Recently, a reader left a comment asking if DoTERRA is a Pyramid Scheme. Here’s what I found out.
Is doTERRA a Pyramid Scheme? doTERRA is a legal direct marketing company that promotes a business opportunity selling essential oils. Although deTERRA is legal, it may not be a good opportunity.
In this article, I explain why doTERRA may be a pyramid scheme and reveal additional information you need to know if you are considering joining.
Why doTERRA May be a Pyramid Scheme.
doTERRA may be a pyramid scheme because it incentivizes and rewards recruitment, it requires distributors to buy lots of product, and to continue buying lots of product, and because most doTERRA distributors lose money.
In my opinion, doTERRA is fundamentally a dishonest company. While it pretends to offer a business opportunity selling essential oils, most doTERRA distributors earn less than they spend on products.
In recent years, doTERRA, a privately-owned company, has earned more than a billion dollars annually while the vast majority of their distributors lose money.If doTERRA distributers SOLD a billion dollars’ worth of product to the public in retail sales, the distributors would make money. Unfortunately, that is not what is happening. doTERRA distributors were forced to BUY product. That is why the company makes money and more than 99% of deTERRA distributors lose money.
The doTERRA promise that you can make money selling doTERRA essential oils is disingenuous and grossly misleading. doTERRA uses the illusion that money can be made to manipulate recruits into paying to join the salesforce and buying over-priced products.
When someone joins doTERRA as a distributor, aka Wellness Advocate, they are essentially paying the company for the privilege of selling its products, much like Tom Sawyer tricked his friends into paying him for the privilege of white-washing the fence.
As if paying for the privilege of selling the company’s products isn’t enough, before you can earn commissions, you must have purchased a minimum volume of products and then continue buying a minimum volume of products each month.
doTERRA emphasizes recruitment over retail sales. The Federal Trade Commission warns that if, as a distributor, your income is based mainly on the people you recruit and not on retail sales to the public, the company is probably a pyramid scheme.
Although doTERRA does appear to have retail sales, a distributor makes more money by recruiting people into the scheme. doTERRA has several incentives and bonuses to entice distributors to recruit.The doTERRA Fast Start Bonus: When a new distributor is recruited, the person who recruited her earns 20% commission on all the products the recruit purchases in her first 60 days as a distributor. doTERRA calls this the FAST START BONUS. However, to qualify to receive commissions, the recruiter must also have purchased a minimum of 100 PV (Personal Volume) each month on auto-ship.
The FAST START BONUS not only rewards recruitment which is a telltale sign of a pyramid scheme according to the FTC, but it also forces the distributor to buy lots of inventory, yet another telltale sign of a pyramid scheme.
The Power of Three Bonus: Like the Fast Start Bonus, the Power of Three also requires a doTERRA distributor to buy a minimum amount of product through monthly auto-ship and that the people that distributor recruits also buy a minimum amount of product through monthly auto-ship. Each monthly auto-ship order must be at least 100 Personal Volume (PV).
100 PV a month is a sneaky way of saying $100 a month!
The distributor must then personally recruit three people who also sign up for a minimum of 100 PV a month auto-ship, and the total downline volume under the distributor must exceed 600 PV a month. It’s important to note that while the minimum monthly auto-ship PV is 100 for the distributor, the incentive is for him to purchase enough product to meet the 600 PV monthly qualification.
When the distributor fulfills the above criteria, he is paid a $50 bonus. If the distributor qualifies for the Power of Three and his three recruits do too, he is paid a $250 bonus. If a third level of distributors also qualifies, then the distributor is paid a $1500 bonus.
However, at every level, the minimum qualifying PV must be met which means the distributors might spent much more on products to reach the qualifying level PV than they earned in bonuses.
Again, we see that doTERRA overwhelmingly promotes recruitment and forces distributors to buy excessive inventory.
Very Few Make Money.If you join doTERRA with hopes of making money, the probability that you will make more money than you spend is extremely small, less than 1%.
The probability that you will spend more money than you earn is almost 100%.
That’s not a business opportunity.
Specifically, doTERRA might be a pyramid scheme because it promotes recruiting over retail sales and because it forces members to buy products to qualify for earned commissions.
A Ridiculous Business Offer.
MLM has been around so long; it might seem normal. It’s not. It’s an abomination in the business world.
MLM in general, and doTERRA specificall,y want you to pay them for the privilege of buying and selling their products and building their sales force. That’s insane.
A Billion Dollar Company.
doTERRA is a billion-dollar company where most of their sales force is going broke.
Headquartered in Pleasant Grove, Utah, doTERRA is an MLM with annual sales exceeding $1 Billion. doTERRA’s foundational products include essential oils, essential oils accessories and nutritional supplements.
False Medical Claims.
The US Food and Drug Administration sent a warning letter to doTERRA in 2014 that alleged doTERRA permitted its distributors, aka Wellness Advocates, to claim doTERRA products could treat and cure medical conditions such as cancer and autism. Making such claims violates laws governing food, drug, and cosmetics.
So-called Business Opportunity.The greatest appeal of doTERRA is not its products. It is their so-called business opportunity.
While there is no conclusive method to determine why someone becomes a Wellness Advocate with doTERRA, I suspect it is mostly to make money. After all, if someone was drawn to the oils, they can buy them online and not have to deal with the hassles of auto-ship.
How many people want to buy expensive oils? It’s a tough market. How many people want to make more money? Just about everybody. That’s where doTERRA misleads people.
The doTERRA sales pitch is that you can become a Wellness Advocate and have your own profitable business. Unfortunately, the majority of people who join doTERRA don’t even make enough money to cover the cost of products. This sad fact is documented in the doTERRA Earning Disclosure Summary, although they try to hide it.
What is happening when you join doTERRA is you get locked into buying products each month. That might make sense if you really, really like essential oils, but if you’re trying to make money, it’s ridiculous.
You can join doTERRA as a Wholesale Customer for $35. This membership level allows you to buy products at wholesale prices. However, you are not permitted to sell these products, so the “wholesale price” thing is just a gimmick.
Even at the wholesale price, you will pay more than the retail price of comparable oil in the store. The wholesale price is not wholesale at all.
If you want to sell doTERRA products and try to make money, you must be a Wellness Advocate. Becoming a Wellness Advocate requires that you buy an enrollment kid.
Enrollment kits cost from $150 to $2,650. Yes, over two thousand dollars and perhaps another incident of doTERRA making their distributors buy more product than they need.
My guess is you’ll be encouraged to buy the most expensive enrollment kit you can afford. And, I suspect the FTC might consider the $2,650 Enrollment kit product loading.
The doTERRA so-called business opportunity is not about you making money. It’s about doTERRA capturing a market of consumers who will buy products under the illusion that is how to make money. It’s not. That’s how to spend money.
When you decipher the misleading numbers on the doTERRA Earning Disclosure Summary, you will see that the potential to make money with doTERRA is consistent with the MLM industry. That is, only about 1% earn more than they spend.
The odds are better in Las Vegas. You can randomly choose any business other than MLM, and your chance of making money would be better.
doTERRA is a billion-dollar company. That money is coming from forcing every Wellness Advocate to buy products. It’s shameful when a company is proud of how successful they have become by exploiting its sales force.
Look beyond all the feel-good ad copy on the doTERRA website because the bottom line for most distributors is not pretty.If you are interested in essential oils, become a certified aromatherapist. You can learn more about that here.
If you want to make money, I recommend that you learn affiliate marketing. It’s a lot cheaper to build an affiliate marketing business, the earning potential is unlimited, you don’t have to buy products, you truly own your business, and you don’t have to chase after friends and family. You can learn more about Affiliate Marketing here.
DoTERRA Income Disclosure.
The doTERRA Income Disclosure is extremely misleading. You must read it carefully to understand what it is saying.
At one point, doTERRA claims that only 20% of their members made money and that most of those who made money earned enough to pay “a portion, if not all, of their purchases of the Company’s products.”
That’s not a business. That’s an expense!
You Are NOT an Entrepreneur.
As a doTERRA Wellness Advocate, you’re not an entrepreneur. You’re a commission sales person who is forced to pay for the privilege of selling the company’s product and forced to buy the company’s product before you can earn a commission.
That’s a lousy deal.
You Are NOT Building a Business.As a doTERRA Wellness Advocate, you’re not building a business for yourself. You’re building a sales force for doTERRA. You don’t own it. It belongs to doTERRA, and they can change the rules whenever they want.
Essentially, doTERRA has placed the expense of marketing their product on the backs of their Wellness Advocates.
How Much Do You Make Selling for DoTERRA? Not much. The DoTERRA Income Disclosure is intentionally misleading and difficult to read. There is a reason doTERRA does not want you to know how much their Wellness Advocates earn.
Don’t look at the compensation plan to try to figure out how much doTERRA Wellness Advocates make either. The purpose of the doTERRA compensation plan is to create the illusion that you can make a lot of money with doTERRA. I found no evidence to substantiate this claim.
The true probability of making money with doTERRA appears to be about the same as the MLM industry in general. Unfortunately, less than 1% of the people that try MLM make more money than they spend. That appears to be true for doTERRA too.
Is doTERRA a Scam? doTERRA uses dishonesty and deception to make money. doTERRA offers a so-called business opportunity that has a 99% rate of failure. The chances anyone will make money with doTERRA is only slightly above zero. That’s not a business opportunity.
If you found this article helpful or if you have experience with doTERRA you would like to share, please leave a comment below. Thank you.