Multi-Level Mecca: Utah’s MLMs are big business, but few make money

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SALT LAKE CITY -- Three of Utah’s biggest multi-level marketing companies fill what is now called the Vivint Smart Home Arena with a devoted sales force of thousands.

In August, it was vitamin giant USANA.

In September, essential oils phenomenon doTerra.

In October, anti-aging product maker Nu Skin, the biggest of all the Utah MLM’s.

Utah is home to dozens of MLMs, companies that sell their products with independent members who recruit more members, each level sharing profits with the levels below them, hence the term “multi-level marketers.”

Detractors like Jon Taylor, author of several books on the subject, say they are all pyramid schemes: fraudulent operations from which money is made simply by recruiting members rather than by selling products.

"In most companies even major corporations where there's a sales function, you might have a branch manager, a district manager, a regional manager and a national manager, and you might even have an international manager. But you don't have 10 or 15 or 20 levels.  There's no need for that,” said Taylor. “And the only reason it's done in multilevel marketing is to further enrich those at the top by this exponential expansion that occurs as you move up."

Taylor said all MLM’s are based on that flawed system, and are therefore pyramid schemes making money from people, not products, but each of Utah’s big three have products that thousands, perhaps millions, swear by.

Related: Resources and research on Multi-Level Marketing

Utah Congressman Jason Chaffetz is a big booster of the industry that has more headquarters in his district than in any area of the world.

"Well if you're a pyramid that's illegal, in fact you should be prosecuted for that but sharing a product and being compensated for that is fair game and that's the American way," Chaffetz said.

The line between MLMs and Pyramid Schemes can be fuzzy, with fly by night operators crossing it and getting in trouble with the FTC, the big MLM’s have clarified the line with their own national association and its code of ethics.

http://www.dsa.org/consumerprotection/Code

The code guards against potential abuses that can lead to financial ruin for unsuspecting sellers. (something we’ll cover on Wednesday’s Multi-Level Mecca).

The industry leaders say they are providing an opportunity without forcing people to spend too much of their own money, and FOX 13 found no evidence to contradict this.

But even the industry leaders acknowledge that the vast majority of their members don’t make money. (see the sidebar on our numbers).

Take USANA for an example: according to the income disclosure they provided to FOX 13, they have a network of 61,400 members who they call “associates.” .13 percent of those associates were in their top tier of earners averaging $100,000 or more in commission a year. That’s 80 people out of 61,400.

DoTerra

It could be that the big mainstream multi-level marketers are now mainstream, even admirable companies.

DoTerra seems to fit the bill.

They fly to countries where the plants they need grow naturally, and search out the people who cultivate and harvest them, making sure they are paid directly.

They call it co-impact sourcing.

They also say they are more of a Costco kind of wholesaler for essential oils than a pyramid scheme, as some consider multi-level marketers.

Dave Stirling is their CEO.

"If you look at most of people, we're very cognizant that first about 95 percent of the people that join doTerra have no interest in the business side they just want the products at wholesale,” Stirling told FOX 13 in an interview at doTerra’s new corporate campus in Pleasant Grove.

FOX 13 has not found any doTerra detractors. We’ll see if this story brings any to our attention.

FOX 13 will profile two people who consider themselves victims of unethical business practices from other MLMs on the News at 9 Wednesday. We’ll also introduce you to a couple who are on their way to making a fortune, and loving it.

102 comments

  • anotherbob

    People who fall for these pyramid schemes deserve to lose their money and waste their time. Now days people don’t care to think about any other aspect of an MLM other than the money, they don’t take into account exactly what it would take to actually become successful. Sure some people are very successful (the very friendly/sociable types) but the majority never really get anywhere and they destroy their actual family/friend groups trying to sell this worthless stuff to everybody they run into.

    I once had a co-worker fall for one of these, I think insurance, and they asked me to go to one of their recruiting seminars as a favor. I ended up going and sure enough was not surprised at all on what I saw, they flash trophies and stories of success in front of your face as bait “yeah paid cash on my 7 series outside), but at the end of the night they can’t give you details on where the money actually comes from and what your actual daily job duties would be. They then ask you to join the collective and pay your entry membership fee haha. Nuskin, vitamins, lawyer services, Marry Kay, Scentsy, Pampered Chef… it’s all the same junk you don’t really need.

  • Faux News

    This is still legal? Why is he highlighted on the news and not in jail. Oh wait…. Legislator buddies with hands in his pockets.

  • Insain

    Rarely highlighted aspect of MLMs doTerra in particular: annoying family members who enrage their sibling cousins parent aunts uncles etc with their incessant desire to sell you their overpriced snake oil. Family should be off limits to high pressure sales events at ever family gathering. MLMs especially doTerra members are unscrupulous and need to be put in their place before they start their sales pitch. Maybe put signs on your front door. “Proudly doTerra free” (and all other MLMs) or “doTerra free zone”

    There need to be AA type recovery groups setup for these former MLM members.

  • Lisa

    I’m actually an Elite Wellness Advocate with doTERRA, & I’m actually doing very well. I actually didn’t join doTERRA for the business, but decided to do it after looking at their business model. The humanitarian & mission efforts of doTERRA are really impressive, their oils are top notch, & our leaders are compassionate & supportive. doTERRA is certainly not just another MLM, and because most join simply to get wholesale pricing & not do the business, it’s not all about feeding the top dog, and in fact, I could actually make more than the person who shared with me and end up with a higher rank.

    Before lumping us all in together, check out the doTERRA difference!😊

      • ohmamalisa68

        Actually, no. Elite is a lower level leadership title, & far from the top (where the article and some comments are stating is where all the money is), but I’m still doing well with my business and clearing a profit after expenses. Definitely not throwing rank to toot my horn. Please look at our rank structure before you make assumptions.

      • Rodger Lee

        Exactly, Ohamalisa. Thank your for making my point for me. Low level , lofty title. Apparently to doTERRA, Elite means something different than it does the average bear.

  • andygoddard

    My wife and I joined doTERRA and we were very happy customers. Then we built a business with it and have been very successful. We love everything about the company, the culture, the product, and the owners.

  • Ruth Brotsky

    I started doTerra to use the essential oils to benefit my family’s over all well being. We have two children, one is handicapped and my husband had been diagnosed with acute Leukemia in 2009, we found doTerra in 2012. DoTerra has taken us from below poverty to living comfortably. Doterra is a great company. I love everything they stand for.

  • wonderwomannm

    doTERRA is the real deal! No pressure to share or even to buy. I share with people who are open to it and I love watching it change their lives like it did mine! I have used the products for 5 years now and love that I can stay healthy naturally. The OILS work! The humanitarian & mission efforts of doTERRA are really impressive and I love being a part of it any way that I can. The level of education that we receive at our convention is worth every penny! I appreciate getting my oils/oil products for FREE by simply helping others feel their best and live their best life!

  • Christine

    Please know that MLM’s are not pyramid schemes. Pyramid schemes are illegal and don’t even fall into the same category. Being a Wellness Advocate with dōTERRA has changed our lives (for the good) in more ways than I can count and even begin to share here. The owners have always shown nothing but integrity and honesty and I am proud to be a part of a company that is build on such solid foundations. We use these products daily in our home and are so grateful for them. At dōTERRA we usually do not share about our incomes, but since that is the basis of this story, I will just share that dōTERRA has provided us with a very stable, growing income. I truly do not know how we would be surviving financially without dōTERRA.

  • Julie

    I am a Wellness advocate for doTERRA. I joined about 5 years ago, but only so I could buy the oils for my own use. I tell everyone I know about how the oils have helped me. I do it not to make money (because I don’t make ANY), I do it to let people know there are alternatives out there for OTC pain relievers. I love sharing my experience with these oils. Its natures medicine, its been used since biblical times for that purpose.

  • Mitchell Stevens

    We started using doterra products years ago because my wife loves natural solutions. I love that we can buy with a wholesale account. When I placed my first order, the rep told me I could set up a wholesale account and now we get deep discounts on product. I’m not sure why anyone would get upset about that. Max, you may have made a judgement error by placing doterra in the same category as those other companies.

  • Jenny Childs

    We are involved with dōTERRA and love it. It’s one of the most ethical companies I’ve ever had the pleasure of doing business with. Customer service is fantastic and we have been building a business with an amazing group of people.

  • Grace Ann Christian

    Multi level marketing is not the same as a pyramid schemes. Pyramid schemes only exchange money. MLMs have legitimate products for sale. I joined doTERRA to purchase the products at a better price. Far from worthless, the effects of using essential oils have had life-changing positive effects on my health and my loved ones. 8 months after starting to use essential oils, I began to teach others how to use them and make some extra money for myself. Now, 3 years later, I am almost replacing my 40 hr/wk job and looking at being able to provide my own retirement income…..with products that are extremely beneficial for everyone.

  • Laura Redmond

    I have been with doterra for 3 years. In that time I’ve replaced my 9-5 job and make double what I did as a general manager in retail sales. I make more than the person above me. You get out of it what you put in. I’ve learned to make almost everything from scratch from cleaning products to lotion . Using doterra saves my family money and allows me to be home with my 5 children.

  • Trisha

    I love dōTERRA and their “costco” type membership! I love the potency of these oils and how well they work for me and my family. Definitely no scams here!

  • Debbie

    I have been with doTERRA since 2009. It has been a learning process for me to understand MLMs, and I can honestly say I now feel proud to be a part of this profession. I believe doTERRA offers the perfect combination to create a MLM that raises the bar from MLMs of the past. The company owners are people of integrity. The products are so helpful and easy to use. The income earning opportunity is generous and available to everyone.

    I am excited about how this company impacts the world by paying fair prices and offering humanitarian aid to the countries they source from. That topic along could fill a book.

    I am so thankful for doTERRA and their consistent effort to not be a stereotypical MLM. I hope you are nothing but surprised and impressed by what you find through your interviews.

    Daily I find myself thankful and amazed with doTERRA for so many reasons.

    I truly am grateful that I have been able to do our wellness shopping, from skin care to haircare, muscle tension relief, and so much more, right from my own Virtual office / store. Supporting my families health and wellness with doTERRA’s amazing products, and having the opportunity through honest and caring work/time, to provide an income that not only supports myself and my family, but ministires we hold dear to our hearts around the world, has been a life changing experience.

    Best Wishes and HaPpY oiling,
    Debbie

  • Holly Yingling

    I am a Wellness Advocate with doTERRA at the Silver level. My family has found the products extremely effective. Due to the positive changes in our family – physically and amotionally – folks ASK me what the difference is with our family. Yes, it is the doTERRA products. The company just happens to compensate me when I share with someone about the products. If someone is interested in the products and eager to learn, I share and earn. If they are not interested in the products, that is perfectly fine. doTERRA does have a wonderful compensation program but it is NOT a get rich quick scheme. It can take years to replace a full time income and more (depending on the income). Yet, this company has great integrity and standards. If someone felt they were “chased down or pressured” by a WA, it is not doTERRA’s style but perhaps an individual’s personality. You can not “lump” 2.5 million wellness advocates into the same “label” of pushy sales reps.

  • Brittany

    I’m interested to hear the follow up story because I can’t imagine how anyone could be “duped” into MLM without knowing exactly what they were getting into. I’ve used products from a lot of different MLMs but the only products I keep buying are the ones from doTERRA. I don’t sell the oils but I sure do use them!

  • Lyn

    I started using DoTERRA in January 2014. I was looking for some natural complimentary solutions that Imcould use in conjunction with my traditional medical practices. The oils are wonderful and work. I had no desire to sell the oils but after using them for three months I started telling my family and friends about them and how they had helped me. I am retired and making quite a nice amount of money sharing my oils. I love the company because of their scientific research on each of their products and their humanitarian works in countries who struggle to even hit the poverty level. DoTERRA is different and cannot be lumped in with all other MLM companies.

  • DPerkins

    Is any corporation not a pyramid? You have the workers at the low levels busting their tail, to make money for the managers above them, who bust their tails to make money for the executives above them. All so the CEO can make a huge salary. Well, this does not describe dōTERRA. I joined to get my oils at the best price, but if I choose to make it a business I can, I can bypass the person who shared with me and make way more than them, so their unique structure for an MLM makes that possible.

  • Beth

    We love dōTERRA. It’s one of the best things to happen to my family. Great, reputable company that pays well. Even for newbies.

  • Lindsay

    I use doTERRA and have never felt a pressure to share, buy or sell. As my family has enjoyed the benefits of their essential oils, I decided on my own to build a business. But when I go to teach classes, I go as a teacher and not as a salesperson. Whether a person enrolls or not does’t matter to me, I know that I have taught someone else that their are alternatives out there, and this is one of them. If they decide later on that they want to enroll, it is their choosing and not something that they felt pressured into doing. I think that doTERRA does a wonderful job and their humanitarian efforts are incredible.

  • Tammy

    This is a very misleading article. Most people in MLM sign up for the discount not to make money. I signed up with Costco more then 10 years and never made a dime, does that make Costco a scam? doTerra has wonderful products for people who are looking for natural alternatives and I’ve made and am making money with doTerra. It’s an amazing company.

    • Rodger Lee

      Two obvious problems with this comment, false analogy and faulty logic. Did Costco ever claim that you or anyone could make a money making business opportunity by joining Costco. You would serve yourself well not to trust whom ever sold you this analogy. If you invented it yourself, don’t trust your own reasoning ability.

  • Mitch Weight

    Not all MLMs are the same. Big watches, fast cars, boats and mansions? Yes, there are plenty of MLMs out there that focus on get-rich-quick ideals. But doTERRA is different. Just as you mentioned above, the company focuses on social good, personal development and service to others. If you attended their convention in Salt Lake this year you would have witnessed hours and hours dedicated to the good work being done in Nepal, Haiti and Somalia. You would have heard about environmental efforts in New Zealand and economic development projects in Ghana. You would have discovered tens of thousands of people who have a desire to uplift others and make the world a better place. Hundreds of doTERRA representatives showed up to create kits for Days for Girls – a non-profit that serves young girls in impoverished countries. There may be tiny similarities in compensation plans between doTERRA and other companies, but that’s where the similarities end. doTERRA stands out with corporate responsibility, effective products and a culture that takes care of those in need.

  • Beth Weight

    I love doTERRA products, their business model, the corporate employees, the other distributors and the culture! The overall culture is one of service and gratitude! My life has been enriched through my association with this remarkable company. I know this is not the case with all MLMs. DoTERRA is an example of goodness in this industry.

  • Laurie C.

    I order from doterra regularly with my wholesale account and I even get frequent shopper points for my purchases. I wish more companies were like that! If I got as much points back from Costco as I do from doterra I’d be set! As far as any scamming goes, I think you’ll have to look elsewhere – I’ve got nothing but rave reviews about doterra.

  • essentialeogal

    I’m a ranked as Silver with doTERRA. I didn’t do this to start the business, but the oils have brought a change in my families life. I believe doTERRA is about something different and sharing knowledge and the love of the oils with people not forcing them to buy. If you found something you love wouldn’t you share with others? All companies are a pyramid per say. There is a CEO of the company and it goes down from there. To be able to make a difference in someones life is an amazing feeling. Im not in it just to earn money, yes thats a plus side, but in it to give a natural solution to families. I also am able to stay at home with my child in the process, and that to me is a WIN WIN! Thank you DOTERRA!

  • Sandy Niedzwiecki

    II am a doTERRA Wellness Advocate, I share oils with those that are interested and use them within our family. I am proud to be part of this organization. This company impacts the world and changes lives for the better every day by paying fair prices and offering humanitarian aid to the countries they source from. The integrity of this company and its leadership is second to none.

  • SLBT

    I know people making 3 figures with doterra. They are a great cmpant. I prefer to use with family & share with friends, but the earning potential is absolutely there & the products have so many benefits & uses ~ People should try it before they jump to conclusions.

    • Rodger Lee

      No, I beg to differ. If it’s a MLM, people should not try it. Rather, that should be the first red flag about the product and the company behind it. Use some logic please, folks. If it’s that superlative of a product wouldn’t it sell gangbusters in a normal retail channel? Product is always an afterthought to MLM scam model.

  • Monica

    Most people sign up for a discount on the product. Just because there are a few bad apples doesn’t mean the entire industry shouldn’t be condemned. Also, by law, most MLM companies are required to offer money back on all inventory for up to a year, so people who are stuck with inventory only have themselves to blame. I’ve been part of several MLM organizations, not because I wanted to be a millionaire, but because I wanted a discount on the products. Haven’t regretted my involvement once.

    • Rodger Lee

      When will people begin to see that the real bad apples are not so much the people duped into MLM, but the people who found and own them. But then, the cult of the personality often wins the day with the weakminded.

Comments are closed.

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