Herbalife to pay $200M, but avoids more serious charges

NEW YORK (AP) — The Federal Trade Commission is closing an investigation of Herbalife. The Cayman Islands company agreed to fully restructure its U.S. business operations and pay a $200 million settlement over allegations that it deceived consumers, but it avoided more serious charges that it was...

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              FILE - In this May 6, 2016 file photo, the Herbalife logo appears above the post where it trades on the floor of the New York Stock Exchange.   The Federal Trade Commission is closing an investigation of Herbalife and the multinational, nutritional supplements company will to pay $200 million to settlement allegations that it deceived consumers.  The company said in a written statement on Friday, July 15,  that the FTC settlement doesn’t change its business model as a direct selling company. (AP Photo/Richard Drew)

NEW YORK (AP) — The Federal Trade Commission is closing an investigation of Herbalife.

The Cayman Islands company agreed to fully restructure its U.S. business operations and pay a $200 million settlement over allegations that it deceived consumers, but it avoided more serious charges that it was operating as a pyramid scheme.

Shares are surging in premarket trading.

Under the settlement, Herbalife Ltd. will have to rework its compensation system so that retail sales are rewarded, and scrap incentives that reward distributors for recruiting.

Herbalife disclosed in 2014 that it was being investigated by the FTC for possible "deceptive practices."

The company Friday that the FTC settlement doesn't change its business model as a direct selling company. Herbalife will also pay $3 million in a separate agreement to settle an Illinois investigation.

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