbalife, and other direct selling companies, protecting consumers is just good business.
As one of the companies, along with Amway, Nuskin, and USANA, that funded the formation of the DSSRC, Herbalife supports the work of the DSSRC and the FTC’s consumer protection mission of “weed[ing] out the fraudulent bad actors” in direct selling. We believe that misleading claims help only bad actors; they are inherently anti-competitive and harm legitimate competitors who play by the rules. While the FTC and the DSSRC have made significant strides in protecting consumers in the marketplace, our company believes that individual companies also share the responsibility to protect consumers. In an era of constrained enforcement resources, effective consumer protection depends not only on focused enforcement but also on robust self‑regulation that promotes accountability across an industry.
The DSSRC, administered by BBB National Programs, is now in its seventh year. In a short time, it has accomplished important things—and it should be judged by the trajectory of its work, not an expectation of omniscience. Since 2019, the DSSRC has administered over 600 matters involving earnings and product performance claims. It has published comprehensive Earnings Claims Guidance with evaluation standards and mock examples. It has driven the removal or modification of over 3,400 earnings claims and 1,700 product claims. It has referred 34 matters to the FTC and State Attorneys General where egregious claims could not be resolved through self-regulation. And it has achieved a 95% voluntary compliance rate. These are not the hallmarks of a fig leaf. The DSSRC reflects how responsible self‑governance can help eliminate bad actors, preserve consumer trust, and enable legitimate companies to compete and grow within a healthy free‑enterprise system.
Herbalife has invested, and continue to invest, millions of dollars in preventing false and misleading claims. The company’s Member Business Practices Compliance Department (“MPC”) has more than three hundred employees around the world, focused on protecting distributors and consumers alike from the ills of false and misleading claims. The company follows the U.S. Department of Justice guidelines for an effective compliance program by implementing “compliance pillars” such as tone at the top, effective rules and procedures, training and education, reporting and monitoring, and effective disciplinary measures. Herbalife has integrated these pillars into the business as well as distributors’ businesses – creating a culture of compliance, that is celebrated and promoted by distributor leaders and recognized by many government agencies in the 95 markets where Herbalife operates.
The company believes that by investing in an effective consumer protection compliance program, Herbalife and other companies in the space can generate greater consumer confidence, enhance brand reputation, and create sustainable revenue. Consumer protection should not be seen just as a regulatory mandate of the FTC or the industry-regulatory responsibility of the DSSRC. It is an opportunity for all direct selling companies to drive sustained, reputable growth, leading to a stronger direct selling industry.
The U.S. direct selling industry is a $40 billion economic engine that provides flexible earning opportunities and entrepreneurial pathways for millions of independent contractors. These are American entrepreneurs who want to build a business on their own, with little or no upfront expenses. Those entrepreneurs should be applauded, and every direct selling company should not only support the DSSRC as a sign of confidence, but also invest in and implement their own effective compliance program to create a brighter future for all.
The bottom line is that consumer protection is a shared goal for the Federal Trade Commission and direct selling industry.
Henry Wang is the Chief Legal Officer for Herbalife.
