FTC urged to probe Herbalife claims Linda Sanchez, a Democratic US representative from California, has urged the Federal Trade Commission to investigate allegations that Herbalife, the nutritional supplement direct seller, is a pyramid scheme. In a letter to Edith Ramirez, FTC chairwoman, seen by the Financial Times, Ms Sanchez said she was "troubled by allegations that this company may be harming consumers - especially those from our country's most vulnerable populations." Ms Sanchez is a prominent leader in the US Latino community, which provides a large proportion of recruits for Herbalife's network of self-employed sales people in the US. Bill Ackman, the prominent short seller who has made a billion-dollar bet against the value of Herbalife stock, has called the company a pyramid scheme that recruits and exploits sales people from low-income and minority groups. Herbalife has denied the accusations. Ms Sanchez, in the letter dated June 5, said: "As I have learned more about this issue from my constituents and outside groups, I believe it is the FTC's responsibility to examine these allegations." Herbalife did not immediately respond to requests for comment. The FTC confirmed it had received the letter but declined to comment on its contents. The Hispanic Federation, a lobby group, last month wrote a letter to the FTC urging that the commission investigate Herbalife's business practices, citing concerns that distributors may be primarily rewarded for recruitment rather than for selling protein shakes and vitamin pills to consumers. The distinction between recruitment and sales as the source of compensation is a key test for whether a direct marketing scheme is legitimate. A March letter to the FTC from the National Consumers League, another lobby group, also called for an investigation. "Low-income consumers, as well as African-Americans and Hispanics, were found to be especially vulnerable to pyramid schemes masquerading as legitimate business opportunities," the letter said. Herbalife has said it passes the test, with the great majority of sales going to genuine retail customers. On Tuesday the company published the results of an online poll, conducted by Nielsen, that it said showed around 8m US adults had purchased Herbalife products in the preceding three months. Shares in Herbalife rose 4 per cent on Wednesday to $45.27. Since Mr Ackman unveiled the campaign by his hedge fund, Pershing Square, against the group in December, they have traded as low as $26 and as high as $50.54. In January, another hedge fund, Third Point, disclosed an 8 per cent stake in Herbalife and told its investors that the idea the "FTC has been asleep at the switch" and would suddenly awaken at the behest of a short seller was "preposterous." The hedge fund has since sold its shares.