Herbalife faces "pending law enforcement action," the Federal Trade Commission confirmed in February 2013. This announcement follows investor Bill Ackman's public presentation in December 2012, where he alleged the company operated as a sophisticated pyramid scheme.

This development makes 2013 a significant year for regulatory scrutiny in the multi-level marketing industry. Earlier actions that year included the FTC's enforcement against Fortune Hi-Tech Marketing as a pyramid scheme and allegations made against Bidify by its former CEO.

Following Ackman's claims, The New York Post submitted a freedom of information request to the FTC. The request sought any substantive complaints filed against Herbalife after the hedge-fund activist went public.

In response, the FTC released 729 pages of complaints. These documents detailed allegations of false promises made by Herbalife and difficulties distributors faced in collecting owed income and securing refunds. Some distributors, years before Ackman's presentation, informed the FTC they believed the company functioned as a pyramid scheme.

Of particular note were internal FTC notes attached to several complaints. These notes specifically referred to a "pending law enforcement action."

The FTC redacted some sections of the released documents. The agency cited an exemption for "information obtained by the commission in a law enforcement investigation, whether through compulsory process, or voluntarily." However, the FTC did not specify whether the action was civil or criminal.

An earlier investigation into Herbalife by the Securities and Exchange Commission became public after Ackman's presentation. But this marks the first time the FTC confirmed its own involvement in an investigation, let alone "pending law enforcement action."

An analysis of the Herbalife compensation plan shows a clear lack of retail customers. It reveals retail sales offer no financial sense compared to commissions distributors earn by reselling their own purchased inventory to recruited Herbalife distributors. This sales process itself proves illogical, as distributors often pay more buying from their upline than directly from the company.

The New York Post attempted to contact both the FTC and Herbalife for comment regarding the revelations.