EX-10.1





 Exhibit 10.1 

DAVID C. SHONKA 
 Acting General Counsel 

JANET AMMERMAN, CA Bar No. 113996 
 CHRISTINE M. TODARO, OH
Bar No. 0084976 
 DANIEL O. HANKS, DC Bar No. 495823; VA Bar No. 65523 

600 Pennsylvania Ave. NW, Mailstop: CC 8528, Washington, D.C. 20580 

(202) 326-2222/(202) 326-3395 (fax) 
 jammerman1@ftc.gov;
ctodaro@ftc.gov; dhanks@ftc.gov 
 LAURA SOLIS, WA Bar No. 36005 

915 Second Ave., Suite 2896, Seattle, WA 98174 
 (206)
220-4544/(206) 220-6366 (fax) 
 lsolis@ftc.gov 
 Local Counsel

 BARBARA CHUN, CA Bar No. 186907 
 Email: bchun@ftc.gov

 Federal Trade Commission 
 10877 Wilshire Blvd., Suite 700

 Los Angeles, CA 90024 
 Tel: (310) 824-4343 

Fax: (310) 824-4380 
 Attorneys for Plaintiff 

Federal Trade Commission 

                          
                          UNITED STATES DISTRICT COURT 

                          
              FOR THE CENTRAL DISTRICT OF CALIFORNIA 
  

			
	  

FEDERAL TRADE COMMISSION,
  

Plaintiff,
  

v.
  

HERBALIFE INTERNATIONAL OF
 AMERICA, INC.,

a corporation;
  

HERBALIFE INTERNATIONAL, INC.,
 a corporation; and

 
	  	 Case No.
                                

 
 STIPULATION TO ENTRY OF

ORDER FOR PERMANENT
 INJUNCTION AND MONETARY

JUDGMENT



  

                          
                                         
             1 














			
	
  HERBALIFE, LTD.,
   a corporation,

Defendants.
  
	  	

 Plaintiff, the Federal Trade Commission (“Commission”), filed its Complaint for 

Permanent Injunction and Other Equitable Relief (“Complaint”) in this matter, pursuant to 

Section 13(b) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 53(b). The 

Commission and Defendants stipulate to entry of a Stipulated Order for Permanent 

Injunction and Monetary Judgment (“Order”), lodged concurrently with this Stipulation, 

with the following terms and provisions: 

THEREFORE, IT IS ORDERED as follows: 

                       
                                         
      FINDINGS 
 Plaintiff and Defendants stipulate to the following findings: 

 

	 	1.	This Court has jurisdiction over this matter. 

  

	 	2.	The Complaint charges that Defendants participated in unfair and deceptive 

 acts or practices in violation of
Section 5 of the FTC Act, 15 U.S.C. § 45, by: promoting 
 participation in a multi-level marketing program with a compensation
structure that causes 
 or is likely to cause harm to participants; making false or misleading income 

representations; making unsubstantiated claims regarding the retail sales income earned by 

participants in Defendants’ program; and providing participants in Defendants’ program 

with the means and instrumentalities to engage in deceptive acts and practices. 
  

	 	3.	Defendants neither admit nor deny any of the allegations in the Complaint, 

 except as specifically stated in
this Order. Only for purposes of this action, Defendants 
 admit the facts necessary to establish jurisdiction. 

 

	 	4.	Defendants waive any claim that they may have under the Equal Access to 

 Justice Act, 28 U.S.C.
§ 2412, concerning the prosecution of this action through the date of 
 this Order, and agree to bear their own costs and attorney fees. 

 

	 	5.	Defendants waive all rights to appeal or otherwise challenge or contest the 


  

                          
                                         
             2 













 validity of this Order. 

DEFINITIONS 
 For the
purpose of this Order, the following definitions apply: 
  

	A.	“Business Opportunity Participant” or “Participant” means any individual who 

  

	    	is participating in a Multi-Level Marketing Program. “Business Opportunity 

  

	    	Participant” or “Participant” does not include Preferred Customers. 

  

	B.	“Business Venture” means any written or oral business arrangement, however 

  

	    	denominated, whether or not covered by 16 C.F.R. Part 437, that consists of the 

  

	    	payment of any consideration for the right or means to offer, sell, or distribute goods 

  

	    	or services (whether or not identified by a trademark, service mark, trade name, 

  

	    	advertising or other commercial symbol). The definition of “Business Venture” 

  

	    	includes Multi-Level Marketing Programs. 

  

	C.	“Defendants” means all of the Defendants and their successors and assigns, 

  

	    	individually, collectively, or in any combination. 

  

	D.	“Downline” refers to the collection of all Business Opportunity Participants whom a 

  

	    	Business Opportunity Participant has personally recruited or sponsored (first level), 

  

	    	all Participants and Preferred Customers recruited or sponsored by first level 

  

	    	Participants (second level), all Participants and Preferred Customers recruited or 

  

	    	sponsored by second level Participants (third level), and so forth, however 

  

	    	denominated (including, but not limited to, “downline,” “tree,” “cooperative,” or 

  

	    	“income center”), whose activities are the basis, in whole or part, for any payment 

  

	    	or compensation from Defendants to the Business Opportunity Participant. 

  

	E.	“Multi-Level Compensation” means any payment or compensation (including, but 

  

	    	not limited to, “wholesale profit,” “commissions,” “royalties,” “overrides,” and 

  

	    	“bonuses”) in a Multi-Level Marketing Program from Defendants to a Business 

  

	    	Opportunity Participant that is based, in whole or in part, on the activities of the 

  

	    	Participant’s Preferred Customers and the Participant’s Downline. 


  

                          
                                         
         3 














	F.	“Multi-Level Marketing Program” or “Program” means any marketing program 

  

	    	in which Business Opportunity Participants have the right to (1) sell goods or 

  

	    	services; (2) recruit others into the Program; and (3) receive payment or other 

  

	    	compensation that is based, in whole or in part, upon the Product purchases, sales, 

  

	    	or other activities of the Participant’s Downline. 

  

	G.	“Net Rewardable Sales” for Defendants means the annual total of 

  

	 	1.	Net Sales generated by Preferred Customer Sales and Product sales that result 

  

	 	    	in Profitable Retail Sales; and 

  

	 	2.	Net Sales generated by Rewardable Personal Consumption, determined 

  

	 	    	pursuant to Subsection I.E. 

  

	    	Provided, however, that if the total of G.2 would exceed one-third of the combined 

  

	    	total of G.1 and G.2, then Net Rewardable Sales shall equal one-and-a-half times the 

  

	    	total of G.1. 

  

	H.	“Net Sales” means gross Product sales in the United States by Defendants, 

  

	    	including packaging and handling, freight recovery, and surcharges, and net of any 

  

	    	returns, refunds, Product Discounts, and allowances, including Wholesale 

  

	    	Commissions. 

  

	I.	“Preferred Customer” means an individual who joins or registers with a Multi- 

  

	    	Level Marketing Program as a customer only, and who does not have the right to 

  

	    	(1) sell goods or services; (2) recruit others into the Program; or (3) receive Multi- 

  

	    	Level Compensation. 

  

	J.	“Preferred Customer Sales” or “Sales to Preferred Customers” means sales of 

  

	    	Products made directly from Defendants to Preferred Customers. 

  

	K.	“Product” means any good sold by Defendants that can potentially generate Multi- 

  

	    	Level Compensation pursuant to Defendants’ compensation plan. 

  

	L.	“Product Discount” refers to the difference between Defendants’ suggested retail 

  

	    	price for a Product and the Product price charged by Defendants to the purchaser in 

  

	    	a purchase made directly from Defendants. 


  

                          
                                         
         4 














	M.	“Profitable Retail Sale” means a sale of Product by a Business Opportunity 

  

	    	Participant to a Retail Customer or a Preferred Customer that is a genuine sale made 

  

	    	at a price above the Business Opportunity Participant’s average wholesale cost over 

  

	    	the preceding twelve (12) months for the items sold (including tax and the actual or 

  

	    	approximate cost of shipping, handling, and any similar fees) and for which retail 

  

	    	sale information is collected and maintained by Defendants. 

  

	N.	“Retail Customer” means a purchaser of Products sold through a Multi-Level 

  

	    	Marketing Program who is not a Business Opportunity Participant or a Preferred 

  

	    	Customer, is not registered with the Program, and is not otherwise participating in 

  

	    	the Program. 

  

	O.	“Rewardable Personal Consumption” means sales of Product by Defendants to a 

  

	    	Business Opportunity Participant, for his own or his household’s use, that can 

  

	    	potentially be used to generate Multi-Level Compensation as set forth in Subsection 

  

	    	I.E. 

  

	P.	“Total Net Sales” for Defendants means the total of Net Sales in a fiscal year. 

  

	Q.	“Wholesale Commissions” means Multi-Level Compensation generated by a 

  

	    	Product purchase from Defendants that, in total for the transaction, equals the 

  

	    	difference between the purchaser’s Product Discount and the lesser of either the 

  

	    	maximum Product Discount for the Product under Defendants’ compensation plan 

  

	    	or 50% of the suggested retail price of the Product, and is paid by Defendants to 

  

	    	Participants whose Product Discount is greater than that of the purchaser and who 

  

	    	have such purchaser either in their Downline or as a Preferred Customer whom they 

  

	    	recruited or sponsored. 


  

                          
                                         
         5 














                          
                                         
     ORDER 

                          
                                         
           I. 

                          
                  PROHIBITED BUSINESS PRACTICES 

IT IS ORDERED that Defendants, Defendants’ officers, agents, employees, and all 

other persons in active concert or participation with any of them, who receive actual notice 

of this Order, whether acting directly or indirectly, are permanently restrained and enjoined 

from advertising, marketing, promoting, or offering any Multi-Level Marketing Program 

unless such program has the following characteristics: 
  

	 	A.	Limitations on Multi-Level Compensation. The program shall include, and 

  

	 	    	Defendants shall enforce, the following provisions: 

  

	 	1.	Any Multi-Level Compensation paid to a Participant for a given period shall be 

  

	 	    	generated solely by the following categories of transactions (“Rewardable 

  

	 	    	Transactions”) occurring in the same period or, during such Participant’s first six 

  

	 	    	months as a Business Opportunity Participant, the three months prior to that 

  

	 	    	period: 

  

	 	a.	Sales to Preferred Customers whom the Participant has personally recruited 

  

	 	    	or sponsored; 

  

	 	b.	Sales to Preferred Customers in the Participant’s Downline; 

  

	 	c.	Profitable Retail Sales of the Participant’s Downline, as calculated by 

  

	 	    	Defendants using the information collected pursuant to Subsection I.C; and 

  

	 	d.	All or a portion of Rewardable Personal Consumption transactions, 

  

	 	    	determined pursuant to Subsection I.E., of the Participant’s Downline; 

  

	 	    	provided that the Rewardable Personal Consumption transactions included in 

  

	 	    	a Participant’s Rewardable Transactions shall be limited such that no more 

  

	 	    	than one-third of the total value of the Participant’s Multi-Level 

  

	 	    	Compensation may be attributable to or generated by such transactions. 

  

	 	2.	If a Participant has transactions that are not Rewardable Transactions (“Non- 

  

	 	    	Rewardable Transactions”) in his or her Downline, the amount of any Multi- 


  

                          
                                         
             6 














	 	    	Level Compensation that the Participant may receive shall not vary from the 

  

	 	    	amount of Multi-Level Compensation that the Participant would be entitled to 

  

	 	    	receive if such Non-Rewardable Transactions were not in his or her Downline;  

  

	 	    	i.e., the total amount of a Participant’s Multi-Level Compensation shall not be 

  

	 	    	increased because the Non-Rewardable Transactions were in the Participant’s 

  

	 	    	Downline rather than in any other Participant’s Downline. 

  

	 	3.	Any point system or other method used to measure Rewardable Transactions 

  

	 	    	shall assign the same value to a given Product regardless of whether the Product 

  

	 	    	was sold to a Preferred Customer, to a Retail Customer, or to a Business 

  

	 	    	Opportunity Participant. Any system that calculates Multi-Level Compensation 

  

	 	    	shall not vary the compensation for a Rewardable Transaction based on whether 

  

	 	    	the Product was sold to a Preferred Customer, to a Retail Customer, or to a 

  

	 	    	Business Opportunity Participant for personal consumption. 

  

	 	4.	For any fiscal year, if the total of Net Rewardable Sales is less than 80% of Total 

  

	 	    	Net Sales, the sum of Multi-Level Compensation payments excluding Wholesale 

  

	 	    	Commissions by Defendants to Participants may not exceed forty-one point 

  

	 	    	seven five percent (41.75%) of the amount of Net Rewardable Sales, which 

  

	 	    	reflects a ten-percent (10%) increase over the percentage of Multi-Level 

  

	 	    	Compensation excluding Wholesale Commissions paid by Defendants in fiscal 

  

	 	    	year 2015. 

  

	 	5.	No compensation shall be paid solely for enrolling or recruiting a Participant or a 

  

	 	    	Preferred Customer into the Program. 

  

	 	B.	Preferred Customer Category. The program shall differentiate between Preferred 

  

	 	    	Customers and Business Opportunity Participants, including through the following 

  

	 	    	requirements: 

  

	 	1.	A Preferred Customer’s classification cannot change to Business Opportunity 

  

	 	    	Participant except upon the Preferred Customer’s written request or application 


  

                          
                                         
         7 














	 	    	or other written expression of intent made directly to and approved by 

  

	 	    	Defendants. 

  

	 	2.	A Business Opportunity Participant’s classification cannot change to Preferred 

  

	 	    	Customer except upon the Participant’s written request or application or other 

  

	 	    	written expression of intent made directly to and approved by Defendants. 

  

	 	3.	A Preferred Customer who becomes a Business Opportunity Participant may not 

  

	 	    	receive any benefit or status that depends in any way on that individual’s activity 

  

	 	    	as a Preferred Customer, except that any discount that the individual obtained as 

  

	 	    	a Preferred Customer may continue to be used to purchase Product that is 

  

	 	    	designated, at the time of purchase, as being for the individual’s own or 

  

	 	    	household use. 

  

	 	4.	All individuals who are registered with or participating in the Program as of the 

  

	 	    	Effective Date of this Section and who have not affirmatively elected to be 

  

	 	    	classified as Preferred Customers pursuant to Subsection I.B.2, above, shall be 

  

	 	    	classified as Business Opportunity Participants. 

  

	 	C.	Collection of Retail Sales Information. Defendants shall collect from Business 

  

	 	    	Opportunity Participants and maintain in a standardized format the following 

  

	 	    	information for any claimed Profitable Retail Sale: 

  

	 	1.	the method of payment; 

  

	 	2.	the Products and quantities sold; 

  

	 	3.	the date; 

  

	 	4.	the price paid by the purchaser; 

  

	 	5.	the first and last name of the purchaser; 

  

	 	6.	contact information for the purchaser, including at least two of the following: 

  

	 	    	telephone number, address or e-mail address; and 

  

	 	7.	for any paper receipt submitted to Defendants, the signature of the Retail 

  

	 	    	Customer or Preferred Customer. 


  

                          
                                         
         8 














	 	D.	Verification of Retail Sales and Preferred Customer Sales. The following 

  

	 	    	requirements shall apply regarding Profitable Retail Sales and Preferred Customer 

  

	 	    	Sales: 

  

	 	1.	Defendants shall take all reasonable steps, including both random and targeted 

  

	 	    	audits, to monitor Profitable Retail Sales and Preferred Customer Sales in order 

  

	 	    	to ensure that they are genuine sales of Products, rather than an attempt to 

  

	 	    	manipulate the Program’s compensation plan. 

  

	 	2.	Defendants shall take all reasonable steps, including both random and targeted 

  

	 	    	audits, to monitor Profitable Retail Sales in order to ensure that they in fact 

  

	 	    	occurred as reported in the information collected and maintained pursuant to 

  

	 	    	Subsection I.C. 

  

	 	3.	If the total amount of Product claimed by any Business Opportunity Participant 

  

	 	    	as Profitable Retail Sales exceeds the total amount of Product purchased by the 

  

	 	    	Participant subsequent to the Effective Date of this Section, less any amount 

  

	 	    	designated at the time of purchase as being for the Participant’s own or 

  

	 	    	household use, Defendants shall not pay any Multi-Level Compensation on the 

  

	 	    	excess amount of claimed Profitable Retail Sales. 

  

	 	E.	Limitations on Rewardable Personal Consumption. The Rewardable Personal 

  

	 	    	Consumption of a Business Opportunity Participant in a given period shall be 

  

	 	    	limited to purchases in that period that are designated by the Business Opportunity 

  

	 	    	Participant at the time of purchase as being for the Business Opportunity 

  

	 	    	Participant’s own or household use. Rewardable Personal Consumption shall also 

  

	 	    	be subject to the following additional limitations: 

  

	 	1.	For the first twelve (12) months following the date this Subsection becomes 

  

	 	    	effective, an individual Business Opportunity Participant’s own purchases in a 

  

	 	    	given month may be Rewardable Personal Consumption in an amount not to 

  

	 	    	exceed $200 of wholesale Product expenditures (including tax and actual or 

  

	 	    	approximate shipping, handling, and similar fees). 


  

                          
                                         
         9 














	 	2.	Beginning twelve (12) months after the date this Subsection becomes effective, 

  

	 	    	an individual Business Opportunity Participant’s own purchases (including tax 

  

	 	    	and actual or approximate shipping, handling, and similar fees) in a given month 

  

	 	    	may be Rewardable Personal Consumption in an amount not to exceed the 

  

	 	    	greater of: 

  

	 	a.	$125 in wholesale Product expenditures; or 

  

	 	b.	the 75th percentile of average monthly wholesale Product expenditures 

  

	 	    	among Preferred Customers over the prior twelve (12) months (the 

  

	 	    	“measurement window”). The population of Preferred Customers from 

  

	 	    	which the 75th percentile shall be computed shall consist exclusively of all 

  

	 	    	Preferred Customers who had the status of Preferred Customer for at least six 

  

	 	    	(6) months of the measurement window and who purchased product directly 

  

	 	    	from Defendants at least once during each of the calendar quarters in which 

  

	 	    	they had the status of Preferred Customer during the measurement window. 

  

	 	    	Each Preferred Customer’s “average monthly wholesale Product 

  

	 	    	expenditure” shall be calculated by summing up all Product expenditures 

  

	 	    	(including tax and shipping, handling, and similar fees) made by the 

  

	 	    	Preferred Customer directly from Defendants during the measurement 

  

	 	    	window and made while he or she had the status of Preferred Customer, and 

  

	 	    	dividing that sum by the total number of months in the measurement window 

  

	 	    	for which he or she had the status of Preferred Customer, regardless of 

  

	 	    	whether he or she made purchases in any of those months. This latter limit 

  

	 	    	option shall be available only if the population of Preferred Customers being 

  

	 	    	ranked consists of not less than 20,000 individuals. 

  

	 	3.	The limitation of Subsection I.E.2 shall be re-set annually, based on the prior 

  

	 	    	twelve (12) months of activity, through the procedure set forth in that 

  

	 	    	Subsection. 


  

                          
                                         
         10 














	 	F.	Limitations on Thresholds, Targets, and Requirements. The Program shall 

  

	 	    	include, and Defendants shall enforce, the following policies: 

  

	 	1.	Business Opportunity Participants shall not be required to purchase a minimum 

  

	 	    	quantity of products, except that Defendants may require Business Opportunity 

  

	 	    	Participants to purchase an initial start-up package or its equivalent, provided 

  

	 	    	that no Multi-Level Compensation is generated or paid on the purchase. 

  

	 	2.	To the extent the Program requires that a Participant meet a threshold or target in 

  

	 	    	order to (a) obtain or maintain a level or designation necessary to receive any 

  

	 	    	particular type or amount of Multi-Level Compensation; (b) qualify or become 

  

	 	    	eligible to receive Multi-Level Compensation; (c) otherwise increase the 

  

	 	    	Participant’s amount of Multi-Level Compensation; or (d) obtain, maintain, 

  

	 	    	increase, or qualify for a discount or rebate on Product purchased for resale; such 

  

	 	    	threshold or target shall be met exclusively through Profitable Retail Sales and 

  

	 	    	Sales to Preferred Customers. 

  

	 	3.	Business Opportunity Participants are prohibited from participating in any auto- 

  

	 	    	shipment program or any similar program involving standing orders of product. 

  

	 	G.	Refund Policies. The program shall include, and Defendants shall enforce, the 

  

	 	    	following policies related to product refunds or buybacks: 

  

	 	1.	For at least the first twelve (12) months after becoming a Business Opportunity 

  

	 	    	Participant, Participants are entitled to a full refund from Defendants of the cost 

  

	 	    	of any start-up package or its equivalent. If Defendants require, as part of their 

  

	 	    	refund procedure, that any part of the start-up package or its equivalent be 

  

	 	    	returned, Defendants will pay for any shipping costs associated with such return. 

  

	 	2.	Business Opportunity Participants are entitled to a full refund from Defendants 

  

	 	    	of the cost, including tax and any fees, of any unopened products purchased from 

  

	 	    	Defendants within the previous twelve (12) months. If Defendants require, as 

  

	 	    	part of their refund procedure, that refundable products be returned, Defendants 

  

	 	    	will pay for any shipping costs associated with such return. 


  

                          
                                         
         11 














	 	3.	Defendants shall take effective steps to notify Participants of both (i) the right to 

  

	 	    	return unopened product for a full refund and (ii) contact information, including 

  

	 	    	a telephone number, that may be used to promptly initiate a product return for 

  

	 	    	refund. Such steps shall include, at a minimum, providing clear and conspicuous 

  

	 	    	notice of the same on the following: 

  

	 	a.	Every product purchase invoice or receipt sent from Defendants to a 

  

	 	    	Participant; 

  

	 	b.	Any websites maintained by Defendants that promote or otherwise provide 

  

	 	    	information about the Program; 

  

	 	c.	Any application to join the Program as a Business Opportunity Participant; 

  

	 	    	and 

  

	 	d.	Any of Defendants’ booklets, brochures, or similar printed materials 

  

	 	    	promoting the Program. 

  

	 	4.	Preferred Customers are entitled to product refunds on terms and through 

  

	 	    	procedures that are at least as generous as those for Retail Customers. 

  

	 	H.	Required Training for Business Opportunity Participants. Defendants shall not 

  

	 	    	pay Multi-Level Compensation to any Participant, and shall prohibit and prevent 

  

	 	    	such Participant from recruiting or sponsoring other Participants, until such 

  

	 	    	Participant has successfully completed a training course conducted by Defendants 

  

	 	    	that is focused on the following topics: (a) the importance of purchasing only the 

  

	 	    	amount of product that the Participant expects to sell in the near future; (b) how to 

  

	 	    	document retail sales; (c) prohibitions on and consequences for falsifying retail sales 

  

	 	    	documentation; (d) how to identify and account for business-related expenses and 

  

	 	    	calculate profit or loss; (e) how to create a business budget and manage income and 

  

	 	    	expenses; (f) prohibited and permissible representations to Participants and potential 

  

	 	    	Participants; (g) how to receive a refund or buyback for unwanted product; and 

  

	 	    	(h) how to submit a complaint about the business opportunity to Defendants and to 

  

	 	    	law enforcement. 


  

                          
                                         
         12 














	 	I.	Policies Relating to Leased or Purchased Business Locations. The program shall 

  

	 	    	include, and Defendants shall enforce, the following policies relating to leased or 

  

	 	    	purchased business locations: 

  

	 	1.	Participants are prohibited from entering into any lease, sublease, or purchase of 

  

	 	    	a physical location or a portion of a physical location (other than their homes or 

  

	 	    	dwellings) for their Program-related businesses until they have: 

  

	 	a.	been Business Opportunity Participants for at least twelve (12) consecutive 

  

	 	    	months; 

  

	 	b.	successfully completed a training course conducted by Defendants that 

  

	 	    	focuses on the following topics as related to the operation of a leased or 

  

	 	    	purchased business location: (i) how to identify and account for all business- 

  

	 	    	related expenses and calculate profit or loss; (ii) how to create a budget and 

  

	 	    	manage income and expenses; (iii) how to learn about and comply with local 

  

	 	    	laws that may affect the Participant’s business; and (iv) how to create a 

  

	 	    	business plan meeting the requirements set forth in Subsection I.I.c, below; 

  

	 	    	and 

  

	 	c.	prepared a written business plan that such Participant must retain and make 

  

	 	    	available to Defendants or to the Independent Compliance Auditor upon 

  

	 	    	request, and that (i) identifies the facilities and equipment that will be used 

  

	 	    	for business operations and the costs of acquiring such facilities and 

  

	 	    	equipment; (ii) identifies applicable city, county, and state regulations and 

  

	 	    	the steps and costs necessary for the Participant to operate in compliance 

  

	 	    	therewith; (iii) estimates start-up costs and identifies the source of funding 

  

	 	    	for such costs; (iv) presents a promotional plan for attracting customers to the 

  

	 	    	location; (v) estimates the monthly and annual volume of customers and sales 

  

	 	    	necessary for the Participant’s retail business to operate profitably; and 

  

	 	    	(vi) forecasts income, overhead, and operating expenses by month for the 

  

	 	    	first two years of operation. 


  

                          
                                         
         13 














                          
                                         
 II. 

                          
              PROHIBITED MISREPRESENTATIONS 
 IT IS FURTHER
ORDERED that Defendants, Defendants’ officers, agents, and 
 employees, and all other persons in active concert or participation
with any of them, who 
 receive actual notice of this Order, whether acting directly or indirectly, in connection with 

the advertising, marketing, promoting, or offering of any Business Venture, are 

permanently restrained and enjoined from misrepresenting or assisting others in 

misrepresenting, including by providing others with the means and instrumentalities with 

which to misrepresent, expressly or by implication: 
  

	 	A.	That participants will or are likely to earn substantial income; 

  

	 	B.	The amount of revenue, income, or profit a participant actually earned or can likely 

  

	 	    	earn; 

  

	 	C.	The reasons participants do not earn significant income, including but not limited to 

  

	 	    	representations that participants fail to devote substantial or sufficient effort; and 

  

	 	D.	Any other fact material to participants concerning the Business Venture, such as: 

  

	 	    	the total costs to participate, including trainings, brochures, and sales aids; any 

  

	 	    	material restrictions, limitations, or conditions on operating the Business Venture; or 

  

	 	    	any material aspect of its performance, efficacy, nature, or central characteristics. 


                          
                                         
 III. 

                          
    PROHIBITED LIFESTYLE REPRESENTATIONS 
 IT IS FURTHER ORDERED that Defendants, Defendants’ officers,
agents, and 
 employees, and all other persons in active concert or participation with any of them, who 

receive actual notice of this Order, whether acting directly or indirectly, in connection with 

the advertising, marketing, promoting, or offering of any Business Venture, are 

permanently restrained and enjoined from representing that participation in the Business 

Venture is likely to result in a lavish lifestyle, and from using images or descriptions to 

represent or imply that participation in the Business Venture is likely to result in a lavish  

  

                          
                                         
         14 













 lifestyle. For the purposes of this Section, the following are examples of prohibited claims 

when made to a general audience of prospective or current participants: 
  

	 	A.	Statements that participants can “quit your job,” “be set for life,” “earn millions of 

  

	 	    	dollars,” “make more money than they ever have imagined or thought possible,” 

  

	 	    	“realize unlimited income,” or any substantially similar representations; and 

  

	 	B.	Descriptions or images of opulent mansions, private helicopters, private jets, yachts, 

  

	 	    	exotic automobiles, or any substantially similar representations. 


                          
                                         
     IV. 
  PROHIBITION AGAINST MATERIAL OMISSIONS AND UNSUBSTANTIATED 

                          
                    INCOME REPRESENTATIONS 

IT IS FURTHER ORDERED that Defendants, Defendants’ officers, agents, and 

employees, and all other persons in active concert or participation with any of them, who 

receive actual notice of this Order, whether acting directly or indirectly, in connection with 

advertising, marketing, promoting, or offering any Business Venture, are permanently 

restrained and enjoined from: 
  

	 	A.	Failing to disclose, clearly and conspicuously, before any potential participant pays 

  

	 	    	any money to Defendants, all information material to the decision of whether to 

  

	 	    	participate in the Business Venture, including, but not limited to whether 

  

	 	    	Defendants have a refund or buyback policy and if so, all material terms and 

  

	 	    	conditions of the refund or buyback policy, including the specific steps consumers 

  

	 	    	must follow to obtain a refund or buyback; and 

  

	 	B.	Making any representation, expressly or by implication, regarding the amount or 

  

	 	    	level of income, including full-time or part-time income, that a participant can 

  

	 	    	reasonably expect to earn unless the representation is non-misleading and, at the 

  

	 	    	time such representation is made, Defendants possess and rely upon competent and 

  

	 	    	reliable evidence sufficient to substantiate that the representation is true. Implied 

  

	 	    	representations regarding the amount or level of income that a participant 


  

                          
                                         
         15 














	 	    	reasonably can expect to earn include but are not limited to representations 

  

	 	    	involving and images used to show an improved lifestyle. 


                          
                                         
     V. 

                          
      COMPLIANCE MONITORING BY DEFENDANTS 
 IT IS FURTHER ORDERED that Defendants, Defendants’
officers, agents, 
 employees, and all other persons in active concert or participation with any of them, who 

receive actual notice of this Order, whether acting directly or indirectly, in connection with 

advertising, marketing, promoting, or offering any Multi-Level Marketing Program, are 

hereby permanently restrained and enjoined from: 
  

	 	A.	Failing to take all reasonable steps necessary to monitor and ensure that Defendants’ 

  

	 	    	agents, representatives, employees, and independent contractors act in compliance 

  

	 	    	with the requirements of Sections I–IV of this Order. For purposes of this 

  

	 	    	Subsection, an individual’s status as a Business Opportunity Participant alone does 

  

	 	    	not render him or her an agent, representative, employee, or independent contractor 

  

	 	    	of Defendants. 

  

	 	B.	Failing to take all reasonable steps necessary to monitor and ensure that Business 

  

	 	    	Opportunity Participants and Preferred Customers act in compliance with the 

  

	 	    	requirements of Sections II–IV of this Order. 

  

	 	C.	Providing any monetary compensation to any Business Opportunity Participant 

  

	 	    	when Defendants know or should know that such monetary compensation is or 

  

	 	    	would be based on claimed transactions that are not in accordance with the 

  

	 	    	requirements of Section I. 

  

	 	D.	Failing to claw back any monetary compensation to any Business Opportunity 

  

	 	    	Participant when Defendants learn or should have learned that such monetary 

  

	 	    	compensation was based on claimed transactions that were not in accordance with 

  

	 	    	the requirements of Section I. 


  

                          
                                         
         16 














	 	E.	Failing to implement and maintain a corrective action program that deters and 

  

	 	    	corrects behaviors of Business Opportunity Participants and Preferred Customers 

  

	 	    	that are not in compliance with the requirements of this Order. 

  

	 	F.	Failing to promptly and thoroughly investigate any complaint received by 

  

	 	    	Defendants relating to compliance with this Order and to notify the complainant of 

  

	 	    	the resolution of the complaint and the reason therefor, unless legitimate business 

  

	 	    	reasons exist not to notify the complainant. 


                          
                                         
        VI. 

                          
          INDEPENDENT COMPLIANCE AUDITOR 
 IT IS FURTHER ORDERED that an
Independent Compliance Auditor (“ICA”) 
 shall be appointed to further ensure compliance with Section I.A–F and I.I of this
Order, as 
 set forth below. The ICA shall be an independent third party, not an employee or agent of 

the Commission or of Defendants, and no attorney-client or other professional relationship 

shall be formed between the ICA and Defendants. No later than sixty (60) days after the 

entry of this Order, Commission staff and Defendants shall select the ICA by mutual 

agreement. If the parties are unable to agree on an ICA who is willing and able to perform 

the ICA’s duties under this Order, they shall submit the matter to the Court for 

determination. Defendants shall consent to the following terms and conditions regarding 

the ICA: 
  

	 	A.	The ICA shall serve, without bond or other security, at the expense of Defendants. 

  

	 	    	Defendants shall execute an agreement that, subject to the prior approval of 

  

	 	    	Commission staff, confers upon the ICA all the rights and powers necessary to 

  

	 	    	permit the ICA to perform its duties and responsibilities pursuant to and in 

  

	 	    	accordance with the provisions of this Order. Any individual who serves as ICA or 

  

	 	    	performs duties at the ICA’s direction shall agree not to be retained by the 

  

	 	    	Commission or Defendants for a period of two years after the conclusion of the 

  

	 	    	engagement. 


  

                          
                                         
         17 














	 	B.	Beginning at the Effective Date applicable to Section I of this Order, the ICA shall 

  

	 	    	have the duty and responsibility to diligently and competently review, assess, and 

  

	 	    	evaluate Defendants’ compliance with the following requirements of Section I of 

  

	 	    	this Order, namely the requirements that: 

  

	 	1.	Defendants are paying Multi-Level Compensation only in accordance with 

  

	 	    	Subsection I.A, and subject to the limitations set forth in Subsections I.D., I.E, 

  

	 	    	I.F, and I.H; 

  

	 	2.	Defendants are differentiating between Preferred Customers and Business 

  

	 	    	Opportunity Participants as required by Subsection I.B; 

  

	 	3.	Defendants are collecting and maintaining retail sales information as required by 

  

	 	    	Subsection I.C; 

  

	 	4.	Defendants are taking all reasonable steps necessary to monitor and ensure that 

  

	 	    	Profitable Retail Sales and Preferred Customer Purchases are genuine sales of 

  

	 	    	Products, rather than an attempt to manipulate the program’s compensation plan, 

  

	 	    	as required by Subsection I.D.1; 

  

	 	5.	Defendants are taking all reasonable steps necessary to monitor and ensure that 

  

	 	    	Profitable Retail Sales in fact occurred as reported in the information collected 

  

	 	    	and maintained pursuant to Subsection I.D.2; 

  

	 	6.	Defendants are complying with the requirements and limitations relating to 

  

	 	    	claimed Profitable Retail Sales set forth in Subsection I.D.3; 

  

	 	7.	Defendants are complying with the requirements and limitations relating to 

  

	 	    	Rewardable Personal Consumption set forth in Subsection I.E; 

  

	 	8.	Defendants are complying with the limitations on thresholds, targets, and 

  

	 	    	requirements set forth in Subsection I.F; 

  

	 	9.	Defendants are complying with and enforcing the requirements and limitations 

  

	 	    	on leased or purchased business locations set forth in Subsection I.I. 


  

                          
                                         
         18 














	 	C.	Subject to the terms of this Order, the ICA shall have authority to engage 

  

	 	    	professional staff, at the expense of Defendants, to assist the ICA in carrying out the 

  

	 	    	ICA’s duties and responsibilities. 

  

	 	D.	Except for information protected by any demonstrated legally-recognized privilege, 

  

	 	    	the ICA shall have full and complete access to all reasonably available information 

  

	 	    	in the possession, custody, or control of Defendants that is relevant to 

  

	 	    	accomplishing the ICA’s duties and responsibilities described in Section VI. 

  

	 	    	Defendants may consult with the ICA concerning the ICA’s work, including but not 

  

	 	    	limited to the ICA’s findings and recommendations, as appropriate. 

  

	 	E.	The ICA, and any staff engaged to assist the ICA in carrying out the ICA’s duties 

  

	 	    	and responsibilities, shall maintain the confidentiality of any of Defendants’ 

  

	 	    	information obtained in accordance with this Order, and shall not disclose such 

  

	 	    	information to any other person except in accordance with this Order; except that, 

  

	 	    	upon request, the ICA shall share records and information with Commission staff. 

  

	 	    	Nothing in this Section shall affect or impair the Commission’s ability to obtain 

  

	 	    	records and information pursuant to Section XII. 

  

	 	F.	Defendants may require the ICA, and any staff engaged to assist the ICA in carrying 

  

	 	    	out the ICA’s duties and responsibilities, to sign a customary confidentiality 

  

	 	    	agreement; provided, however, that such agreement shall not restrict the ICA (and 

  

	 	    	its representatives) from providing any information to Commission staff. 

  

	 	G.	Commission staff may require the ICA, and any staff engaged to assist the ICA in 

  

	 	    	carrying out the ICA’s duties and responsibilities, to sign an appropriate 

  

	 	    	confidentiality agreement related to Commission materials and information received 

  

	 	    	in connection with the performance of the ICA’s duties, and to take other 

  

	 	    	appropriate steps to protect the confidentiality of the same. 

  

	 	H.	The ICA shall serve for seven (7) years after the Effective Date applicable to 

  

	 	    	Section I of this Order. 


  

                          
                                         
         19 














	 	I.	The ICA shall periodically report in writing to Commission staff and to Defendants 

  

	 	    	on Defendants’ compliance with each of the subsections of Section I. For the first 

  

	 	    	three (3) years, the ICA shall make such reports every six (6) months, beginning six 

  

	 	    	months following the Effective Date applicable to Section I. After the first three 

  

	 	    	(3) years, the frequency of such reports shall be decreased to annually. 

  

	 	J.	If, at any time, the ICA determines that Defendants are not in substantial compliance 

  

	 	    	with Section I.A–F or I.I of this Order, the ICA shall so notify Commission staff and 

  

	 	    	consult with Defendants. Defendants may at any time submit to Commission staff 

  

	 	    	and to the ICA a written response to the ICA’s notification. 

  

	 	K.	The ICA shall prepare a budget and work plan as follows: 

  

	 	1.	No later than ninety (90) days prior to the Effective Date applicable to Section I 

  

	 	    	of this Order, the ICA shall, in consultation with Commission staff and 

  

	 	    	Defendants, prepare and present to Commission staff and Defendants an annual 

  

	 	    	budget and work plan (the “ICA Budget”) describing the scope of work to be 

  

	 	    	performed and the fees and expenses of the ICA and any professional staff to be 

  

	 	    	incurred during the first year following the Effective Date of Section I of this 

  

	 	    	Order. 

  

	 	2.	The scope of work, fees, and expenses to be incurred by the ICA and any 

  

	 	    	professional staff shall be reasonable and not excessive, in light of the ICA’s 

  

	 	    	defined duties, responsibilities, and powers prescribed in this Order. 

  

	 	3.	The ICA shall prepare and submit to Defendants and to Commission staff an 

  

	 	    	annual ICA Budget no later than ninety (90) days prior to the beginning of each 

  

	 	    	subsequent year of the ICA’s term. If Defendants and Commission staff both 

  

	 	    	approve the ICA Budget, the ICA shall adhere to and shall not exceed the 

  

	 	    	approved ICA Budget, unless such deviations are authorized by agreement of the 

  

	 	    	parties or order of the Court. 

  

	 	4.	Within 21 days of receipt of any ICA Budget, either Commission staff or 

  

	 	    	Defendants may serve an objection to the ICA, who, within 21 days of such 


  

                          
                                         
         20 














	 	    	objection, shall provide to Commission staff and Defendants a revised ICA 

  

	 	    	Budget or a notice that no such revision will be made. 

  

	 	5.	Following the ICA’s response to an objection provided in accordance with 

  

	 	    	Subsection VI.K.3, either Commission staff or Defendants may apply to the 

  

	 	    	Court to modify the ICA Budget. 

  

	 	6.	Pending the Court’s decision concerning any application pursuant to Subsection 

  

	 	    	VI.K.4, the ICA shall continue to perform its duties and implement the ICA 

  

	 	    	Budget as prepared by the ICA. 

  

	 	L.	Defendants shall indemnify the ICA and hold the ICA harmless against all losses, 

  

	 	    	claims, damages, liabilities, or expenses arising out of, or in connection with, the 

  

	 	    	performance of the ICA’s duties, including all reasonable fees of counsel and other 

  

	 	    	reasonable expenses incurred in connection with the preparations for, or defense of, 

  

	 	    	any claim, whether or not resulting in any liability, except to the extent that such 

  

	 	    	losses, claims, damages, liabilities, or expenses result from gross negligence, willful 

  

	 	    	or wanton acts, or bad faith by the ICA. 

  

	 	M.	In the event Commission staff determines that the ICA has ceased to act or failed to 

  

	 	    	act consistently with the terms of this Subsection, Commission staff may relieve the 

  

	 	    	ICA of its duties. 

  

	 	N.	If the ICA has been relieved of its duties, or if the ICA is no longer willing or able 

  

	 	    	to continue to serve, Commission staff and Defendants shall mutually agree on a 

  

	 	    	replacement ICA. If the parties are unable to agree on a replacement ICA within 

  

	 	    	thirty (30) days, they shall submit the matter to the Court for determination. If more 

  

	 	    	than three (3) months elapse without an ICA in place, the overall term of the ICA set 

  

	 	    	forth in Subsection VI.H shall be extended for a commensurate period. 

  

	 	O.	Not later than ten (10) days after the appointment of the replacement ICA, 

  

	 	    	Defendants shall execute an agreement that, subject to the prior approval of 

  

	 	    	 Commission staff, confers upon the replacement ICA all the rights and powers




  

                          
                                         
         21 














	 	    	necessary to permit the replacement ICA to perform its duties and responsibilities 

  

	 	    	pursuant to this Order. 


                          
                                         
       VII. 

                          
                            MONETARY JUDGMENT 

IT IS FURTHER ORDERED that: 
  

	 	A.	Judgment in the amount of Two Hundred Million Dollars ($200,000,000) is entered 

  

	 	    	in favor of the Commission against Defendants, jointly and severally, as equitable 

  

	 	    	monetary relief. 

  

	 	B.	Defendant Herbalife International of America, Inc. is ordered to pay to the 

  

	 	    	Commission Two Hundred Million Dollars ($200,000,000), within 7 days of entry 

  

	 	    	of this Order by electronic fund transfer in accordance with instructions previously 

  

	 	    	provided by a representative of the Commission. 

  

	 	C.	Defendants relinquish dominion and all legal and equitable right, title, and interest 

  

	 	    	in all assets transferred pursuant to this Order and may not seek the return of any 

  

	 	    	assets. 

  

	 	D.	The facts alleged in the Complaint will be taken as true, without further proof, in 

  

	 	    	any subsequent civil litigation by or on behalf of the Commission in a proceeding to 

  

	 	    	enforce its rights to any payment or monetary judgment pursuant to this Order, such 

  

	 	    	as a nondischargeability complaint in any bankruptcy case. 

  

	 	E.	The facts alleged in the Complaint establish all elements necessary to sustain an 

  

	 	    	action by the Commission pursuant to Section 523(a)(2)(A) of the Bankruptcy 

  

	 	    	Code, 11 U.S.C. § 523(a)(2)(A), and this Order will have collateral estoppel effect 

  

	 	    	for such purposes. 

  

	 	F.	Defendants acknowledge that their Taxpayer Identification Numbers or Employer 

  

	 	    	Identification Numbers, which Defendants must submit to the Commission, may be 

  

	 	    	used for collecting and reporting on any delinquent amount arising out of this Order, 

  

	 	    	in accordance with 31 U.S.C. § 7701. 


  

                          
                                         
         22 














	 	G.	All money paid to the Commission pursuant to this Order may be deposited into a 

  

	 	    	fund administered by the Commission or its designee to be used for equitable relief, 

  

	 	    	including consumer redress and any attendant expenses for the administration of any 

  

	 	    	redress fund. If a representative of the Commission decides that direct redress to 

  

	 	    	consumers is wholly or partially impracticable or money remains after redress is 

  

	 	    	completed, the Commission may apply any remaining money for such other 

  

	 	    	equitable relief (including consumer information remedies) as it determines to be 

  

	 	    	reasonably related to Defendants’ practices alleged in the Complaint. Any money 

  

	 	    	not used for such equitable relief is to be deposited to the U.S. Treasury as 

  

	 	    	disgorgement. Defendants have no right to challenge any actions the Commission 

  

	 	    	or its representatives may take pursuant to this Subsection. 


                          
                                         
      VIII. 

                          
                           CUSTOMER INFORMATION 

IT IS FURTHER ORDERED that Defendants, Defendants’ officers, agents, and 

employees, and all other persons in active concert or participation with any of them, who 

receive actual notice of this Order, are permanently restrained and enjoined from directly 

or indirectly failing to provide sufficient customer information to enable the Commission 

to efficiently administer consumer redress. Defendants represent that they have provided 

this redress information to the Commission. If a representative of the Commission requests 

in writing any information related to redress, Defendants must provide it, in the form 

prescribed by the Commission, within 14 days. 

                          
                                         
         IX. 

                          
                        ORDER ACKNOWLEDGMENTS 

IT IS FURTHER ORDERED that Defendants obtain acknowledgments of receipt 

of this Order: 
  

	 	A.	Each Defendant, within 7 days of entry of this Order, must submit to the 

  

	 	    	Commission an acknowledgment of receipt of this Order sworn under penalty of 

  

	 	    	perjury. 


  

                          
                                         
         23 














	 	B.	For ten (10) years after entry of this Order, Defendants must deliver a copy of this 

  

	 	    	Order to: (1) all principals, officers, directors, and LLC managers and members, 

  

	 	    	including Participants who serve as principals, officers, directors, and LLC 

  

	 	    	managers and members; (2) all employees, agents, and representatives having 

  

	 	    	managerial responsibilities concerning conduct covered by Sections I–IV of this 

  

	 	    	Order; (3) Business Opportunity Participants who are members of the Founder’s 

  

	 	    	Circle or Chairman’s Club or any group with similar stature under the marketing 

  

	 	    	plan; (4) any business entity resulting from any change in structure as set forth in the 

  

	 	    	Section titled Compliance Reporting. Delivery must occur within 7 days of entry of 

  

	 	    	this Order for current personnel. For all others, delivery must occur before they 

  

	 	    	assume their responsibilities. 

  

	 	C.	From each individual or entity to which a Defendant delivered a copy of this Order, 

  

	 	    	that Defendant must obtain, within 30 days, a signed and dated acknowledgment of 

  

	 	    	receipt of this Order. 


                          
                                         
          X. 

                          
                        COMPLIANCE REPORTING 

IT IS FURTHER ORDERED that Defendants make timely submissions to the 

Commission: 
  

	 	A.	One year after entry of this Order, each Defendant must submit a compliance report, 

  

	 	    	sworn under penalty of perjury. Each Defendant must: 

  

	 	1.	Identify the primary physical, postal, and email address and telephone number, 

  

	 	    	as designated points of contact, which representatives of the Commission may 

  

	 	    	use to communicate with Defendant; 

  

	 	2.	Identify all of that Defendant’s businesses by all of their names, telephone 

  

	 	    	numbers, and physical, postal, email, and Internet addresses; 

  

	 	3.	Describe the activities of each business, including the goods and services 

  

	 	    	offered, the means of advertising, marketing, and sales, and the involvement of 

  

	 	    	any other Defendant; 


  

                          
                                         
         24 














	 	4.	Describe in detail whether and how that Defendant is in compliance with each 

  

	 	    	Section of this Order; and 

  

	 	5.	Provide a copy of each Order Acknowledgment obtained pursuant to this Order, 

  

	 	    	unless previously submitted to the Commission. 

  

	 	B.	For nine (9) years after entry of this Order, each Defendant must submit a 

  

	 	    	compliance notice, sworn under penalty of perjury, within 14 days of any change in 

  

	 	    	the following: 

  

	 	1.	Any designated point of contact; or 

  

	 	2.	The structure of Defendant or any entity that Defendant has any ownership 

  

	 	    	interest in or controls directly or indirectly that may affect compliance 

  

	 	    	obligations arising under this Order, including: creation, merger, sale, or 

  

	 	    	dissolution of the entity or any subsidiary, parent, or affiliate that engages in any 

  

	 	    	acts or practices subject to this Order. 

  

	 	C.	Each Defendant must submit to the Commission notice of the filing of any 

  

	 	    	bankruptcy petition, insolvency proceeding, or similar proceeding by or against such 

  

	 	    	Defendant within 14 days of its filing. 

  

	 	D.	Any submission to the Commission required by this Order to be sworn under 

  

	 	    	penalty of perjury must be true and accurate and comply with 28 U.S.C. § 1746, 

  

	 	    	such as by concluding: “I declare under penalty of perjury under the laws of the 

  

	 	    	United States of America that the foregoing is true and correct. Executed on:  

  

	 	    	            ” and supplying the date, signatory’s full name, title (if applicable), and 


 

	 	    	signature. 

  

	 	E.	Unless otherwise directed by a Commission representative in writing, all 

  

	 	    	submissions to the Commission pursuant to this Order must be emailed to 

  

	 	    	DEbrief@ftc.gov or sent by overnight courier (not the U.S. Postal Service) to: 

  

	 	    	Associate Director for Enforcement, Bureau of Consumer Protection, Federal Trade 

  

	 	    	Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580. The subject 

  

	 	    	line must begin: FTC v. Herbalife, Ltd., et al. 


  

                          
                                         
         25 














                          
                                         
         XI. 

                          
                                    RECORDKEEPING 

IT IS FURTHER ORDERED that Defendants must create certain records for nine 

(9) years after entry of the Order, and retain each such record for five (5) years. 

Specifically, Defendants must create and retain the following records: 
  

	 	A.	Accounting records showing the revenues from all goods or services sold to 

  

	 	    	participants in a Business Venture; 

  

	 	B.	Personnel records showing, for each person providing services, whether as an 

  

	 	    	employee or otherwise, that person’s name; addresses; telephone numbers; job title 

  

	 	    	or position; dates of service; and (if applicable) the reason for termination; 

  

	 	C.	Records accurately reflecting current Preferred Customers’ and Participants’ name, 

  

	 	    	address, telephone number, and e-mail address, and former Preferred Customers’ 

  

	 	    	and Participants’ name and last known address, telephone number, and e-mail 

  

	 	    	address; 

  

	 	D.	Records of all consumer complaints and refund requests, whether received directly 

  

	 	    	or indirectly, such as through a third party, and any response; 

  

	 	E.	All records necessary to demonstrate full compliance with each provision of this 

  

	 	    	Order, including all submissions to the Commission; 

  

	 	F.	A copy of each unique advertisement or other marketing material used or 

  

	 	    	disseminated by Defendants to consumers, Preferred Customers, or Participants; 

  

	 	G.	A copy of each unique training material used or disseminated by Defendants to 

  

	 	    	Preferred Customers or Participants; and 

  

	 	H.	Copies of all contracts or agreements entered into between Defendants and any 

  

	 	    	participant in Defendants’ Business Venture. 


                          
                                         
        XII. 

                          
                        COMPLIANCE MONITORING 

IT IS FURTHER ORDERED that for the purpose of monitoring Defendants’ 

compliance with this Order and any failure to transfer any assets as required by this Order: 

  

                          
                                         
         26 














	 	A.	Within 14 days of receipt of a written request from a representative of the 

  

	 	    	Commission each Defendant must: submit additional compliance reports or other 

  

	 	    	requested information, which must be sworn under penalty of perjury; appear for 

  

	 	    	depositions; and produce documents for inspection and copying. The Commission 

  

	 	    	is also authorized to obtain discovery, without further leave of court, using any of 

  

	 	    	the procedures prescribed by Federal Rules of Civil Procedure 29, 30 (including 

  

	 	    	telephonic depositions), 31, 33, 34, 36, 45, and 69. 

  

	 	B.	For matters concerning this Order, the Commission is authorized to communicate 

  

	 	    	with each Defendant through its counsel. Defendant must permit representatives of 

  

	 	    	the Commission to interview any employee or other person affiliated with any 

  

	 	    	Defendant who has agreed to such an interview. The person interviewed may have 

  

	 	    	counsel present. 

  

	 	C.	The Commission may use all other lawful means, including posing through its 

  

	 	    	representatives as consumers, suppliers, or other individuals or entities, to 

  

	 	    	Defendants or any individual or entity affiliated with Defendants, without the 

  

	 	    	necessity of identification or prior notice. Nothing in this Order limits the 

  

	 	    	Commission’s lawful use of compulsory process, pursuant to Sections 9 and 20 of 

  

	 	    	the FTC Act, 15 U.S.C. §§ 49, 57b-1. 


                          
                                         
       XIII. 

                          
                                  EFFECTIVE DATE 

IT IS FURTHER ORDERED that this Order shall become effective upon entry, 

except that Section I shall become effective ten (10) months after entry of the Order. 

                          
                                         
       XIV. 

                          
                      RETENTION OF JURISDICTION 

IT IS FURTHER ORDERED that this Court retains jurisdiction of this matter for 

purposes of construction, modification, and enforcement of this Order. 

  

                          
                                         
         27 













 SO STIPULATED AND AGREED: 

FOR PLAINTIFF FEDERAL TRADE COMMISSION 
  

			
	 /s/ Janet Ammerman
	  	Date:      July 15, 2016      

 JANET AMMERMAN, California Bar No. 113996 

Email: jammerman1@ftc.gov 
 CHRISTINE M. TODARO, OH Bar
No. 0084976 
 Email: ctodaro@ftc.gov 
 DANIEL O. HANKS, DC
Bar No. 495823; VA Bar No. 65523 
 Email: dhanks@ftc.gov 

600 Pennsylvania Ave. NW, Mailstop: CC 8528, Washington, D.C. 20580 

Tel: 202-326-3145 (Ammerman) 
 Tel: 202-326-3711 (Todaro) 

Tel: 202-326-2472 (Hanks) 
 Fax: (202) 326-3395 

LAURA SOLIS, WA Bar No. 36005 
 Email: lsolis@ftc.gov 

915 Second Ave., Suite 2896, Seattle, WA 98174 
 Tel:
(206) 220-4544 
 Fax: (206) 220-6366 
 Local Counsel

 BARBARA CHUN, California Bar No. 186907 
 Email:
bchun@ftc.gov 
 Federal Trade Commission 
 10877 Wilshire
Blvd., Suite 700 
 Los Angeles, California 90024 
 Tel:
(310) 824-4312 
 Fax: (310) 824-4380 
 FOR
DEFENDANTS HERBALIFE INTERNATIONAL OF AMERICA, INC., 
 HERBALIFE INTERNATIONAL, INC., AND HERBALIFE, LTD. 

 

			
	 /s/ Douglas A. Axel
	  	Date:      July 14, 2016                  

 DOUGLAS A. AXEL 
 Email:
daxel@sidley.com 
 NITIN REDDY 
 Email: nreddy@sidley.com 

Sidley Austin LLP 
 555 West Fifth Street 

Los Angeles, CA 90013 
 Tel: (213) 896-6035 (Axel) 

Tel: (213) 896-6929 (Reddy) 
 Fax: (213) 896-6600 

  

                          
                                         
         28 













 ANDREW J. STRENIO, JR. 

Email: astrenio@sidley.com 
 Sidley Austin LLP 

1501 K Street NW 
 Washington, DC 20005 

Tel: (202) 736-8614 
 Fax: (202) 736-8711 

 

			
	 /s/ John E. Villafranco
	  	Date:      July 14, 2016                  

 JOHN E. VILLAFRANCO 
 Email:
jvillafranco@kelleydrye.com 
 Kelley Drye & Warren LLP 

3050 K Street NW 
 Washington, DC 20007 

Tel: (202) 342-8400 
 Fax: (202) 342-8451 

 

			
	 /s/ JB Kelly
	  	      July 14, 2016                  

 JB KELLY 
 Email:
jbkelly@cozen.com 
 Cozen O’Connor 
 1200 19th Street
NW, 3rd Floor 
 Washington, DC 20036 
 Tel:
(202) 471-3418 
 Fax: (202) 861-1905 
 FOR
DEFENDANTS HERBALIFE INTERNATIONAL OF AMERICA, INC.,  
 HERBALIFE INTERNATIONAL, INC., AND HERBALIFE, LTD. 

 

			
	 /s/ Mark J. Friedman
	  	Date:      July 14, 2016                  

 MARK J. FRIEDMAN, as an officer of 

Herbalife International of America, Inc. 
  

			
	 /s/ Mark J. Friedman
	  	Date:      July 14, 2016                  

 MARK J. FRIEDMAN, as an officer of 

Herbalife International, Inc. 
  

			
	 /s/ Mark J. Friedman
	  	Date:      July 14, 2016                  

 MARK J. FRIEDMAN, as an officer of 

Herbalife, Ltd. 

  

                          
                                         
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