Herbalife is refuting hedge fund investor Bill Ackman's claims that they are a pyramid scheming company.

The company issued a press release on Tuesday, which includes an analysis from prominent economist Walter H. A. Vandaele.

Vandaele said that Herbalife's business is a legitimate multi-level marketing firm.

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"Herbalife's U.S. business operations are consistent with the socially beneficial MLM model and inconsistent with the socially harmful pyramid scheme model," Dr. Vandaele said.

The economist's report supported the practices that Herbalife said it implemented on its business operations.

The release stated that 97 percent of Herbalife's product consumption came from its members and other indirect end-users. The percentage exceeds the 62 percent requirement for any legitimate retail MLM company, which means that almost all of the sales come from product selling and not the recruitment process.

Vandaele also pointed out that the company's products have "significant intrinsic value and market demand."

The capital needed for any person to join Herbalife is very minimal and "mostly recoverable." The starter package includes training materials and unsellable products for personal consumption of the joining member. All the training materials and products purchased can be returned and has a 100 percent money-back guarantee.

The research also shows that performing members were able to receive incentives. About 32 percent of their members who has one or two downlines were able to earn a minimum of US$1,000, while 7 percent of eligible members, or members who perform well, were able to receive at least US$10,000 and 2 percent of the group earned US$50,000 at minimum.

Vandaele is a managing director for Navigant Economics, LLC, a subsidiary of Navigant Consulting, Inc. He is an expert in the field of economics, public policy, finance and business strategy. He also specializes in microeconomics, econometrics, statistics and industrial organization.

Tagsherbalife, bill ackman, refute, press release