In Hong Kong, Herbalife goes on, as US probes alleged pyramid scheme

It was business as usual yesterday at the Hong Kong branch of a global health-products firm under investigation in the United States for possible pyramid selling - as a barrister urged local police to crack down on such schemes.

The US Federal Trade Commission has launched a probe into Herbalife after repeated allegations by a hedge fund manager betting against its stock that its multi-level marketing is an illegal pyramid scheme.

But Herbalife International of Hong Kong, which has operated for almost two decades, said no local enforcers had contacted it and business was continuing normally. The company has an office in Tsim Sha Tsui.

Hong Kong's Pyramid Schemes Prohibition Ordinance, which came into effect in 2012, says a scheme is illegal when any reward is entirely or substantially based on the recruitment of new members while the product or service offered has little or no real value.

But multi-level selling of a legitimate product or service, such as insurance, is allowed.

Barrister Albert Luk Wai-hung said the ordinance offered a clear definition and it was time for police to be more active in ensuring multi-layer marketing activities did not cross the line.

"Many of these companies are involved in very complicated marketing activities," Luk said. "It may be difficult for the authorities to collect evidence to prove that a company is involved in a pyramid scheme, even if victims have come forward."