Is Melaleuca a Scam, Pyramid Scheme or Legit?

Welcome to my Melaleuca review. In this review, I’ll answer the question if Melaleuca is a pyramid scheme or any other type of scam.

I’ll share with you the characteristics of a pyramid scheme and then see if Melaleuca shares these characteristics.

Over the last few years, I’ve been busy creating reviews about all kinds of online products and opportunities.

Some turned out to be fake others were legit ways to make money online but in the process, I learned how to spot scams.

After reading this post, you can decide for yourself if Melaleuca is worth your energy, time, and money.

What is Melaleuca?

Melaleuca is a health and wellness company that was founded in 1985 by Frank L. VanderSloot. It doesn’t define itself as an MLM company but they’re using the same pyramid business model to distribute its products.

The only difference is that their independent distributors aren’t selling the products directly but referring people to their website.

Melaleuca is an international company that generates more than $2 billion in annual revenue headquartered in Idaho Falls, Idaho. 

Melaleuca is a member of the Inc. 500 Hall of Fame and is the only firm to remain on Inc.’s list for five consecutive years while also earning the publication’s “A profitability” rating each year.

That being said, I have found some things that worry me. Keep reading and I’ll explain why I feel that way.

How does Melaleuca work?

Melaleuca is a company that distributes Health, Cleaning, and Wellness products. Instead of directly selling it to consumers they have chosen to use the MLM model which gives you the choice to earn money by:

• Selling the products for a commission
• Recruiting people to earn bonuses.

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 selling 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/or 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 which is called 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 were founded in the 1950s. MLM has a lot in common with pyramid schemes, so 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 you can order at wholesale price and re-sell to make a profit. This is easier said than done for multiple reasons which is why most members try to recruit others so they can earn more money.

A funny thing about that Melaleuca claims not to be a multi-level marketing company while using the MLM business model to distribute its products over multiple levels in its pyramid structure.

The only difference is that Melaleuca doesn’t let its independent distributors sell directly to customers. They let the distributors refer them to the website where they can buy the products.

My guess is that they’re aware of the bad reputation of MLM companies and try to distance themselves from it.

How to join Melaleuca

Most people get referred to Melaleuca but you can also sign-up through their website.

After that, you can become a Melaleuca advocate by following these 3 steps.

Step 1: Pay the startup fee 
Step 2: Purchase a starter kit
Step 3: Recieve training

1. Pay the startup fee
This is an annual fee of $19. All distributors get a personal website that they can use as their virtual base of operations. You’ll also get access to the back office and login details.

2. Choose a starter kit
You can choose 1 of 7 starter packs with the cheapest being the Basic Pack for a price of $109,99 for new members and worth 50 PP.

The annual fee comes with all the legal documents and other paperwork needed to get started + the online resources needed to start your training.

The starter packs are a collection of hand-picked products in different categories that you can use to start earning money. 

In total, there are 7 packs: 

• Value Pack ($219,99 during the starter period)
• Home Conversion Pack ($329,99 during the starter period)
• Customer Favorites Pack ($109,99 during the starter period)
• Ecosense save for your home Pack ($109,99 during the starter period)
• Core Nutrition and Fitness Pack ($109,99 during the starter period)
• Sei Bella Beauty Essentials Pack ($109,99 during the starter period)
• Pure Essentials Oil Pack ($109,99 during the starter period)

3. Mentorship and Training
After receiving your website, you’ll be mentored by your sponsor to increase your chances of succeeding. 

After following these steps you’re ready to start selling products and recruiting people.

Is Melaleuca 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 instead of selling products and services. 

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 or a monthly fee and in exchange for that, they get a percentage of the fee of everyone they recruit after.

The remaining money goes to the creators at the top of the pyramid.

The problem with this model 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.

At the point that people can’t be recruited anymore, the pyramid collapses because not enough money is coming in to pay members and sustain the pyramid.

Looking at the description of what a pyramid scheme is, Melaleuca can’t be classified as a pyramid scheme from a legal perspective. Melaleuca products have given people a method to make money without recruiting people.

That being said, there are pyramid schemes that disguise themselves as MLM companies because MLMs also use a pyramid structure but they sell products and services. 

These pyramid schemes offer products that are almost impossible to sell with the goal of pushing you to recruit people because you supposedly can get higher commissions.

From that point on it’s the same as a traditional pyramid scheme.

The rest of this review will be dedicated to finding out if this is a pyramid scheme in disguise.

Who can benefit from melaleuca?

Who would benefit from joining Melaleuca:

• Expert salesmen
• Expert recruiters
• People that want to use Melaleuca products for themselves
• People that are older than 18

Who shouldn’t join Melaleuca:

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

Melaleuca products

A legit business opportunity in the MLM sector is largely defined by the products it distributes. If the products seem to be unsaleable it’s not wise to invest in the company. 

This is why I want to take a quick look at the selling point, the quality, and the price compared to the market to determine if these products are appropriate for distribution by an MLM company.

Melaleuca is a wellness company that offers products in a multitude of categories. The main categories that seem to be promoted the most are cleaning & laundry, Supplements, Food, Personal care, beauty, and more.

It seems Melaleuca isn’t targeting a specific niche but has taken a more broad approach by basically offering products in all kinds of different categories.

Melaleuca Unique Sales Propesition

Melaleuca according to their website has put an emphasis on using natural ingredients for their products. They also have a list of ingredients they don’t use such as: 

• CHLORINE BLEACH
• AMMONIA
• ABRASIVES
• PHOSPHATES
• PHTHALATES
• TRICLOSAN
• PARABENS
• FORMALDEHYDE
• QUATERNARY DISINFECTANTS

Here’s a list of the ingredients Melaleuca uses for its products:

• CITRIC ACID
• THYME OIL
• MELALEUCA OIL
• GLYCOLIC ACID
• SODIUM CITRATE
• ESSENTIAL OILS

I have also looked at the FDA website and it seems that as a manufacturer Melaleuca is FDA-approved and the same goes for most of their products.

The use of natural ingredients seems to be their selling point. I don’t think this is a unique enough selling point to stand out from the competition but maybe in combination with other factors, it could work.

Melaleuca Product Pricing

Melaleuca has more products than I could cover individually but look at the products in most categories I got a good idea of how much they’re charging. Melaleuca sells a lot of products that non-MLM companies sell but at a much higher price. 

An example of this is the non-chlorine washing detergent. It costs $28,00 for non-members and $18,00 for Melaleuca members. 

You can make a big profit if you’re able to sell this product but why would if within 2 clicks could be on a website that sells them for a lower than even the member price?

This seems to be the trend with most of the products that Melaleuca offers. I don’t think their sales proposition is unique en beneficial enough to justify these prices.

Melaleuca Product Quality

People seem to be very satisfied with Melaleuca products when I look at ratings outside of the official website. Even when I went to Amazon I noticed that most of the products have been rated by at least 200 people and the majority giving it 5 stars.

I did notice that most of the complaints about the products are about the price. Just as I concluded earlier a lot of people like the products but find them too expensive.

Overall it seems that Melaleuca offers high-quality products and I have seen a lot of ratings speak highly of it.

I don’t think this product is impossible to sell but I still believe you’re going to have a hard time as an independent distributor.

Pros and Cons

Pros

• A lot of good product reviews
  Most people that have rated the product online seem to be satisfied with Melaleuca. This makes it easier to sell as a distributor because you can refer to all the positive reviews.

Cons

• You have to pay to play
  You have to purchase a specific amount of Melaleuca products to stay eligible for earning commissions and bonuses. The same applies to getting commissions based on your downlines. The higher the rank, the more you have to purchase.
• Earning decent money without recruiting is extremely hard
  Most of the products are around $20 to $100. At a commission rate of roughly 7%, it is going to take a lot of sales to earn a decent side or full-time income. When you start recruiting the money you can earn increases exponentially but so does the costs of maintaining the rank where recruiting is possible.
• Melaleuca is losing relevancy
  Numbers have proven that Melaleuca is losing relevancy every year. Less and less people are searching for the brand on search engines( Google, Yahoo, and Bing) which often is connected to the demand of products.

Melaleuca Compensation Plan

Melaleuca can be considered a traditional MLM when looking at its compensation plan. You either sell their products for a commission or you can recruit people and receive residual income, climb up the ranks, and earn bonuses.

In total there are 6 ranks that all come with their benefits such as getting a higher commission percentage of all your sales.

• Product advocates
• Directors (1-9)
• Senior Director (1-9)
• National Director
• Corporate Director
• Presidential Director

Your rank is based on multiple factors such as:

• Number of active personal customers
• Average Monthly Leadership Point Production
• Monthly Organisation Volume
• Monthly Personal Enrollee Group Volume 
• Active Personal Enrolled Directors
• Active Personal Enrolled Senior Directors
• Active Personal Enrolled Executive Directors
• Leadership Credits

For more information concerning the compensation plan, you can look at the official document by clicking here.

How much does it cost to start a Melaleuca “business”?

There are multiple types of membership offered at Melaleuca. 

Regular members receive discounts for products regularly without paying but if you’re set on earning money with the Melaleuca MLM program you’re going to have to become an Independent Marketing Executive.

To do this you simultaneously have to submit a Melaleuca Independent Marketing Executive Agreement and Customer Membership agreement. The cost for this is $19.00 per year plus applicable sales tax. 

At the very least, you’ll also have to invest $109,99 into a starter pack.

Purchasing at least 1 starter kit isn’t obligated but it’s almost impossible to earn money without products you can use as samples.

After becoming a member you have a monthly quota to uphold to stay eligible for any type of commission. 

At 35PP monthly quota, you’ll receive a 30% discount on all products you order. If you commit to upholding a monthly quota of 75PP you’ll receive a discount of 50% on all orders. 

The Pure Essential Pack (which is the cheapest option) at a normal member price costs $156,50 and is worth 50 PP. 

This means 35 product points is roughly ((35 x 156,50) / 50) = $109,55.

Multiple articles on the internet have confirmed that it’s around this range. 

This would mean in a year you’d have to invest 12 x 109,55 x 0,30 = 920,22 + 19 = $939,22.

This doesn’t include additional expenses such as: 

• advertising or promotional expenses
• training
• rent (for conferences)
• travel (for conferences)
• telephone and internet costs
• other miscellaneous expenses

Here’s where the financial risk often comes into play. If you purchase the monthly quota of products but you aren’t able to sell it all you stay a member but you could lose money.

This is why I can only see people with a lot of sales experience succeeding because with each rank the commission rate rises but also the monthly quota.

Ways to earn with Melaleuca

In total there are 8 bonuses that you can take advantage of such as:

• Advancement Bonus 
• Pacesetter Bonus
• Mentoring Bonus
• Core Mentoring Bonus
• Double Core Mentoring Bonus
• Leadership Growth Bonus
• Monthly Car Bonus
• 20/20 Bonus

You can read everything you need to about these bonuses in the compensation plan but I’m more interested in real numbers.

Luckily, melaleuca has published an income disclosure with the numbers showing the income of all members. 

Can you earn money as a Melaleuca distributor?

On the Melaleuca income disclosure page, you can find this copy. 

"...As the world’s leader in referral marketing, Melaleuca has been providing residual income for tens of thousands of families for over 30 years. 

The opportunity to make $250 a month, $500 a month or even $2,500 a month is possible for average, everyday families. We invite you to look at our Annual Income Statistics on this page to see what real people are earning with us every year..."  

Is this really possible with Melaleuca? I’ve taken a look at their income statistics and this is what I found out.

There’s a lot of information in this document so I have decided to share with you the summary of my findings in quick bullet points.

• 81% of people buying the products have made no money (According to Melaleuca these are customers not interested in the Melaleuca financial opportunity).
• 8% of all Melaleuca customers are product advocates and on average have earned between $110 and $510.(According to Melaleuca these people also aren’t interested in the business opportunity)

According to Melaleuca, the remaining 10% are the people that are taking the Melaleuca opportunity seriously. Here are their numbers.

• 91,2% has made between $274 and $33,047 with an average of $2,073. This group took an average of 185,5 months to get to this point.
• 2,5% has made between $2,830 and $30,468 with an average of $9,785 
• 1,6% has made between $5,296 and $46,938 with an average of  $15,677
• 0,8% has made between $11,643 and $55,706 with an average of  $22,695
• 0,7% has made between $13,181 and $82,571 with an average of  $35,022
• 1,8% has made between $17,418 and $224,076 with an average of $63,239
• 1,2% has made between $66,940 and $777,180 with an average of  $174,595
• 0,2% has made between $151,538 and $894,654 with an average of  $307,148
• 0,1% has made between $307,634 and  $2,820,943 with an average of  $1,086,047

Here are the key takeaways:

• It took on average roughly 185 months for people to get in the top 10%.
• +90% of the top 10% earned $172,75 per month.
• Less than 2% earn a full-time income
  According to the U.S. Bureau of Labor Statistics (BLS), the average US full-time income (including overtime, commissions, and tips) is somewhere around $54,132 a year. This group earns $63,239 a year. 
• It took the full-time income group an average of 183 months to get to this point.

It is also important to realize that these numbers represent gross income, not net income. This means expenses made as a distributor aren’t deducted from these numbers.

So technically, it is possible to earn an income with Melaleuca but it’s going to take around an average of 158 months just to make a small side income. 

It’s not uncommon that work has to be done upfront before you start earning a profit with business opportunities but this is an insane number of months to stay at it. 

I’d rather go with a business opportunity that allows you to get to this point in 4 - 7 months without having high expenses such as affiliate marketing for example. 

To be fair, these are of course averages and not the median numbers that’d probably give a different impression of the company. 

I'd suspect the medium would look a bit better especially when it comes to how much time is needed to earn money.

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

I have summed up the reasons why it’s hard to make money with Melaleuca and MLM companies in general into 3 points. As a Melaleuca distributor, you’ll have to deal with the first 2 points mentioned below.

1. MLM companies are often associated with pyramid schemes
MLMs 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.

This isn’t good for your sales.

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 distributors of MLM companies).

3. The price of the product often isn’t aligned with the market

It’s hard for 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 translated 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 in commission per year.
• Out of the 33,000 interviewed, 90 people made enough money to cover the costs of building their businesses.
• 50% of the people who start a network marketing enterprise abandoned it in the first year.

Sources:
FTC
AARP
Jobsinmarketing.io

Melaleuca Revenue & Popularity

According to the About page of Frank van der Sloot, Melaleuca offers over 450 health and wellness products, operates in 19 countries around the world, and brings in $2 billion in annual revenue.

Multiple analysis websites confirm this but they’re also showing a decline. It seems between 2021 and 2022, Melaleuca suffered a loss of $300 Million. 

In 2021, they had a revenue of 2,7 Billion while in 2022 they earned 2,3 Billion. 

How it’ll fare in the coming years I can’t say but it does seem that the golden age for earning money with Melaleuca has long passed.

This also seemed to be reflected in their overall relevancy on search engines. 

The search term Melaleuca has been steadily declining for years according to Google Trends. 

This doesn't mean it doesn't have the ability to bounce back but it might not be the best time to jump into Melaleuca at the moment while it’s decreasing in demand and popularity.

Is Melaleuca A Pyramid scheme (in disguise)?

As I said earlier in this review, from a legal perspective Melaleuca isn’t a pyramid scheme. If it’s a pyramid scheme in disguise is another story. 

Let’s take a look good look at what I found out Melaleuca.

Are Melaleuca products unsaleable? 

No. There seem to be a lot of reviews of customers that are satisfied with the product because of the quality they provide.

There does seem to be a misalignment when it comes to price when you compare it with the rest of the market. They try to justify this by saying they choose natural ingredients but it’s not a good enough reason for those prices.

Does Melaleuca pressure its members to recruit others?

I don’t know if pressure is the right word but you can tell they’re trying to get as many people as possible to start recruiting instead of selling the products for a commission.

Most legit MLM companies let you sell the products at a retail price and let you keep the profit. This often equates to 20 – 25% but Melaleuca offers a base commission of 7%. 

It seems like they’re trying to make this way of earning money as unappealing as possible.

The only reason I’m not saying they’re being pressured is that you can stay a member even if you don’t buy products to re-sell them but you won’t be eligible for commissions.

That being said, I do think it’s a bit sketchy.

Do people make money with Melaleuca?

Looking at the income statements it’s safe to assume that 90% are barely making any money or have made no money. 

It might not look like it at first sight but you have to take into account that income statements are focused on revenue instead of profits. It doesn’t take into account the monthly accumulation of points that is necessary to stay eligible.

Verdict

Looking at all the data I’d conclude that Melaleuca is either a horrendous business opportunity or a pyramid scheme in disguise.

Is Melaleuca A Scam? 

According to the oxford dictionary, a scam is defined as a dishonest scheme or a fraud. 

Melaleuca doesn’t fall under this category because it isn’t spreading any untruths about the Melaleuca opportunity. 

I do think it takes a bit of investigating to truly see in what kind of state the company is and if you really can call it a business opportunity, especially with its declining numbers and horrible income statistics.

There's not much good I can say about this MLM company to be honest.

Do I recommend joining Melaleuca?

The company seems to be losing a significant amount of revenue and relevancy since 2021. 

It’s already hard to succeed with this business model so if the demand decreases it’s only going to become exponentially harder to earn money.

I wouldn’t recommend joining Melaleuca if you’re expecting to earn a side or full-time income.

Melaleuca Alternative

Unfortunately, Melaleuca 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 Melaleuca let me know in the comments!

That’s all for today. 

See you at my next post!