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Herbalife: Belgian court judgment contains factual errors

By Elaine Watson , 19-Dec-2011
Last updated on 19-Dec-2011 at 10:31 GMT2011-12-19T10:31:34Z

Herbalife: Belgian court judgment contains factual errors

Direct selling giant Herbalife says it will appeal last month’s ruling in a commercial court in Brussels stating it had violated Belgian law on unfair commercial practices.

The Los Angeles-based firm faces a maximum fine of €250,000 should a court determine that modifications it makes to its business practices will not bring it in compliance with the judgment.

While Herbalife generates less than 0.65% of its net sales in Belgium, it remains “fully committed” to supporting its Belgian distributors and end customers, said the firm in a statement.

“The company firmly believes its sales method is in compliance with all applicable Belgian laws.”

Misinterpretations of the law and Herbalife’s direct-selling sales model?

It added: “Herbalife believes the judgment contains factual errors and is based on misinterpretations of the law and its direct-selling sales model.

“Herbalife remains committed to its multi-level direct-selling sales model and is confident that, with clarifications in certain aspects of its business, there will be no doubt as to its compliance with all applicable Belgian laws.”

The case was brought by the Belgian consumer organization Test-Aankoop (‘Test Purchase’) in 2004.

Walsh: Herbalife is not a pyramid selling scheme

Speaking to NutraIngredients-USA earlier this year, Herbalife president Des Walsh said his biggest frustration was continued skepticism from some quarters about Herbalife's multi-level-marketing business model, which was not a pyramid or a ponzi scheme, he said.

“We still have to work really hard to explain what we do, but at 49% we’ve got the highest retention rate [the annual renewal rate for distributors] in the industry. Compared with the average for this business model, it is quite extraordinary.”

Founded by entrepreneur Mark Hughes in California in 1980, Herbalife markets and sells its products through a network of more than two million independent distributors in 70+ countries.

These distributors then sell Herbalife products to end consumers.

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