Is Young Living a pyramid scheme?
Young Living sells essential oils and other health and lifestyle products. The company says that it is a ‘Multi Level Marketing’ plan. However, MLMs share lots of qualities with pyramid schemes so it can be difficult to tell the difference.
The US Government’s Federal Trade Commission has information about pyramid schemes to help. “Some schemes may purport to sell a product, but they often simply use the product to hide their pyramid structure.”
Some tips to watch out for
- Large profits are based primarily on recruiting others not on the real sale of goods.
- Recruits are forced to buy more products than they could sell.
- People at lower ranks make excessive payments for inventory that accumulates in their basements. See: inventory loading, bonus buying
- Many schemes will claim product sells like crazy, but sales are only occurring between people inside the structure or to new recruits. Lack of retail sales.
- Prices for products are inflated. Outrageous product claims.
- Commissions for recruiting new distributors. Especially when there is no legitimate product or service, or separate up-front membership fee.
How does Young Living stack up?
Let’s look at the tips above and look carefully at the compensation plan and the income disclosures for Young Living. Also, we’ll look at what participants frequently say.
- Large profits are reached at the higher ranks. At these ranks, a member must be recruiting other members. The income disclosures do not show large profits from real sales alone. The compensation plan also mentions to “focus on helping others create their success.”
- New recruits must purchase expensive starter packs. The default pack is a “standard premium kit” for $160. Some are as much as $260. The basic kit is $45.
- Recruits are encouraged to order inventory monthly via auto-shipment in the essential rewards program. This can lead to extra inventory that can’t be sold.
- Returning merchandise has fees and limitations.
- You cannot become a consultant without purchasing a starter kit.
- There is not technically a direct commission for enrolling a new distributor. However, you do make a commission when a new distributor purchases a starter kit. In this way, there is a commission for enrolling new distributors.
- Distributors frequently make unbelievable product claims. Most commonly, the oils are a miracle cure. There are limitations on products being sold on various platforms and in the state of California.
Pyramid schemes will disguise themselves as MLM or direct sales companies. Even if Young Living is technically a legal multi-level marketing company it has many pyramid scheme red flags. These qualities make it a bad business opportunity.
Finally, we can see this isn’t a great opportunity because so many people are earning $0. This means, after expenses, most people lose money selling Young Living. Check out the income disclosure analysis for more.