A wellness empire embroiled in allegations of operating as a “cult-like” pyramid scheme under the guise of essential oil sales.
Young Living is a multi-level marketing (MLM) company founded in 1993 by D. Gary Young, specializing in essential oils and wellness products. Despite its substantial market presence, the company has faced significant controversy and legal challenges, particularly regarding its business model and practices.
The core of the controversy lies in the company’s MLM structure, which has been described as “cult-like” and a pyramid scheme by critics and in legal actions. A class-action lawsuit filed in the U.S. District Court for the Western District of Texas by Julie O’Shaughnessy and others alleges that Young Living’s business model is overly reliant on recruitment rather than actual product sales. According to the lawsuit, the company promises financial success and wellness benefits that are unattainable for the vast majority of its members, with 94 percent of members earning an average of $1 per month in sales commissions. This setup reportedly results in significant financial losses for its members, who are encouraged to recruit new members aggressively and maintain their membership status through monthly purchases, leading to an accumulation of unsold inventory.
This lawsuit further argues that Young Living violates the Federal Trade Commission’s 70/30 rule, which mandates that MLM participants must sell more than 70 percent of their monthly inventory before purchasing additional products to be eligible for commissions. The suit asserts that Young Living prioritizes recruitment over product sales, crossing the line into operating as an illegal pyramid scheme. The average loss per member in 2016 was approximately $1,175, while the company itself reported over $1.5 billion in annual revenue, largely derived from its representatives paying to be part of the sales force and from the products its sales force is required to purchase.
Young Living defends its business model, arguing that it offers individuals the opportunity to build their own businesses by selling products and states that many of its members solely purchase products for their use without engaging in sales or recruitment. Despite these defenses, the allegations and the lawsuit highlight significant concerns regarding Young Living’s practices and the broader implications of MLM models that emphasize recruitment over direct sales.
image via Young Living
