Is doTerra A Pyramid Scheme? Opportunity or Essential Oil Scam

So you are probably here because you came in contact with an doTERRA Wellness advocate or you were curious to see if doTERRA is the real deal or a scam.

The moment I hear about recruiting people to make money my mind immediately goes towards those same thoughts.

Luckily, for the last 3 years, I have been reviewing make-money opportunities just like Isagenix and have become really good at spotting make money online scams.

After reading this post, you’ll know exactly if this is that once-in-a-lifetime opportunity or run for the hills. At the end of the post, I’ll also provide you with an alternative just in case doTERRA isn’t for you.

Now let’s get into it.

What is doTERRA?

doTERRA is an MLM company founded in 2008 by a team of ex-Young Living members. doTERRA is a Latin derivative meaning “Gift of the Earth.” The company manufactures and distributes essential oils.

According to doTERRA, their unique selling point is the purity of their essential oils. doTERRA is based in a facility in Pleasant Grove, Utah, United States, and is active in more than 100 countries.

doTERRA in the past has had some trouble with Young Living. There are articles stating how they sued each other for alleging the theft of trade secrets, fake lab tests, false advertising, and “pure” products contaminated with unnatural substances.

Founders information

David Stirling
Former COO at young living
Founding Executive, Chairman, and CEO of doTERRA

Mark A. Wolfert
the Executive Vice President and General Counsel of doTERRA International
Former Vice President Nu Skin 

Corey B. Lindley
Founding executive board member
Executive vice president Nu Skin

Gregory P. Cook
the executive vice president and co-founder of doTERRA International in Orem
the senior director of international development at Young Living Essential Oils
Sr. director Nu Skin Enterprises

Robert j young
Founding executive board member
Product development, marketing, and branding services for doTerra products 

Most of the members have a history with the MLM company Nu-Skin which has been accused of using deceptive marketing and running an illegal pyramid scheme. Nu-Skin has had to pay more than $47 million in settlements.

doTERRA’s mission in 1 simple video

How does doTERRA work?

In short, doTERRA is a company that manufactures and distributes essential oils and home products. Instead of directly selling it to consumers they have chosen to use the MLM model.

What is MLM?

MLM (a.k.a network marketing or direct selling) stands for multi-level marketing.

According to Wikipedia, multi-level marketing is a marketing strategy for the sale of products or services where the revenue is derived from a non-salaried workforce.

As a part of this workforce, you sell the products from the company and you recruit people to do the same thing. This group of people you recruit will work under you and is referred to as your downline. 

The bigger your downline is the more money you can earn passively (technically speaking) because you’re getting paid a percentage based on the performance of your downline.

This also means the person that recruited you, your upline, is making money based on your performance.

The act of recruiting turns an MLM company into a pyramid-shaped organization where the first people to join make the most and are on the top of the pyramid and those last to join are at the bottom.

Source: Wikipedia

MLMs have been around for a long time. There are Multi-level marketing companies active today that was founded in the 1950s.

MLM has a lot in common with pyramid schemes which are why scammers often use MLM to disguise their pyramid schemes.

Is it absolutely necessary to recruit people? No.

You can also stick to just selling products that you can order at wholesale price (25% discount) and re-sell to make a profit.

This is easier said than done for multiple reasons which are why most members try to recruit others so they can earn more money.

How to join doTERRA

If you haven’t been introduced by a doTERRA member you can join by signing up on the website. You can sign up to become a wholesale customer or wellness advocate.

After that, you either purchase a starter kit or pay a starter fee.

So what’s the difference you might wonder.

What is a wholesale customer?

As a wholesale customer, you are purely a consumer of doTERRA products. There are some perks to signing up such as being able to join the loyalty rewards program. 

You can compare it with a cashback program.

Every time you purchase doTERRA products you get points that you can redeem to get more doTERRA products. You can also get points based on the shipping costs for ordering your products. 

What is a wellness advocate?

As a wellness advocate, you’re both a consumer and a seller. 

You get all the benefits a wholesale customer gets and you’ll be given the chance to re-sell products and earn bonuses by recruiting people as a multi-level marketer.

After signing up you can start reselling products and start recruiting.

How much does it cost to join doTERRA?

It depends on if you're planning to be a wholesale customer or make money as a wellness advocate.

The annual fee for being a wholesale customer is $25.

Wellness Advocates have to pay a fee of $35.

They also have to place a monthly order worth 100 PV. 1 PV is equal to 1 dollar so you’ll have to spend $100 a month to stay active as a wellness advocate.

There's also the option to purchase an enrollment kit. If you get an enrollment kit your initial fee will be waived.

The enrollment kits cost somewhere between $130 and $2,665.33 (retail prices). You can find the prices of all the kits on the doTERRA enrollment kit page.

Who can benefit from doTERRA?

Who would benefit from joining doTERRA:

• Expert salesmen
• Expert recruiters
• People that want to use doTERRA products for themselves.

Who shouldn’t join doTERRA:

• People that hate sales jobs.
• People that hate recruiting 
• People that expect to earn passive income

doTERRA products: Safety, Effectiveness, Costs

What does doTERRA sell and what makes it special?

doTERRA sells essential oils and products that contain essential oils. Essential oils are extracted from plants and are mostly used for aromatherapy.

According to doTERRA, their essential oils are special because unlike the rest of the market which works with either synthetic or engineered essential oils, they don’t add anything to their oils they’re pure making them safer and more effective.

Are doTERRA products safe?

100%% natural sounds nice but that doesn’t automatically mean that essential oils are 100% safe.

There are a lot of plants out there that are poisonous despite being natural but is that the case with essential oils? Studies have been done to test the safety and effectiveness of essential oils and they had some interesting results. 

First off, it’s hard to perform blinded tests because the scent of the oils prevents you from ruling out biases. 

Second, some essential oils are known to have possible side effects such as

• rash
• asthma attacks
• headaches
• allergic reactions

Overall, not a lot is known about essential oils.

Are doTERRA products FDA-approved?

Essential oils are FDA approved but only when they’re used for Aroma Therapy. The FDA has put them in the class of Aroma Therapy and does have some restrictions when it comes to how you market these products. 

As I said earlier, not much is known about essential oils so the FDA has put a ban on using words such as disease,” “illness,” “cure,” “treat,” “repair,” “chronic,” etc when selling essential oils.

You also can’t use pictures that suggest anything that has to do with diseases or their treatment of it.  

In the past, there have been incidents of wellness advocates that have marketed the products using these words and doTERRA got a warning from the FDA.

As a wellness advocate, you’re permitted to make cosmetic claims and mention temporary emotions. You can find more about what is permitted in the doTERRA claims guide.

doTERRA Assortiment

doTerra products come in multiple categories such as:

• Single oil
• Proprietary Blends
• Personal care
• Supplements
• Diffusers
• Literature
• and more

As a wholesale customer or a wellness advocate, you’ll get these products at wholesale price which is 25% cheaper than normal prices but even then it’s still incredibly expensive.

When you compare essential oil prices doTERRA is nowhere near the prices of other essential oil companies.

doTERRA tries to justify this by referencing the purity of their oils compared to synthetic and engineered oils but every true essential oil has this characteristic making it not more special than others.

Pros and Cons

Pros

• doTERRA training
  They spend a lot of time training their distributors.
• Fast Start Period
  In your first 60 days, it’s possible to earn a higher commission rate than normal.
• Leadership pool
  You can earn a share of the revenue doTERRAearns globally.

Cons

• Founders have a sketchy past
  Some of the founders were involved with Nu-Skin an MLM company that’s been accused of a lot of shady things.
• Retail prices are expensive
  The products of doTERRA are way too expensive when compared to other companies that sell essential oils.
• Enrollment fees
  You have to pay money before you even start and after that, you have to pay a monthly fee.
• Difficult relationship with the FDA 
  FDA has already given them a warning because distributors were making false claims on Facebook.
• It has already reached its peak as a niche
  According to google trends, essential oils as a topic was at their peak in 2018 and now it’s declining year by year.

doTERRA Compensation Plan

doTERRA can be considered a traditional MLM when you look at its compensation plan. You either re-sell their products for profit or you can recruit people to climb up the ranks and earn bonuses.

Here's a list of all the ranks you can achieve:

• Wellness Advocate
• Manager
• Director
• Executive
• Elite
• Premier
• Silver
• Gold
• Platinum
• Diamond
• Blue Diamond
• Presidential Diamond

What makes the doTERRA compensation plan different?

The fast start bonus
Unlike a lot of other MLM companies, you have the opportunity to earn a lot of money right from the beginning with the Fast Start program.

The first 60 days after signing up you can earn up to a 20% commission based on the people you recruit. 

The commission rates decrease depending on their enrollment level. You’ll be paid bi-weekly in the fast star bonus period.

The Power of 3
The “power of 3” program was set up to give wellness advocates proper direction when recruiting other people. doTERRA encourages you to recruit 3 people for the loyalty rewards program and help your downline with recruiting 3 people.

This way you create a downline with multiple levels instead of having all your recruits on the same level. When you and your first level purchase 100 PV per month and you get the team volume to 600 you earn $50 on top of your commission.

When you help the people in your downline achieve the same thing you’ll earn a $250 bonus. You’ll earn an additional $1500 bonus if you help the third level of your downline to achieve the same thing.

Leadership pools

This is my first time encountering something like this in an MLM company. What doTERRA does is put a percentage of their global revenue in what they call pools and depending on your performance and rank you get a share of the revenue. 

Here’s a video explaining the entire compensation plan.

How much can you earn with doTERRA?

In theory, the sky is the limit and you can become a millionaire but in reality, it’s not wise to expect to earn that much money. I tried searching for an income statement and I found one.

Here’s a summary of what you can find in the document.

Wellness Advocate

Managers (39%) on average earn $712
Directors (26%) on average earn $1,105
Executive (12%) on average earn $1,671
Elite (19%) on average earn  $4,381
Premier (5%) on average earn $10,533

The remaining advocates consist of 2% of all wellness advocates.

Silver members (61.0%) on average earn $30,037
Gold members (22.1%) on average earn $67,044
Platinum members (5.5%) on average earn $122,867
Diamond members (8.2%) on average earn $206,256
Blue Diamond members (2.2%) on average earn $501,759
Presidential Diamond members (1.0%) on average earn $1,369,172

These are the annual numbers which means: 

• Most members are losing money
  65% of Wellness Advocates are making less than $1200 a year which is less than $100/month. Take into account that you need to spend at least $100 per month on products.

• An extremely small minority is earning a full-time income
  If we do the math 0,76% of members on average earn a US Full-time income. 

There’s a small group in between that earns a profit dependent on if they can get their downline to accumulate enough organizational volume.

Looking at the numbers it doesn’t seem like the ideal way to earn money.

Why aren’t people earning decent money with MLM companies like doTERRA?

I have summed up the reasons why it’s hard to make money with doTERRA and MLM companies in general into 3 points.

1. MLM’s are often associated with pyramid schemes
MLM’s have a pyramid recruiting structure that you often have to join to be able to make decent money or at the very least not lose money. The problem is a lot of pyramid schemes disguise themselves as MLM programs making it difficult to differentiate the two.

This is the biggest problem why most distributors have a difficult time recruiting people. The moment people hear about how you can make money by recruiting people red flags appear in most people’s minds.

2. You have to consistently invest your money to earn commissions
You’re only eligible for bonuses and commissions if you buy their products. The bigger the bonuses the more product you have to buy.

You do get discounts but if you can’t sell the products I can see you easily fall into a financial deficit (which happens to the majority of MLMs).

3. The price of the product often isn’t aligned with the market
It’s hard as a multi-level marketer to sell products because most MLM products tend to be a lot more expensive than similar products sold by non-MLM companies.

This means even if you’re really good at recruiting your downline still needs to sell those same expensive products for you to make decent money.

You can see that translate in these statistics I found about Multi-level Marketing.

• Nearly half (47%) of MLM participants reported that they lost money.
• One in four (27%) MLM participants reported that they broke even (made no money).
• MLM participants are 7% more likely to declare bankruptcy during their lifetime.
• Direct sales have risen 79% in the last decade, but MLM participants continue to lose money.
• 90 – 99% of distributors in multilevel marketing only receive a couple of hundred dollars commission per year.
• Out of 33,000 interviewed, 90 people made enough money to cover costs in building their business.
• 50% of the people who start a network marketing enterprise abandoned it in the first year.

Sources:
FTC
AARP
Jobsinmarketing.io

Even though doTERRA is using the exact same business model as the MLM companies in these statistics, I don’t think it’s fair to make such an assumption without proof.

That being said, I would be careful when it comes to joining doTERRA.

doTERRA Reviews, Opinions, and Ratings

Blogger reviews on Google

To add as much objectivity as possible, I decided to look at other people’s experiences with doTERRA. Most reviewers on Google have come to the conclusion that doTERRA isn’t a pyramid scheme but it’s still incredibly hard to earn money with.

User Rating websites

The user rating websites don’t talk a lot about the experience as a wellness advocate. They do talk about the product and customer service.

It seems there’s a divide when it comes to what people think about the products. They either think they’re great or horrible products.

My Personal Take

Let’s start this off by talking about what I do and don’t like about doTERRA.

What I like about doTERRA:

The Fast Start Bonus
The possibility to make a lot of money in the first 60 days is a plus in my book. There are a lot of MLMs that don’t offer that opportunity. I absolutely hate recruiting but I can understand that it’s a cool bonus for those that like recruiting people.

The loyalty rewards program
The LR program gives you the chance to get free products. If you’re just here for the money this might not have a lot of value for you but fans of the products will appreciate this program.

What I don’t like about doTERRA:

The products are too expensive
The prices of these oils are so much more expensive compared to the rest of the market that it’s ridiculous. The only company with more expensive products is young living. This makes it that much harder to sell their products as wellness advocates.

The value proposition of Essential oils is vague
There are no conclusive studies about the benefits of essential oils. I can imagine when people ask what it does and the only answers you’re allowed to give are that it lifts your mood or reduce irritability it’ll raise a lot of eyebrows.

Recruiting 
Everyone has their thoughts about recruiting but I hate it. The moment you bring it up prospects’ minds immediately go to pyramid schemes and I don’t blame them.

Enrollment fees
I’m a huge advocate of trying things out before purchasing them. Even if it’s a crappy 3-day free trial I want to see what m getting into and decide for myself if I can succeed with the opportunity.

Sketchy past
Some of the founders have very sketchy pasts. They used to work for pyramid schemes having such a history doesn’t help with recruiting I can imagine. 

doTERRA is not a pyramid scheme from a legal perspective purely because they have a product that they sell. That said, I don’t think doTERRA is for everyone. 

Most people that get into MLM either lose money or make no money which means only the best of the best in sales and recruiting make money.

If I’m going to financially invest monthly I would rather invest in an opportunity that gives me a higher chance of succeeding. doTERRA is not a scam but it’s not something I would recommend joining.

Is doTERRA a pyramid scheme?

To answer this question we need to know what a pyramid scheme is.

What is a pyramid scheme?

A pyramid scheme is a type of scam where people are promised money for joining the scheme and recruiting other people. No selling of a product or service is involved whatsoever.

So you might be wondering where the money comes from.

The people that join are expected to pay a one-time fee and in exchange for that, they get a percentage of the fee of everyone they recruit after that.

The problem is from a mathematical standpoint it’s impossible for everyone to make money because you simply run out of people.

Take a look at this picture below showing how it’s impossible for everyone to earn money.

Source: Wikipedia

As you can see, in this pyramid model it’s required to recruit 6 people. You’ll notice from the 12th level and further, it’s not possible anymore for everyone to earn money.

The 2.2 Billion people on the 12th level need 13.1 billion recruits in total for them all to make money which is more people than there are currently on Earth.

MLM companies and pyramid schemes are very similar in their structure. 

This is why it’s not uncommon for pyramid schemes to disguise themselves as multi-level marketing companies.

Spotting pyramid schemes

The US Securities and Exchange Commission and Federal Trade Commission have both come out with articles stating that companies exist that run undercover pyramid schemes. 

Since it's not always as easy to spot these undercover pyramid schemes they’ve come up with a list of red flags to look out for.

According to the SEC and the FTC, these are the hallmarks of a pyramid scheme. 

1. A pyramid scheme doesn’t offer a genuine product or service.
The keyword here is genuine. Concluding that an MLM is not a pyramid scheme simply because a product is involved is not good enough. 

It has to be a viable product or service that can be sold. Products that are priced too high or lack the quality necessary to be sold don’t apply.

2. Promises of high returns in a short period.
If the company promises that you can earn a decent side income or life-changing money in a matter of days or weeks that’s a red flag.

3. Easy money or passive income.
If the MLM company offers huge compensation in exchange for little work making payments, recruiting others, and placing advertisements it might be wise to be wary.

4. No demonstrated revenue from retail sales.
Income disclosure statements can tell a lot about a MLM company but they often don’t state the percentage of revenue coming from retail sales.

Ask for documents audited by a certified public accountant (CPA) that showcase revenue gained from non-members.

5. You have to Pay-to-Play
According to the SEC, You should be wary of MLM programs that require you to buy in. The main goal of an MLM should be to sell its products not get money from its members.

6. Complex commission structure.
If the commission plan is so complex that you don’t understand how you’ll be compensated you should be wary of the MLM program.

Most of the time these compensation plans have little conditions that prevent you from getting paid for your hard work. 

7. Emphasis on recruiting.
MLM companies that you should be wary of are the ones that compensate people more for recruiting than selling products. 

Conclusion

No. I don’t consider Doterra a pyramid scheme because of 4 reasons based on the hallmarks presented by the SEC. 

1. Compensation Plan isn't more complex than most
The compensation plan is complicated but not more complex than any other basic MLM business.

2. Recruiting is done for subscription sales
There are bonuses for recruiting but most of them are focused on recruiting members for the loyalty program. These members don’t recruit other recruiters but have a subscription for product purchases. 

3. No Get rich quick claims
No high returns are promised in a short time by the company (but there are independent distributors out there that are making false claims).

4. Oils aren't impossible to sell
The price of the oils is a bit high but I know people personally who are buying them so it’s not impossible to earn money (but it’s going to be incredibly hard). 

This is why I don't consider doTerra a pyramid scheme.

I do think before joining you should always ask for financial documents audited by a certified public accountant because ultimately is going to decide if it's a pyramid scheme.

That being said, I can’t call this a great business opportunity purely because statistically you’re more likely to lose money than earn money.

If I’m going to invest money into business opportunity I’d prefer to get more than just the ability to earn bonuses. 

Alternatives

Unfortunately, doTERRA isn’t for everyone. 

It comes with significant financial risk and it’s hard to scale because most of the marketing is done face-to-face and you can’t be at multiple places at once.

This is why I suggest to those that don’t want to deal with these 2 factors an alternative.

It is called affiliate marketing. 

It’s the method I use to earn most of the money I earn online.

How do you earn money with affiliate marketing?

You don’t have to sell products or services and you don’t have to recruit people.

The only thing you’ll be doing is referring people (that already are interested) to merchant websites such as Amazon, Walmart, and eBay. 

When people buy something based on your recommendation you’ll get a percentage of the purchase.

My #1 recommendation is an affiliate marketing training platform with more than 1.5 million members. 

Memberships are basically an all-in-1 package that comes with expert-level training, resources, and support from a community of people doing the same thing. 

Want to learn more? Take a look at my comprehensive review of the affiliate marketing platform.

Do you have any experience with MLM or Modere let me know in the comments!

That’s all for today. 

See you in my next post!

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