Is Young Living A Pyramid Scheme?

Is Young Living A Pyramid Scheme?

 

Young Living Essential oils was founded in 1993 and has become a major player in the health and wellness business category.

 

Gary and Mary Young started their first farm and distillery in 1994 and distributes essential oils internationally.

 

Young Living comes in at #9 of the top MLM companies list in 2021 with 2.0 Billion in Revenue.

 

Just as a reminder, an illegal pyramid scheme contains some of these characteristics

 

  • You cannot make more than the person who sponsored you
  • You only get paid to recruit
  • No product exists or no product is being sold
  • Commissions are based only on recruits
  • Large sign up fee or front loading of inventory
  • There should be a strong retail aspect – Gaining customers

 

 

HOW TO SIGN UP IN YOUNG LIVING

 

This sign up discussion applies only to the USA signups

 

Preferred Customer:

 

You can sign up to shop Young Living products and enjoy member rewards.

 

Once you enroll another person, you automatically become a business member.

 

They are calling a business builder a Brand Partner on their web site. It does look like you have to buy a small business essentials kit for $29.95

 

This gives you company literature and some goal tracking papers.

 

You do, however, have to earn 100PV to get 24% off all products. This equates to about $165.00

 

So all up, it is still under $200 USD to get started in Young Living.

 

This is far below the threshold of a typical pyramid scheme.

 

 

HOW YOU GET PAID IN YOUNG LIVING

 

Beyond the fast start bonuses, trips, and other periodic incentives, Young Living’s compensation plan is based on a five level payout.

 

You earn a percentage of all the group volume in each level – 8% 5% 4% 4% 4%

 

There are 7 qualification levels and you only get paid down 5 levels hen you reach the 4th qualification (Executive).

 

This “unilevel” method of payout is typical of many other MLM’s.

 

In order to get paid, you must personally purchase 100PV of oils per month. (about $165).

 

One of the key factors I look at when analyzing compensation programs is the ability for a person to earn more than the person who enrolled them.

 

If that cannot happen (as in the corporate world), it is definitely a pyramid scheme.

 

In Young Living, I could personally enroll more people than my enroller and based on the compensation plan, I will earn more money. The plan rewards you more for personal enrollments than group enrollments.

 

Nowhere in the compensation plan do I see any payment for simply recruiting someone. The closets to it would be their fast start bonus. But that is based on volume purchased, although some critics could try to twist it!

CLICK HERE for Young Living Compensation Plan PDF

 

RETAIL FACTOR

 

Unfortunately, there are not retail sales requirements in Young Living. It goes against the FTC’s 10 customer rule established when they investigated Amway. There is no requirement from the FTC, but they do take that into consideration if an investigation is launched.

 

Young Living members can (and do) sell to retail customers. I was a retail customer for a long time before becoming a member. This is the way most members start. According to Young Living, about 89% of their members are in it to get a discount on their own oils and make some sales along the way.

 

 

CAN YOU MAKE MONEY IN YOUNG LIVING?

 

The simple answer is YES. The practicality is, most do not. In fact, in 2021, the average gross annual income of 89% of their members was only $3.

 

I have personally coached a few people in Young Living and have about 50 or so tax clients in Young Living. The key is finding people who like the benefits of the oils. I would say 1 out of 4 people will do something with the business. The 3 out of 4 will either be retail clients or members.

 

The fact is that the oils are high quality and high priced. They do have benefits and I would not classify this as a pyramid scheme.

Let me know your thoughts in the comments!

 

Cheers

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