fbpx

Young Living Essential Oils Pyramid Scheme Class Action

The story alleged in this complaint is familiar: a pyramid selling scheme, promising riches, but with the ultimate wealth going to those at the top of the pyramid. In this case, the allegations are against Young Living Essential Oils, LC.

The class for this action is all US residents who joined Young Living before December 31, 2016 and enrolled as Essential Rewards members.

Young Living sells essential oils through a multi-level marketing (MLM) operation. Not all MLM companies are considered fraudulent; the Federal Trade Commission (FTC) has developed guidelines for legitimate ones. 

One guideline for a legitimate MLM operation is that revenue comes primarily from sales rather than from the “down line”—members farther down the pyramid. Unfortunately, the complaint claims that the revenue in Young Living is “overwhelmingly dependent on the recruitment of new people to the Young Living sales force[.]”

New members to Young Living must buy a starter kit from an earlier member. The kits range in price from a basic kit for $100 to a premium kit for $260. The recruitment earns the earlier member a cash bonus. 

Members must buy a minimum amount of product each month in order to be eligible to make commissions. The products are available at a discount, and the member can resell them and keep the profit. However, the complaint says, there is no real incentive for a member to do this for two reasons. 

First, the complaint claims anyone can buy the oils at the discounted price from Young Living. Second, members do not earn commissions on the products they buy; instead, the commissions come only from starter kits and products sold to the down line. 

Worse, Young Living doesn’t even pay all commissions owed. If a member’s commission comes to less than $25 in a month, Young Living pays the commission in credits to buy more product. To truly earn money, the complaint says, a member must have a down line of thousands of recruits.

Young Living also violates the FTC’s “70/30 rule.” The FTC ruled that Amway was not a pyramid scheme in part because the company required members to provide proof of resale showing that no more than 30% of the product they bought was for personal use or for storage and that 70% went to actual sales. Although Young Living’s policies state that no more than 30% of product ordered can be stored, the complaint says it does nothing to enforce the policy.

The complaint claims, “Based on Young Living’s own public disclosures, 94% of total Members earn an average of $1per month in sales commissions, and more than half of those who joined in 2016 alone made no commissions at all.” However, since members are still required to buy product, “the average loss per Member in 2016 was approximately $1,175.”

The complaint alleges racketeering and conspiracy to violate racketeering laws.

Article Type: Lawsuit
Topic: RICO

Most Recent Case Event

Young Living Essential Oils Pyramid Scheme Complaint

April 12, 2019

The story alleged in this complaint is familiar: a pyramid selling scheme, promising riches, but with the ultimate wealth going to those at the top of the pyramid. In this case, the allegations are against Young Living Essential Oils, LC.

young_living_pyramid_scheme_rico_compl.pdf

Case Event History

Young Living Essential Oils Pyramid Scheme Complaint

April 12, 2019

The story alleged in this complaint is familiar: a pyramid selling scheme, promising riches, but with the ultimate wealth going to those at the top of the pyramid. In this case, the allegations are against Young Living Essential Oils, LC.

young_living_pyramid_scheme_rico_compl.pdf
Tags: Pyramid Scheme, RICO laws