A reader asked if Young Living Essential Oils is a pyramid scheme. In this article, I give my opinion based on the guidelines established by the United States Federal Trade Commission regarding MLMs and pyramid schemes.
Is Young Living Essential Oils a Pyramid Scheme? Young Living Essential Oils is NOT a Pyramid Scheme. Young Living Essential Oils is a Multi-level marketing company with robust retail sales. Because Young Living Essential Oils representatives appear to earn the greater portion of their revenue from sales to the public, I conclude the company is not a pyramid scheme.
Young Living Essential Oils.
Keep in mind that although Young Living Essential Oils may not be a pyramid scheme that does not mean you will make a lot of money with their business opportunity. More on that in a moment.
The Federal Trade Commission (FTC) investigates and prosecutes suspected pyramid schemes in the United States. A thorough investigation and a legal hearing is required to conclusively determine if a business is a pyramid scheme or not.
However, there are warning signs that a business may be a pyramid scheme. If these warning signs are not evident, it is probably safe to assume the business is not a pyramid scheme, although it does not mean the business is a good business worthy of your money, time and energy.
FTC Warning Signs.
In this article, I expand on the three elements the FTC warns are indicators that a business might be a pyramid scheme and I show how Young Living Essential Oils measures up.
Pyramid schemes are illegal in most countries. Pyramid schemes destroy the financial lives of countless people and negatively impact entire economies.
Unfortunately, the internet has fostered a growing epidemic of pyramid schemes in various forms. Many pyramid schemes pretend to be Multi-level marketing companies. Often, it’s a very thin line between a legitimate MLM and a pyramid scheme.
3 Signs a Company Might Be a Pyramid Scheme.
If a business trying to sell you an “opportunity” has any of the following signs, it’s probably a pyramid scheme.
- The money you make as a distributor for the company is primarily earned by recruiting others and selling products to your recruits. Little or no money is earned by selling products to people who are not members of the sales organization.
- You are forced to buy lots of products. This requirement might be disguised as Starter Packs or Business Packs, or as aggressive auto-ship programs.
- You are required to buy other things you don’t need such as training packages or product packs to maintain an active status with the company.
The Pure Pyramid Scheme.
A pyramid scheme is focused on recruitment. In a pure pyramid scheme there is no product, just a so-called business opportunity. If you join the scheme, you pay money to join and the person who recruited you is paid a commission.
Once you join the scheme you have license to recruit people. Each time you recruit someone you earn a commission. Again, no product is sold, you are rewarded for recruiting others. Recruiting others is the only way to make money with a pure pyramid scheme.
Not surprisingly, most of the money paid into a pyramid scheme is funneled to the person at the top, usually, the person who created the scheme in the first place.
At some point there is no one else to recruit and the scheme collapses. The thing to remember is a pure pyramid scheme is based on recruitment and it is only through recruitment that money is made.
Selling the Dream.
A key sign that a business opportunity may be a pyramid scheme is “Selling the Dream.”
Selling the Dream means the people trying to recruit you are pitching outrageous promises of making a lot of money quickly and easily. They will continually try to keep you in an emotional state because they know you cannot make a rational decision while you are emotional.
In other words, they push your greed button. It’s a scammers tactic as old as Eve and the Serpent.
Is Young Living Essential Oils Legal?
In my research, I found a comment that argued Young Living Essential Oils is indeed a pyramid scheme because when a distributor recruits someone new into the organization they are paid a $20 commission. The writer makes a good point. Technically, I agree. However, because Young Living Essential Oils has a large retail sales market, I do not think the FTC would consider it a pyramid scheme.
In my observation of the FTC and the cases they chose to prosecute, it appears that the FTC is friendly towards the Multi-level Marketing industry. The FTC often tolerates all but the obvious violation of the law. Their attitude may be because of limited resources and an infinite caseload. In other words, they must chose their battles.
The Product Based Pyramid Scheme.
According to the FTC, many pyramid schemes hide their true nature by adding a line of products and claiming to be an MLM. Dr. Jon Taylor, in his published research about the MLM industry, referred to this hybrid as a product-based pyramid scheme.
Indeed, many critics label all MLMs as product-based pyramid schemes. And, they have a sound argument. However, within the focus of this article, I will debate there are differences between blatant pyramid schemes masquerading as MLMs and genuine MLMs that earn most of the revenue from retail sales of products that are also reasonably priced.
Remember how a pure pyramid scheme has only a business opportunity to offer. That’s illegal because money can only made by recruitment.
For sake of comparison, let’s say it costs $50 to join and $50 a month to stay in such a scheme. Each time someone joins, $50 flows from the bottom of the organization to the top. At each level, each member is rewarded a little slice from the $50, but most of it goes to the top.
Likewise, every month, each member pays $50 to stay active in the scheme. That’s how money flows in a pure pyramid scheme.
When a pyramid scheme adds a product to conceal their true nature, they charge a lot of money for a product that isn’t nearly as expensive when purchased elsewhere. Promoting overly expensive products is a clue that a MLM might be a pyramid scheme.
For example, if a so-called MLM sells a $5 beverage for $55 and requires recruits to buy that beverage when they join and to buy more each month, the flow of money up the organization is no different than for a pure pyramid scheme. The product is merely an attempt to make a criminal enterprise look legitimate.
Young Living Essential Oils products are among the most expensive in the essential oil market. However, I do not think they are unreasonably priced. Nor do I think the product packs are overly expensive either. Again, when you weigh the cost of their products with their robust retail sales, I think Young Living Essential Oils is clear of any accusation that it might be a product-based pyramid scheme.
Product-based pyramid schemes generally offer magical products. By this I mean they claim their products can achieve magical health results. There are MLMs which I suspect are product-based pyramids that promote magical coffee and energy drinks and who charge several times more than a comparable product that is available elsewhere.
There are reports online that some Young Living Essential Oils have made unsubstantiated health claims about their products, even claiming that it can cure cancer and a series of other health issues.
In 2014, the FDA sent Gary Young, the CEO of Young Living Essential Oils a warning letter advising Mr. Young that many of the company’s distributors were making wild claims about the health benefits of the products. These claims included viral infections, Ebola, Parkinson’s disease, diabetes, high blood pressure, cancer, insomnia, heart disease, PTSD, and dementia.
However, such claims are not evident on the Young Living Essential Oils website. Still, the fact that some distributors will make such claims exposes a serious issue with selling essential oils through an MLM. Most distributors are not Certified Aromatherapist, and that’s a problem.
Some of the Young Living Essential Oils complaints I found online were about the products harming or killing pets after a distributor recommended them.
Unsubstantiated claims stem from distributors who are mostly interested in making money. Generally speaking, these are the sorts of people drawn to MLM because most MLMs market to people who want to make money. The essential oils are just a means to an end. It’s a recipe for continual ethics violations.
Young Living Essential Oils Integrity.
To be sure, Young Living Essential Oils has had some failures of integrity, both at the corporate level and among their distributors. However, I am not convinced it is a pyramid scheme because it has such robust retail sales.
Can You Make Money with Young Living Essential Oils?
Probably not. Statistically, the MLM industry has a dismal record for helping people make money. Entrepreneurship is tough in any industry or market. Success takes work, commitment, proper support and patience.
The crime of MLM is that the deck is stacked against the average distributor and only favors a few people at the top. MLM holds out the promise that the average distributor can make money. That promise is misleading and damaging to most people who try MLM.
Statistics show that only about 1% of the people who try MLM earn more than they spend.
Young Living Essential Oils Compensation Plan does not directly claim you will make money, but they do claim to help you “achieve abundance.” Whatever that means. Promises that don’t promise anything are typical MLM speak.
Should You Join Young Living Essential Oils?
That’s a personal decision. However, I suggest that you only join if you are crazy about the products. And, don’t expect to make more money than you spend on product and running your business.
If you join Young Living as a distributor with the ambition of making money, remember, the few people who succeed with MLM either launch their own business or they become very good at recruiting, motivating and managing people.
If you’re interested in essential oils, I think you would find it more rewarding if you were a Certified Aromatherapist. Then you can genuinely help people and that’s the best way to make money. Begin your research about Certified Aromatherapists at the two non-profit organizations that promote the profession, HAHA and AIA.
If you found this article helpful, or if you have experience or insights to share about whether Young Living Essential Oils is a pyramid scheme, please leave a comment below. Thank you!