A new class-action lawsuit filed in Texas accuses Young Living of running an illegal pyramid scheme. The lawsuit filed on April 12, 2019, alleges the Multi-Level-Marketing company violated federal racketeering laws and lied to members about the possibility of becoming rich.
In the court filing, plaintiff Julie O’Shaughnessy of Texas alleges that Young Living runs an illegal pyramid scheme. According to the suit filed in Texas Federal court, Young Living lures new members to the company with cult-like promises of wealth and alternative income. Media, emails, and conferences held by Young Living promote a life of “abundance” to new members.
O’Shaughnessy joined Young Living in 2015 after attending a party hosted by a friend. She purchased a starter kit for $100.00. After her initial purchase, she was persuaded to sell the products to offset the money she spends on oils for herself.
Believing she could earn commissions, she attempted to sell the oils. However, the suit states that she could not sell the oils successfully. Additionally, she says that the commission structure only compensated her for enrolling new members and creating a downline.
To be eligible for monthly commissions, Young Living required that she spend a minimum of $100 per month. The suit states that federal laws prohibit MLM’s from forcing members to purchase inventory to earn a commission.
“And Young Living’s Members’ losses are compounded by its structure, which requires its Members to continuously purchase (and as a result, hold) an ever-growing inventory of unused product, in direct violation of the 70/30 rule established in the FTC’s 1979 Amway ruling.”
Basically, Young Living forces people to stockpile inventory to be eligible for commission. The suit alleges that the company knows that members are unable to sell their stock and enact no quality control to ensure that members have sold 70% of the inventory they purchase.
The suit accuses Young Living of compensating distributors only on the purchase of new member enrollment kits. Members that sell oils do not receive commission checks unless they enroll new members and create a downline. Uplines instruct new members to recruit more members to earn money.
The entire structure of the commission relies on new recruitment and not product sales. Because MLM laws state commissions must be paid based on the products they sell and not recruitment, the suit alleges that Young Living runs an illegal pyramid scheme.
In the suit, attornies allege members must pay to play and then recruit to earn money. However, with nearly 3,000,000 members there is no feasible way for new members to make money.
In fact, a 2016 income statement showed that the average Young Living member made $25.00 in annual income. New members must purchase $100 starter kits and $100 per month to be eligible for commission. Julie O’Shaughnessy says in the three years she attempted to sell Young Living she lost nearly $5,000.00.
Perhaps most telling in the suit is the wealth inequity between the bottom and the top of the pyramid. With more than 3,000,000 members in the company, only 46 people have ever made it to the top of the company. To achieve that rank they must have 15,000 members in their downline.
Attornies in the case are asking that Young Living reimburse the losses of each member of the lawsuit. Additionally, they are requesting that Young Living be barred from promoting the scheme in the future.
For years critics of Young Living have accused the company of running an illegal pyramid scheme. However, the suit filed in court is the first by members to support these claims.
Young Living has not commented publically on the lawsuit.
If you want to read the full details, read the 36-page document here.
Watch my video “Is Young Living Essential Oil MLM a Scam?”
*Katie Joy is a columnist and hosts Without A Crystal Ball on Patheos Non-Religious Channel. She writes articles on parenting, disability advocacy, debunking pseudoscience, atheism, and crimes against women and children.
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