Is doTerra A Pyramid Scheme? [2020 Review]

It's likely that you wound up here because someone recommended either doTerra products or their business opportunity to you. Maybe someone close to you or an acquaintance in Facebook for example.

Whoever it was, something smelled fishy and you decided to investigate. Could this be one of those pyramid schemes like One Coin?

Before we continue, I want you to know that I'm not affiliated with doTerra in any way. My website is about helping people to start working on their own terms so I look at business opportunities and recommend the ones that I know to be effective.

My content does include affiliate links from time to time because of this. I want to be completely transparent about this because I trust the programs I recommend and offer my full support. Buying through my affiliate links will of course not cause any extra cost to you.

Difference Between MLM and a Pyramid Scheme

Before we talk more about doTerra and if there's any evidence of it being a pyramid scheme, it's important to understand the terminology first.

doTerra is an MLM or multi-level marketing company, aka network marketing company. Many people get the terms MLM and pyramid schemes mixed and think they mean the same thing.

While it's true that multi-level marketing uses a pyramid model to grow its distributor base, there are in fact completely legit MLM companies. Well at least legit in the country they operate in.

You see, that's the other thing about pyramid schemes. The definitions vary between countries and officials. Something that's considered completely legal network marketing in one country can be considered an illegal pyramid scheme in another.

For the sake of simplicity, I'm going to limit this post to how officials, mainly FTC, classify pyramid schemes in the US.

The generally accepted definition of a pyramid scheme is that it's a system where individual reps recruit additional members and earn commissions over several levels of recruitment.

Put more simply, you recruit people and they pay you for a business opportunity, the business opportunity is that they get to recruit people as well. You earn a share of their recruitment commissions as well.

Pure pyramid schemes are very rare, an example of this are the chain letter schemes that used to go around the world in the not so distant past.

Modern pyramid schemes are virtually almost disguised as some form of legit business that usually offers investment opportunities or business training, sometimes they can be about personal development as well.

The idea is that they seem to be selling something in the form of training for example, but all the money actually comes from the recruitment of new members.

And this is the most important distinction from a legit MLM business. That the income comes from the participation fees of new members.

Legal MLM or network marketing businesses use a similar pyramid model where individual sales reps can recruit additional sales reps and earn a share of their revenue.

For it to be considered legal, the majority of revenue into the system has to come from sales of actual products or services to consumers. So in an MLM, just recruiting someone won't give you any income, you have to help them sell products as well.

That's why these are often called sales organizations or personal sales teams in MLM jargon. The common term for the people you have recruited and their recruits is a downline.

If you understand a bit of math, the downline grows in an exponential manner, so if you draw it on a piece of paper, it resembles a pyramid. Hence the name pyramid scheme.

So the key take away here is that MLMs that get most of their revenue from selling products are actually considered completely legal.

Though the FTC has expressed their concerns about the business model as they have statistics that show that up to 95% of sales reps in MLMs don't end up making any meaningful profit and might actually lose money.

Pyramid schemes are generally short-lived because members and officials will eventually realize the foul play. There will usually be ongoing legal processes before the scheme crumbles and there's evidence that they are not actually selling any real products or services.

A good example of a recent pyramid scheme is One Coin. Another company that is under suspicion is called Crowd1 which I talk more about in my article Is Crowd1 A Scam?

Now that we understand the difference between an MLM and a pyramid scheme, let's look more closely at doTerra.

doTerra: Company Overview

Doterra is an American multi-level marketing company that was established in 2008 by David Stirling, David Hill, Corey B. Lindley, Gregory P. Cook, Robert J. Young and Mark A. Wolfert.

The company is based in Pleasant Grove, Utah and its main products are essential oils, aromatherapy products, and related categories.

doTerra shares some history with Young Living, another essential oil MLM. Stirling, Wright, and Hill were all former executives in Young Living before moving to establish their own company doTerra.

doTerras name is apparently inspired by the Latin phrase for "gift of earth". The company initially launched with 25 single oils and ten oil blends but has since grown its product base to include skincare products for example.

doTerra has grown very fast since it's forming in 2008. In 2018 doTERRAs global headcount was over 3,200 employees, 2,580 of which were based in the US.

Like you probably realized from the previous sentence, they have expanded globally and have organizations in Taiwan, Japan, Hong Kong, Australia, Korea, China, Mexico, Singapore, Canada, Malaysia, Costa Rica, New Zealand, Brazil, Russia, Guatemala, Ecuador, Italy, and many other European countries.

The company uses a network marketing or multi-level marketing business model, where sales are made by independent "Wellness Advocates" instead or a regular distribution chain of retail stores.

doTerra sources, tests, manufactures, and distributes their essential oil products themselves through industry-leading responsible sourcing practices.

According to their website they maintain the highest levels of quality, purity, and sustainability in partnership with local growers globally through co-impact sourcing.

doTerra has also formed a non-profit organization called doTerra Healing Hands Foundation, that offers resources and tools to global sourcing communities for self-reliance, health care, sanitation, and the fight against human trafficking. A noble cause, to say the least.

doTerra Business opportunity

You are probably most interested in the business opportunity doTerra offers by becoming their "Wellness Advocate"

doTerra advocates come apparently from all kinds of backgrounds and walks of life. The only requirement you have is to be passionate about health and wellness and caring for people.

As a Wellness Advocate you can sell doTerra products face-to-face locally or globally through a personalized web shopping site.

According to doTerra a Wellness Advocate is a person who is committed to sharing the life-enhancing benefits of essential oils. They apparently do this by sharing (or selling?) the world's higher-quality essential oil products that have been developed by experts.

In layman's terms this means that the business opportunity is to sell their essential oils and other products to consumers and by recruiting people into your downline so you can earn a share of their revenue as well.

In MLMs the money is always in the recruitment, just having a few active sellers beneath you, that are good at recruiting as well, can easily surpass anything you could possibly sell yourself directly.

Of course the online world offers more potential, as you can reach the global audience and your website can do sales on automation. We'll talk more about this in a minute.

So you have basically three ways to make money as a Wellness Advocate. By selling products to consumers, by recruiting people, and through bonuses.

You can find out how the bonuses and recruitment commissions work in their compensation plan.

Is doTerra a Pyramid Scheme?

So the million-dollar question is: Is doTerra a pyramid scheme? Well there are three questions I like to ask when assessing if an MLM might be a pyramid scheme.

1. How long has the company been around? Pyramid schemes are shortlived.
2. Are there any real products or services and proof of them being sold? Pyramid schemes use products only as a front for recruitment
3. Are there any concerning lawsuits or other legal documents? Pyramid schemes tend to get sued or noted by officials.

1. How Long has the company been around?

doTerra was formed in 2008, so it isn't exactly an old MLM like Ameriplan, Primerica, or Avon, but it's still been around for over a decade and the founders were a part of Young Living, an MLM that's been around since 1993.

Most pyramid schemes are very shortlived. They typically grow extremely fast with a lot of hype and then the owners just vanish into thin air when officials start shutting the operation down. This is what happened with OneCoin.

At 12 years, the age, growth, and organization model with several global subsidiaries would suggest doTerra is a legit MLM company and not a pyramid scheme.

2. Are there real products?

Legit MLM companies have to get the majority of revenue from selling products or services to consumers. In pyramid schemes the products or business opportunities are just a front to recruiting additional members.

doTerra focuses on selling essential oils and related products to consumers. doTerra sources and manufactures these oils themselves and by 2016 they claimed to have generated more than $1 Billion in sales.

Let's just say that if their products are a front, it would have to be a very very elaborate scheme. So it's fairly obvious they are actually selling products to consumers. In massive amounts.

So nothing that would suggest doTerra being a pyramid scheme on this account.

3. Are there any lawsuits?

Before a pyramid scheme collapses, there will typically be warning from officials like the FTC and possibly lawsuits from members or officials.

I did some research online to see if doTerra has been involved in any lawsuits concerning it being a pyramid scheme. There really doesn't seem to be any.

A company of this size has of course been involved in several other legal battles. Most notably in 2013 Young Living filed a suit against doTerra alleging that doTerra has recreated Young Livings production process illegally. In July 2018, the court ruled that Young Living acted in bad faith and had misled the court, thus the judge ordered Young Living to cover doTERRA attorney costs.

In 2014 the FDA issued a warning letter to doTerra for allowing its distributors to market its products as possible treatments for several serious diseases and conditions like Ebola, cancer, and autism. The company responded by creating a compliance team that oversees the marketing material individual reps are using.

Apparently some distributors are still doing this. This is very common with MLM because the companies simply can't oversee all of their individual sales reps. There are bound to be dishonest people among them that are willing to lie to get sales. This is one of the core problems with MLMs.

More recently doTerra has had a security breach in their system where the personal details of their distributors were stored. Some distributors have recently falsely marketed doTerra products as a remedy for COVID-19.

So all-in-all, nothing too concerning and definitely nothing that would suggest the company is a pyramid scheme.

My conclusion is that doTerra is not a pyramid scheme. It's a legit company that uses multi-level marketing as it's distribution method.

So doTerra actually seems to be one of the better MLMs out there. I still can't really recommend it as a business opportunity though, because I know a better business model and MLMs are notorious for low success rate among members.

Even if you are determined to become a doTerra rep, you might want to hear me out because this method can be used to increase your sales exponentially through your personalized online store.

How To Leverage The Online World For Sales

One of the things I like about doTerra is the fact that they allow the sales reps to run their own personalized web stores. This is very modern and it would be ridiculous not to leverage the online world for sales.

Here's the thing. People are buying more and more stuff online instead of retail stores or from sales reps. As a business owner having an online store is superior to running a regular shop.

This is especially true if you are a sales rep that doesn't actually ship the items to the customers. I'm not sure if doTerra ships the products to customers or if the reps have to keep their own inventory and ship them, but I hope it's the former.

When done like this, it's essentially affiliate marketing. You get customers to the website and the company does all the hard work like storage, handling, and shipping. That stuff is expensive and labor-intensive. Something you should avoid at all costs.

Now the most important thing is that the website will be online 24/7, making sales even when you sleep. But the problem is that you won't get any sales unless you get traffic.

What if I told you there's a way to get endless amounts of free traffic that are looking to buy your products. And the best part is that this works with almost anything, not just doTerra online stores.

I'm talking about search engine optimized content creation, which is kinda like targeted blogging:

• You find out what information related to your products people are looking for
• You create content around those topics and optimize it for search engines
• You recommend relevant products within that content

This process can be used to create an automated selling machine when combined with affiliate marketing for example because there are no manual steps involved once the system is setup.

People find your content, they click a link that takes them to the affiliate vendor, they buy something and you earn a commission. Rinse and repeat.

If you want to learn more about how this stuff works, check out my number one recommendation for learning this method through the link below.

Also consider joining my free 7-day online marketing course if where I walk you through the initial steps of setting up a profitable website of your own.

Conclusion

I hope you found this doTerra review useful. If you have any questions, feel free to leave them in the comments section below and I'll get back to you.

doTerra definitely doesn't seem to be a pyramid scheme, it's simply a well established MLM company that focuses on selling essential oils to consumers.

MLMs have a notoriously low success rate, so I can only recommend the business opportunity to you if you are experienced with direct selling and know that you have what it takes to become a successful MLM rep.

One thing I do like about doTerra though is the fact that they allow reps to have online stores of their own. If they handle the shipping, an online store like this could potentially be used like affiliate marketing where you handle only the customer acquisition and the company does all the hard work.

But even if it doesn't work like this, there are endless amounts of affiliate programs to choose from. You can create a profitable affiliate marketing business in almost any niche by combining it with search engine optimized content creation.

But the truth is that this business model takes time, it's definitely not a get rich quick type of deal. But the end result is an automated sales machine that allows you to work on your business anywhere in the world.

So I recommend you get started as soon as possible so you get to reap the benefits later on.

Thanks for reading and if you found this review useful, remember to share it on social media!