William Ackman's Accusation Against Herbalife Case

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1. William Ackman’s accusation against Herbalife was; he thought that Herbalife was wasting money and their focus was not on selling but instead on recruiting. The key facts are Herbalife really does not have to push their products because in reality they pretty much sell themselves. The critical issue presented in the case is; Ackman felt that Herbalife was trying to sell an illusion, a get rich quick scheme. Because the bottom line is, it was all about what the recruits could bring in. Ackman believed that the “real money did not come from selling but from recruiting other contractors” (Ferrell, et al., 2016). According to John McCarthy, July 22, 2014, Herbalife has denied accusations by Bill Ackman that the company is fronting an elaborate pyramid scheme (The Drum.com, 2014). 2. I can see why Ackman would think that Herbalife had lost focus, but companies have been operating like Herbalife for years. I can remember the company Am Way, yes they would sell you their product, but what they really wanted was for you to become a dealer to sell and recruit other dealers. And please let us not forget Kirby vacuum cleaners, which was their motto too. You could become your own boss; and work at your own pace. But the vacuum cleaners felt like they weighed 100lbs or more. 3. A multilevel compensation plan is often confused with illegal pyramid scheme because of the way companies do business, when companies are direct sales companies only, in order for them to stay in

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