FROM THE EDITORS

My New Neighborhood Coffee Shop Is Secretly an MLM Front

Pyramid schemes are sneakier, darker, and more exploitative than ever (and they’re thriving in pandemic times)

Ever Better in Richmond, VA. Photo by author.

“Hi, do you use Herbalife in your products?”

That’s the comment that got me blocked on the Instagram of the new “cafe” in my neighborhood. The owners of the shop have been busy deleting comments after the word got out (thanks, /rva subreddit!) that they’re not a cafe at all. They’re a “Nutrition Club” — a recruiting tool for Herbalife, which is a multilevel marketing scheme (MLM, aka pyramid scheme*), and that they add Herbalife to their drinks.

Yikes! Secret ingredients? Lying to customers? Blocking people on social media and deleting comments? Questionable labor practices for employees? Let’s dive a little deeper into how we got here, and how to tell if your local cafe is an MLM scam.

MLMs 1.0: The Old-Fashioned Pyramid Scheme-Scam

Multilevel marketing is a sales strategy in which distributors/sellers make money by recruiting new sellers. Then, they get a percentage of the sales of any new sellers that are beneath them in the pyramid, I mean, recruiting line.

I’m using “MLM” and “pyramid scheme” interchangeably here, but there is a difference — namely, that an MLM sells a real product, and that’s what makes it legal. (Legally. Technically. Ethically or conceptually, not so much.)

Herbalife, which is still around, apparently

Herbalife is a “global nutrition and weight management company,” according to their website. It’s one of the most notorious multi-level marketing schemes, but it’s certainly not new. If you’re unfamiliar with it (or MLMs in general), I highly recommend watching this half-hour segment of Last Week Tonight with John Oliver from 2016, which explains how MLMs work and uses Herbalife as an example:

There’s also Betting on Zero, a documentary (also from 2016) investigating Herbalife. It’s got 100% on Rotten Tomatoes, so it’s worth checking out, but the TL;DR summary is this: Herbalife is a dangerous and economically devastating scam where no one wins (unless you’re at the very, very top). Both of these were made five years ago, and Herbalife seems to have only gotten stronger — and more complicated — since then. In 2021, they hit record sales numbers.

Health risks associated with Herbalife

Health-wise, Herbalife has been linked to liver damage that can be fatal, according to multiple studies (here’s one from the Journal of Hepatology, 2007, or from docwirenews, 2020). The most comprehensive study I found is LiverTox: Clinical and Research Information on Drug-Induced Liver Injury (2018), which details cases of liver injury from consuming multiple Herbalife products regularly.

Even if you’re not worried about liver damage, adding ingredients to a product without disclosing what’s in it is dishonest and dangerous.

MLMs manipulate the most vulnerable people into a system that’s nearly impossible to win

Full disclosure: If it’s not already obvious by now, I am strongly anti-MLM. I think MLMs are terrifying, misleading, and destructive. The messaging they use to recruit people, which is aspirational and vague: “Be your own boss!”, “Live life on your terms!”, “Quit your 9–5!” — is far-removed from reality. According to the Federal Trade Commission, 99% of people who join an MLM will end up losing money from it. One commenter on the John Oliver video summarizes the business model: “Falling for a pyramid scheme is like becoming a vampire: Someone comes along and bleeds you dry, and if you want to survive afterward, your only option is to do the same thing to someone else.”

This is even scarier when you consider that the majority of people who join MLMs are women and/or people of color. These predatory organizations exploit the hopes of the most vulnerable groups.

Writes Holly Hobkirk in You’re Not A Girlboss — You’re Just Trapped in An MLM Scheme, “Outdated #girlboss messages like the popular ‘You have as many hours in the day as Beyonce’ lend themselves perfectly to MLMs because they promote the message that women are failing because they aren’t working hard enough.” Women are funneled into a system that is literally near-impossible to win, then told that they just need to do more, sell more, reach out to that friend-of-a-coworker, destroy all their relationships.

MLMs also use flexible hours as a way to appeal to stay-at-home moms who want to work, but not to have a 9-to-5 job. Writes Lizzie Bestow in Why Are So Many Women Joining MLM Companies?, “Pyramid schemes encourage stay-at-home moms to apply, telling them that they can spend all the time they want with their child and earn a decent living. When young women often feel pressured to pick one or the other, an MLM can feel like a middle-ground.”

Despite so much research and writing about MLMs, it seems like there are only two types of people in the world: people who know MLMs are obviously a scam, and people who are deep into MLM-world. The /antiMLM subreddit celebrates stories of successfully stopping people from joining pyramid schemes, but those stories are far outnumbered by stories from people who have lost friends and loved ones to MLMs. And once you’re in, the powerful psychological cocktail of denial, desperation, sunk-cost fallacy, and shame makes it hard to see logic or listen to others.

MLMs 2.0: That New Dark-Windowed “Health Shop” Is Probably a Secret Herbalife Nutrition Club

Advanced MLM trickery

I thought I knew the basics about MLMs. I’ve seen the documentaries and read the articles, and I’m on the lookout. Can’t fool me!

Sadly, MLMs have caused most of us to be more distrustful, cynical, and critical of any out-of-the-blue messages we get from our personal networks. Because of these pyramid schemes, I know that if my former coworker from a decade ago sends me a random message saying, “I wanted to say hi and send you some midweek good vibes!”, they probably don’t *actually* just want to wish me good vibes, and I can wait for the impending MLM sales pitch (if you’re curious about that one, it was Beachbody).

But wait, there’s more — now you have to be wary of coffee shops, too! (Sigh.) Here’s where things get even more complicated and, for lack of a better word, icky: Herbalife Nutrition Clubs. If there’s a new, trendy, Instragrammable shop selling colorful shakes and #healthylifestyles, there’s a good chance it might be a front for an MLM.

What is an Herbalife “Nutrition Club?”

I’d never heard of this until it happened in my neighborhood, but apparently, they’re not too uncommon. The press around Ever Better in Richmond called it a “husband-and-wife team brings a wellness-focused cafe” and framed it as a success story amidst the closing of so many local businesses during COVID-19.

What these stories don’t tell us is that the drinks are all made with Herbalife, and when you register with their shop when you buy a Lightnin’ Lemonade tea on your way to Nate’s Bagels for a delicious breakfast sandwich to go, sorry, you may have just accidentally registered with an MLM!

The stories about the opening of Ever Better don’t mention Herbalife because the business owners themselves are dishonest about that information. The owners did originally reply to comments to confirm that they use Herbalife, but now they’re just deleting comments and blocking any users who ask about it. One commenter received this reply from the owners, in which they said that they “are adding Herbalife to our menus and website, it just takes longer than 5 min to do so.” (For whatever it’s worth, their website is made with Squarespace — and as someone who has made plenty of Squarespace websites, I can confirm that it definitely would take less than five minutes to update.) Then, they say that they are deleting comments because they are “really mean/bullying,” which is insane when the comments are just inquiring about the contents of the products they’re selling.

Her response is gaslighting and manipulation 101, but if they’re a Herbalife Nutrition Club, then it’s also probably a lie. That’s because the Nutrition Club Rules specify that club owners are not allowed to:

• Advertise their affiliation with Herbalife
• Use “Herbalife”, “Mark Hughes”, “Nutrition Club”, or any Herbalife product names in their name
• Use “cafe”, “restaurant”, “bar”, “mart”, “store”, “branch”, or “shop” in their name
• Display an open/closed sign or credit card notices
• Have a visible interior — the inside of Nutrition Club “must not be visible from outside the Nutrition Club”, using window and door coverings to obscure the interior if necessary — literally, shady business practices!

(Ever Better did not respond to a request to comment for this article.)

Do Herbalife Nutrition Clubs make money?

Maybe this new MLM storefront-model has a greater chance of success than traditional MLM sales, right? Well, not really.

According to Facts About Herbalife, the vast majority of Nutrition Clubs fail. 89% of Herbalife distributors lose money, and club owners spend (on average) nearly $9,000 to open their club. The top 1% of Herbalife distributors receive 90% of the total rewards — again, that’s where the whole pyramid-shape comes in.

Their “hiring” and labor practices are questionable, too — here’s a thread from someone who applied to work at one of the shops. They were told that “employees get paid based off a point system” and that they “would have to buy some product for [themselves] and sell it on social media.” The FAQ from Herbalife states that only Herbalife Independent Distributors can “assist” with the club.

How many Herbalife Nutrition Clubs are out there?

Well, it’s hard to say exactly how many, essentially by design — since the club aren’t allowed to use Herbalife in their name or marketing info. But it seems like there’s a lot. Smoothie shops, juice bars, even Herbalife-laced protein donuts.

Sure, Okay, But Why Does It Matter?

There’s plenty of more enjoyable things I could have done with my Sunday afternoon than to write 2,000 words about Herbalife MLMs. Shouldn’t we just mind our own business, let scammers do their thing, anyone who spends $8 on a tea deserves to be tricked anyway?

(In case it’s not clear, yikes, no, those are rhetorical questions. No one deserves to be tricked.)

For me — someone who works in marketing and runs a publication about it — MLMs feel like a personal attack and an industry-wide problem. It’s probably similar to the way a nice, honest car salesperson feels whenever another car salesperson lies or deceives a customer in order to make a sale. Stop doing bad things, please!! You’re ruining it for the rest of us!!!

And while I could channel my angry-energy toward exposing plenty of other exploitative business practices (have you heard of Amazon?), spreading awareness about MLMs feels like it could be an achievable goal. The owners of Herbalife Nutrition Clubs can delete comments and hide information on their website and channels, but they can’t do anything about 1-star Google or Yelp reviews explaining their connection to Herbalife, or fact-based journalism, or honest word of mouth about their products. And I think we have some responsibility to do what we can to keep “businesses” like these out of our neighborhoods.

Herbalife Nutrition Clubs masquerading as wholesome mom-and-pop shops, while lying about their products and their business practices, are disingenuous and dishonest. MLMs exploit personal networks, and with nutrition clubs, they’re doing the same thing on a community level — taking away opportunities for honest small business owners in the process.

It would have been great to actually have a new local coffee shop in my neighborhood. It’s frustrating to be tricked, blocked on social media, and still lacking a reliable walking-distance caffeine source.