When I Accidentally Got Involved in a Pyramid Scheme

When I Accidentally Got Involved in a Pyramid Scheme August 2, 2018
Photo Credit Big Stock

When I first started using the DoTERRA products in spring 2017, I loved the way the oils smelled. My husband and I both had trouble sleeping, and we rubbed a few of the oils on our feet. Initially, we found the oils relaxing and calming. During the day I diffused citrus oils to help invigorate my mood. I noticed the oils not only made the air smell better, but they helped me feel better. The better I felt using the oils, the more I wanted to buy. My friend I bought them from convinced me to sign up as a Wellness Advocate and sell the oils.  I had no idea by doing so I would get involved in a Pyramid Scheme.

After a one time purchase, I decided to sign up as a Wellness advocate. I figured I could sell a few oils to friends or family to offset the cost of the oils. My friend that introduced me to the product became my upline. I knew very little about oils at this point. However, I knew a lot about sales and marketing due to my career in sales. Selling the oils didn’t feel like it could be that hard. I knew I could apply my years of sales experience, and I felt like I could be successful.

My first month my sales were outstanding. I had some friends and family interested in purchasing oils. However, the next month I found it impossible to sell anything. My friends and family didn’t have much interest in buying oils every month. Because the oils are so concentrated, a single bottle could last for years. My upline told me to instruct people on ways to use the oils to increase their consumption.

I made videos, wrote blogs, and did everything I could to push the oils. Unfortunately, people didn’t need oils, or they had someone else they knew that sold oils. I tried everything my upline recommended, and nothing worked. I couldn’t believe that with the amount of sales experience I had that I couldn’t sell the oil.

Finally, I opened up to my upline and shared my frustration. I told her I didn’t like harassing my friends and family to buy products. Additionally, I expressed my frustrations that I couldn’t make money by selling the products.

At this point, she dropped a bomb on me. She admitted that the only way to make any money at DoTERRA was by recruiting new members to become Wellness Advocates. She said the goal was to create a team. I was instructed to recruit people to sell under me. Then I could earn commissions off their onboarding packages and any sales they made.

I asked her how adding friends to directly compete with my sales would improve my sales. She promised me that we all had different circles of influence for selling. However, my uplines sphere of influence and my own sphere were intertwined. I found it next to impossible to reach new customers because we knew the same people.

If I had trouble selling by having a person above me, how would I sell more oil by having people below me? None of this made sense to me. I know market saturation is not a good thing. I mean McDonald’s doesn’t put 3 restaurants on the same block. Why would I ask my neighbors to sell oils that I offer?

What she told me about DoTERRA made it seem like the company may be a Pyramid Scheme. When I made the realization, I felt sick to my stomach. I had always been critical of anyone that got involved in these scams. Somehow despite my best efforts to avoid these companies, I ended up working for one.

In order to verify my concerns, I did a quick Google search and landed on the Federal Trade Commission website. There I found an article called the Telltale signs of a Pyramid Scheme. The FTC outlined three examples the company was a pyramid scheme

  1. The income you earned is based primarily on the recruitment of new salespeople to the company. The income you make on products is minimal.
  2. You are required to buy a lot of inventory
  3. You are forced to buy products you don’t want or need to stay in good standing with the company

I reviewed the commission chart for DoTERRA. After reading it, I realized the commission worksheet was confusing and complicated. Additionally, I learned the most significant commissions given out were through “Power of 3,” bonuses. These commissions are received when you and 2 of your recruits hit specific targets each month. The rewards were substantial at up to $1500 per month. A Power of 3 Bonus was far more than the 10% in the commission that DoTERRA offered for the sales of the products.

Also, the chart said I needed to purchase 100 product points every month to be eligible for the highest bonuses. Product points were supposed to be one point for one dollar spent. However, many times this formula of 1:1 wasn’t accurate. I noticed with the most expensive products that the points were significantly less than the product cost. Additionally, to be eligible for commissions, I had to spend more than $100 a month or $1200 a year. YIKES! $1200 is a lot of money to spend on products that I don’t even need.

After reviewing everything and comparing it to the FTC article, I knew I got involved in a Pyramid Scheme. I can’t even tell you how humiliated I felt. Not only did I feel embarrassed, but an incredible amount of shame came over me. My family lived on a tight budget, and I had wasted hundreds of dollars. I had been lured into selling with the pitch that I could help my family by earning extra money. When I did the math over the two months I had been selling, I had spent $700 more than I had made.

After I did the math, I felt sick to my stomach. My family lives on a single income because my son is medically fragile. When I had to tell my husband about the money I lost, I felt petrified, embarrassed, and full of shame. I had always been the responsible one with money in our relationship. Admitting my carelessness to my husband, was a bitter pill to swallow.

Thankfully, my husband was incredibly understanding. He didn’t get angry or upset. In fact, he told me he understood my intentions. I felt relieved he didn’t get mad. However, I was so angry with myself.

After my husband and I talked, I let my upline know that I had to quit selling. I was too afraid to tell her what I uncovered, and I knew she wouldn’t believe me anyway. When I left as a consultant, our friendship ended on bad terms. Not only did I get scammed out of money, but I also lost a friendship. My heart was shattered.

Today I still have a box of over 100 oils that I no longer use as a reminder of my mistake. Each time I see the box, I feel a tiny sting to my ego. I had always prided myself on being astute and intelligent in business. However, even I got suckered by a Pyramid Scam.

If it can happen to me, it can happen to anyone.

My best advice is to stay away from all Multi-Level Marketing companies.

All of them are a scam. Some just do a better job at looking legitimate.

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What Are Your Thoughts?leave a comment
  • Blanche Quizno

    Her name is Katie Paulson… Her name is Katie Paulson…

    😀

  • what?

  • Jennny

    I recall staying with an aunt for 3m (my mum was ill) when I was 9yo. She went sooo OTT for something new called Tupperware parties. She hosted them and bought just about every item they sold at friends’ parties. My mum used similar plastic tubs at a fraction of the price from Woolworths, or recycled ice-cream tubs. Young as I was, it all seemed a bit of a marketing con to me. My aunt got my uncle to build another cupboard in the kitchen for her Tupperware collection. A few months later, I visited and 2 Tupperware tubs were catching drips from a leaky porch roof, others were dog bowls and several stood under plantpots. And I recalled the demonstrator waxing eloquent about how wonderful these tubs were for ‘your party canapes’ – only she pronounced it ‘can-apes’ as in the animal kind of apes. it kind of innoculated me against any commodity that was sold at parties that could be bought cheaper in normal shops.

  • Yep! Now it’s norwex. Omg the rags that you can buy at target are 5x the price via norwex it’s insane

  • Morgan Lefaye

    Fight Club reference, Blanche. Katie: Get mad at the scammers, not yourself.

  • Jennny

    Oh wow, I’d never heard of Norwex so googled it. How can anyone, except those with money to burn spend £25 (it’s here in the Uk too) on a can of bathroom cleaner? I don’t spend that in a year on cleaners for my 2 bathrooms – and £15 for a cloth? I’ve used old tee-shirts for 50yrs…and DH and I have made it to 70yrs old, fit and healthy on cheapie supermarket cleaners, germophobes we ain’t…and never will be!

  • Yeah a friend of mine got into selling Arbonne and recruited several downlines from our circle of friends. The upline is trained to focus on people to recruit – the single mom, the stay at home mom whose dream is to pay for a new car or college education, etc. The upline interviewed each of us at the party, and when I told her I am upper management at a fragrance manufacturer and know through personal care customers exactly how much it costs to manufacture, market, and distribute the products, she said, “Oh this isn’t for you” and she moved to interview the next mark.

    Don’t feel bad. MLMs are designed to play on your emotions, Hope’s, and dreams to lure you in. They give you gifts and throw conventions to rival a rock concert.

    My friend is no longer an Arbonne rep. She left her husband, has an exciting new fiance, and according to her ex only cleared $2000 in 3 years after a lot of hard work and trips to conventions. She was looking to make a life change and her upline played her. Most of her downlines got out too.

    As for essential oils, in the fragrance industry we use them in small quantities along with aroma ingredients to make fragrances. Some ingredients come from breaking down essential oils into components. Essential oil quality, color, and aroma value are dependent on crop conditions. They are a problem in terms of sustainability – 1000 kg of rose petals are required to produce 1 kg of rose oil. There is a TON of waste, much land is needed for production, and many crops are grown in 3rd world countries. Many essential oils are highly allergenic and are restricted for skin product use (hello, cinnamon,clove, citrus, to name a few). Some like nutmeg and basil contain carcinogens, and many are regulated as aquatic hazards. Natural doesn’t equal safe. Sorry, I am highly involved in educating customers about naturals.

  • Mythblaster

    Rodan & Fields (“dermatology” products) is another example. Avoid them like the plague… https://uploads.disquscdn.com/images/75367896e4d8ed2992ace1fff78f4fcee36564cfc8b3790e3a44a2d10621d930.gif

  • Mefistofele

    These MLM schemes are as old as the pyramids themselves, yet people still get sucked in! A lot like religion really.

  • Daffodil

    My advice is to run away anytime someone suggests you can sell things other people make from home. They are all MLMs and they are all targeting the stay-at-home moms who want to help contribute to the family income. My best friend was in Tupperware for the longest time and never made it to the income level she shot for. She still has boxes and boxes of Tupperware from years ago that she can’t get rid of. Now she does Rodan & Fields and I’m just waiting for the day she tells me she’s giving that up too. Every time she or anyone else I know has asked me if I would consider joining their MLM flavor of the month, I am always at a loss as to who I would sell to. I know the same people these people know, so who is left? And many of them are sellers as well! It’s especially amazing to me that these things are so popular in churches. It takes no time at all to saturate a church and then where do you go to get new sellers/buyers?

  • Daffodil

    Out of curiosity, here are the ones that were prevalent in my early marriage and childrearing. Are any of them still around?

    Tupperware
    Pampered Chef
    Mary Kay
    Siilpada
    Thirty-One
    Amway
    Avon
    Discovery Toys

  • Fred Rickson

    Sorry, but using the word “Accidentally” doesn’t substitute for “not thinking.”

  • Mike Curnutt

    Mary Kay, Amway and Avon are still around. I’m not sure about the others.

  • Guy Fawkes

    There are about a million MLMs operating right now. Tupperware and Avon are definitely still among them.

  • Raging Bee

    My upline told me to instruct people on ways to use the oils to increase their consumption.

    Your “upline” were bloody idiots, even by MLM standards. If they weren’t selling fast enough because the oils were concentrated, the obvious response would be to dilute the oils, so the stuff gets used faster, without changing the price. This incident strongly implies that MLM scams serve to stifle competition, and thus to deter the kind of innovation that actually enables companies to come up with new and useful products and profit from them.

  • LeekSoup

    The link between MLM and church folk has been covered a few times on the Roll to Disbelieve blog. I know several people from my former church who have been zealous MLM promoters. With some of them I’ve seen the cycle – sudden excited splurge of Facebook posts, desperate attempts to entice people to buy, announcement that they’re quitting.

  • LeekSoup

    There’s bathroom cleaner? Aren’t they self cleaning?

  • Guy Fawkes

    No legitimate “business” will ever require you to pay them in order to work for them. They also don’t require purchasing a starter kit or a monthly minimum product amount. And if anyone tries to sign you up for an “opportunity” and uses the words “help yourself while helping others” RUN! Preferably put a stake in their heart first.

  • which is why they should be illegal

  • yep

  • It’s funny because MLM sure looks like a pyramid

  • Jim Jones

    > Today I still have a box of over 100 oils that I no longer use as a reminder of my mistake.

    Craig’s List? Kijiji? I see them from a buck on eBay.

  • Jim Jones

    Yep. Throw a bucket of water at the ceiling and close the door. All done.

  • Jim Jones

    > “Spend $100 and get the Kitchen Towel and Cloth Set, sunflower, for just $25.99 (reg. $33.98)”

    Or, go to Dollar Tree and see what you can get for $126.

  • Jim Jones

    The only Tupperware one I liked was the juice jug with built in mixer.

  • Raging Bee

    Not sure about the original company, but I suspect that “tupperware” is now a generic public-domain word for a certain class of products, just like “xerox.”

  • Tupperware the pyramid scheme does still exist

  • Snaga

    31 is the bags right? That’s still around. So is Pampered Chef though it’s slowed down a lot. Market saturation does that.

  • Yes. All of them are some level of pyramid scheme