The company has been alleged to have fraudulently operated a pyramid scheme; under an SEC agreement the compensation and other benefits have been restructured over the past years to include sales metrics linked to bonuses.

[5] The business is incorporated in the Cayman Islands, a tax haven, with its corporate headquarters located in Los Angeles, California.

In October 2022, previous CEO Michael O. Johnson was appointed as Chairman and interim Chief Executive Officer following the departure of John Agwunobi.

The company agreed to "fundamentally restructure" its business in the United States and pay a $200 million fine as part of a 2016 settlement with the U.S. Federal Trade Commission (FTC) following these accusations.

[8] In February 1980, Mark R. Hughes began selling the original Herbalife weight management product from the trunk of his car.

[10] In 1982, Herbalife received complaints from the Food and Drug Administration for claims made about certain products and the inclusion of mandrake, poke root, and food-grade linseed oil in another.

[29] The company announced in November 2016 that Chief Operating Officer Richard Goudis would take over the position of CEO in June 2017 and Johnson would transition to executive chairman.

[35] Agwunobi departed Herbalife Nutrition in October 2022 and Michael O. Johnson was named Chairman and interim Chief Executive Officer.

[48][49] Herbalife's claims of health benefits from its products have met scrutiny from the medical community, consumers, and government agencies.

[55] In the past, company management considered the number and retention of distributors a key parameter and tracked it closely in financial reports.

[60]: 42 Hospitals in Israel, Spain, Switzerland, Iceland, Argentina, and the United States have reported liver damage in a number of patients who used Herbalife products.

[61] Herbalife's SEC 10-Q filings stated that the Israeli Ministry of Health did not establish a causal relationship between the product and liver ailments.

[74] Herbalife stated they were cooperating fully with Spanish authorities,[75] and after investigation, the agency determined no action was required and removed the alert.

After reviewing cases implicating Herbalife products in Spain, Switzerland, Israel, Finland, France, Italy, Iceland and Portugal, the 12-member scientific panel issued a report concluding: "The analyses of these cases and information regarding their circumstances have not allowed us to establish a causal relationship" between liver anomalies and Herbalife's dietary supplements.

[77] In a separate review published less than a year earlier, the same author described the relationship between Herbalife products and reported hepatotoxicity cases as "highly probable".

[78] In 2019, the Journal of Clinical and Experimental Hepatology published a paper titled Slimming to the Death: Herbalife®-Associated Fatal Acute Liver Failure-Heavy Metals, Toxic Compounds, Bacterial Contaminants and Psychotropic Agents in Products Sold in India.

This paper examined the connection between Herbalife slimming products and a case of fatal acute liver failure in one patient in India.

[84][85] They have also argued that the company does not sufficiently work to curb abuses by individual distributors, though Herbalife Nutrition has consistently denied the allegations.

[92] On December 20, 2012, Bill Ackman (of Pershing Square Capital) presented a series of arguments outlining why his firm believed that Herbalife operated a "sophisticated pyramid scheme" and contended that its stock would hit zero.

[100][101] In November 2017, Ackman closed out his short position after Herbalife shares increased by 51 percent over the year, and replaced it with a less aggressive put option.

[108] In March 2014, the FTC opened an investigation into Herbalife in response to calls from consumer groups and members in both houses of the United States Congress.

Herbalife responded to the probe by saying it "welcomes the inquiry given the tremendous amount of misinformation in the marketplace, and will cooperate fully with the FTC.

[clarification needed][109][110][111][112][113] In July 2016, Herbalife agreed to change its business model and pay $200 million in a settlement with the FTC.

"[117][118] The lawsuit alleged that Herbalife deceived consumers into believing they could earn substantial income from the business opportunity or big money from the retail sale of the company's products.

[119] The company remains under investigation as of early 2019 both by the United States Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) for corruption in China.

[120] On September 27, 2019, the SEC announced that Herbalife has agreed to pay $20 million to settle charges of making false and misleading statements about its business model and operations in China between 2012 and 2018.

[citation needed] In April 2016, a documentary directed by Ted Braun, titled Betting on Zero, premiered at the Tribeca Film Festival.

It explored the allegation from Bill Ackman that Herbalife was a pyramid scheme and personal stories of its distributors who lost their life savings.

[135] Hilary Rosen, a Democratic lobbyist and an adviser to Herbalife, questioned Tribeca's credibility after claiming that the film was "bought and paid" for by Ackman "to make good on his stock bet".