Lifevantage MLM: Scam, Pyramid Scheme or Legitimate MLM?

You probably came to this page because you wonder if Life Vantage is a scam, pyramid scheme, or a legit opportunity.

No need to worry you’re in the right place.

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

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

In this post, I’m going to look at Life Vantage products, history, income statements, and its compensation plan to find out if Life Vantage is legit or a scam.

What is Life vantage?

Life Vantage is a health and wellness company founded in 2003 by Darren Jenson. 

It started out as a group of researchers that were working on anti-aging products. They found out that one of the key causes of aging is oxidative stress. After finding this out they created Protandim.

This was a product that decreases oxidative stress by 40%.

According to their website, where they detail their journey sales didn’t go as expected because it required understanding of the complexity behind Protandim. 

This is why they proceeded to use network marketing as a tool to distribute the product. 

They sold over $30 million of Protandim in the first year and over $100 million in the second. By our third year, we reached nearly a quarter billion dollars in revenue.

Their products are now sold by over 50,000 Distributors in 17 countries and on 4 continents.

How does Life Vantage work?

Life Vantage is a company that distributes anti-aging 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 was 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 (20% discount) 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.

How to join Life Vantage

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

After that, you can become a Life Vantage associate by following these 3 steps.

Step 1: Purchase a starter kit
Step 2: Sign the agreement
Step 3: Start Sharing

Step 1: Purchase a starter kit

There are multiple enrollment packs that you get to choose from to start as a distributor. The cheapest enrollment pack is the basic starter kit. This starter kit contains: 

These basic necessities are needed to get started and participate as a LifeVantage Consultant.

• Personalized Website
• Business Management Tools
• LifeVantage App
• PLUS, you get materials to help you promote and market your business, including customer emails, social posts, company and customer support, and more.

Step 2: Sign the agreement

The agreement contains the terms and conditions for working as a LifeVantage consultant. You’ll have to sign this in order to become a consultant. 

Step 3: Start Sharing

Get access to your virtual office which is your hub from where you manage sales, recruit, get training, and find online resources needed for marketing LifeVantage products.

Something you also have to take into account which isn’t mentioned on the opt-in page of LifeVantage is that you have to place an order worth at least 100 points when signing up.

Is Life Vantage 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, LifeVantage can’t be classified as a pyramid scheme from a legal perspective. LifeVantage 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 sell products and services. 

John M Taylor. a prominent figure in the research of MLM’s and Pyramid schemes calls these product-based pyramid schemes.

He came to the conclusion that this variant is a lot more dangerous than its predecessor.

A few examples of these can be found on the FTC website,  such as Vemma an  “MLM/Direct-selling company” that supposedly was selling liquid nutrition products but turned out to be a pyramid scheme.

Ultimately they settled and had to pay a fine of $238 million and were suspended from partaking in recruiting practices to distribute their products.

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.

These pyramid schemes bring in money by the members paying for a membership and them purchasing products thinking they’ll earn money in the long run.

In an investigation by the FTC regarding Amway, a precedent was set called the 70 percent rule.

They were accused of being a pyramid scheme. 

The 70 percent rule states that every distributor must sell at wholesale and/or retail at least 70% of the total amount of products he bought during a given month in order to receive the Performance Bonus due on all products bought. 

This was set in order to prevent distributors from purchasing their way to the top and the company from earning money at the expense of the distributor.  

This is of course hard to prove so most of the time to spot a pyramid scheme people look for signs in which the company encourages recruiting while discouraging selling products.

From that point on it’s the same as a traditional pyramid scheme but is this the case with Life Vantage?

There are 5 red flags that we can look at to determine if LifeVantage is a pyramid scheme.

1. Recruiting of participants is unlimited in an endless chain of empowered and motivated
recruiters recruiting recruiters. 
2. Advancement in a hierarchy of multiple levels of “distributors” is achieved by recruitment,
rather than by appointment. 
3. Ongoing purchases (products, sales “tools,” etc.) by “distributors” are encouraged in order
for them to be eligible for commissions and to advance in the business (“pay to play”). 
4. The company pays commissions and/or bonuses to more than five levels of “distributors.” 
5. For each sale, the company payout for each upline participant equals or exceeds that for the
person actually selling the product.

 Let’s review their compensation plan, income numbers, earning potential, costs, and more to see if we can uncover some red flags.

LifeVantage Compensation Plan

LifeVantage is very similar to a traditional MLM when looking at its compensation plan.

How much money you’ll earn is heavily based on your ranks which you receive by meeting Young Living’s compensation plan qualifications.

There are three factors to meeting qualifications:

• Personally purchase (or resell) enough product volume to qualify
• Recruiting enough customers (who become your downline) to qualify at your desired level.
• Your downline purchasing (or reselling) enough products.

You’ll receive different types of points (personal volume, customer volume, team volume, etc.) for doing these actions. What type of points you get can differ.

Here you can see the qualifications for each rank. 

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

Like most MLM companies, you’ll have to make a financial investment to join as a LifeVantage Consultant.

How much you’ll have to pay differs per country.

For this post, I mostly focused on what it’d be like if you joined LifeVantage in the United States of America but most countries seem to be around the same price range aside from a few exceptions.

When you sign-up you’ll have to buy an enrollment kit. 

There are multiple enrollment kits available but the cheapest and basic pack is the Start kit ($50) which contains documents to keep up to date with what is going on with LifeVantage, website tools, business management tools, and some samples.

To kick start your journey you also have to purchase 150 points (PV) worth of products.

At the lowest level, you’ve to at least purchased 150 points for products every month. 

So that’s 150×12= 1800 Personal Sales Volume a year you have to invest as a LifeVantage Consultant at the lowest level.

As someone that has been reviewing MLM companies since 2018, I can tell you that it’s extremely rare to find MLM companies for which the worth of 1PV is less than 1 dollar. 

I think It is safe to assume, you’ll be spending around $1800 + $50 in the first year. 

You’ll also have to take into account other costs such as: 

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

Can you earn money with LifeVantage?

In theory, you could make an average of more than a million-dollar per year according to their income disclosure statements but what is the chance of you getting to this point?

Let’s take a look at the most recent income disclosure.

According to their disclaimer, 98,89% of LifeVantage on average earns less than $1850 in 2022. Since these are the minimum expenses that means except for the people at the top most people lost money.

It’s normal to not break even in your first year with most businesses but these numbers are a bit extreme in my opinion.

The people (1,11% in 2022) that succeeded in breaking even and earning a profit did that after an average of +10 months.

That’s 150PV x 10 = 1500 Personal Sales Volume that they’ve invested in those +10 months.

I’m not saying it’s impossible to make money as a member of Life Vantage but the chances of you losing money are that much higher than earning money.

The earning potential, in theory, is high, but in practice is significantly lower than most people might suspect.

The income disclaimer also tells you where all the money goes. 

It seems that almost all the money goes to the 1% at the top of the pyramid.

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

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

LifeVantage Controversy

The voluntary recall

In December 2012, LifeVantage issued a voluntary recall of select bottles with Protandim due to potential health risks. Apparently, small metal fragments were present in the final product.

Source: Life Vantage website

False Claims on LifeVantage website
On April 17, 2017, LifeVantage received a warning letter from the U.S. Food and Drug Administration (FDA) regarding illegal advertising claims on the company’s websites. 

The copy on the website suggested that Protandim can play a role in helping to cure various ailments, including cancer and diabetes.

source: FDA warning letter

Pyramid Scheme Allegations
In January 2018, a class action lawsuit was filed against LifeVantage in Connecticut.
 

The suit was about the company and its CEO Darren Jensen, CSO Justin Rose, and CMO Ryan Goodwin were operating an illegal pyramid scheme in violation of the RICO Act, federal securities laws.

Source: BusinessWire

Verdict: Is LifeVantage A Pyramid scheme?

1. Recruiting of participants is unlimited in an endless chain of empowered and motivated
recruiters recruiting recruiters. 
The highest ranks that are capable of earning the most are encouraged to help their recruits make more money by reaching ranks that require recruiting to maintain. 

2. Advancement in a hierarchy of multiple levels of “distributors” is achieved by recruitment, rather than by appointment. (sales) 
While they do give you another option to earn money without any form of recruiting to reach maximum earning potential you’d need to start recruiting.

3. Ongoing purchases (products, sales “tools,” etc.) by “distributors” are encouraged in order for them to be eligible for commissions and to advance in the business (“pay to play”).
There is a “pay-to-play” element present in LifeVantage its compensation plan. If you want to stay active and eligible for commissions it’s required to purchase a certain number of products.

The main goal is to resell these products but just purchasing the products is still seen as a fulfillment of the minimal quota needed to stay active. 

This could stimulate people that can’t get sales to just purchase products solely to stay active in the hopes that they’ll earn back the money at a later point. 

4. The company pays commissions and/or bonuses to more than five levels of “distributors.”
There are more than 5 levels of distributors that get paid in this model. This is definitely a red flag.

5. For each sale, the company payout for each upline participant equals or exceeds that for the person actually selling the product.

Looking back at what we found out about the most recent income disclaimer most of the money consultants spend and the revenue made through sales is going up the pyramid.

That being said, it’s not up til the point where the upline earns more per product than the person who sold it.

Conclusion: Scam or Legit?

LifeVantage seems to have multiple red flags that could point to it being a product-based pyramid scheme rather than any other type of scam. 

That being said, most MLM companies and their model are very similar to pyramid schemes which is why I can’t say with absolute certainty that LifeVantage a pyramid scheme. 

It’s also because of this reason that I can’t recommend joining LifeVantage.

LifeVantage Alternative

Unfortunately, LifeVantage might not be the ideal method for earning money.

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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