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Young Living

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Young Living
Company typePrivate
IndustryMulti-level marketing
Founded1993 (1993)
FounderDonald Gary Young
Headquarters
Lehi, Utah
,

United States
Area served
International
Key people
Mary Young (CEO)[1]
ProductsEssential oils, home products

Young Living is a multi-level marketing company based in Lehi, Utah. Founded by Donald Gary Young in 1993, it sells essential oils and other related products.

History

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1993–2014: Formation of Young Living

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Donald "Gary" Young gained an interest in alternative medicine after suffering a back injury in the early 1970s.[2] Then, he became interested in essential oils after meeting with a French lavender distiller at a conference in California before traveling to France to learn distillation. He purchased a 160-acre (65 ha) farm in St. Maries, Idaho, with his wife in the early 1990s,[2][3] and Young Living was founded in 1993 in Riverton, Utah, with Gary as CEO,[4] and incorporated in 1994.[3] A second farm in Mona, Utah, was purchased in 1996.[3]

In 1996, the company projected sales of between $8 and $10 million,[5] and reported annual sales of more than $1 billion from 2015 and 2017.[6]

Starting in 2000, Gary ran the Young Life Research clinic in Springville, Utah. After settling a lawsuit in 2005, the clinic was closed, and he opened a clinic in Ecuador, practicing medicine and performing surgery there, over concerns from Young Living's COO, David Stirling.[2] He also opened his first international farm in Ecuador in 2006.[3] In 2010, they became the "first large commercial distillery" to distill essential oils from frankincense, and in 2014 their Highland Flats distillery "became the first automated, large-capacity, computerized steam distilling facility ... for essential oils".[3]

In 2008, David Stirling was fired from the firm and founded the rival company doTerra, and in August 2013, Young Living filed suit against doTerra for theft of trade secrets, alleging that the company had recreated their production process illegally.[7][8] Young Living lost the case in 2017,[9][10] and in 2018, a judge ordered it to pay doTerra's legal fees amounting to $1.8 million.[11] The companies also settled lawsuits around faked lab tests, false advertising, and theft of trade secrets, and withdrew their negative claims in relation to the purity of each other's products.[10]

2015 to present: Post Donald Gary Young

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Young stepped down as CEO in 2015, and his third wife, Mary Young, assumed the role.[12] The company moved their corporate operations to Lehi, Utah, in 2014, receiving tax breaks in order to expand their operations,[4] and in 2017, started construction on their new corporate headquarters.[6] Gary died in 2018.[3]

Business model

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Young Living employs a multi-level marketing model, recruiting "thousands of independent distributors who can sell directly to customers and earn commissions on sales to distributors recruited into a hierarchical network called 'downlines'".[7] Although distributors can potentially make a profit from direct sales, more money is made by commissions through sales made by people who the distributors recruit.[2] Distributors are categorized based on their sales: the lowest rank with the least sales are referred to as simply "Distributors", while at the top are the "Royal Crown Diamonds".[2]

In 2017, the New Yorker reported that distributors are required by Young Living to make $100 of purchases per month to qualify for a commission. According to a public income statement from 2016, approximately 94% of Young Living's active members made less than a dollar, while less than one tenth of one percent (about one thousand Royal Crown Diamond distributors) made over a million dollars.[2][13]

According to an analysis of the company's 2018 income disclosure statement by Business Insider, 89% of all members attempting their own business were on the bottom tier, earning an average of $4 annually, while those on the first three tiers, comprising 98.7% of active members, averaged between $4 and $1,551 annually, not counting required monthly costs to remain active with the company.[14]

Products

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Young Living sells essential oils and other related products.[7] It claims to sell completely pure, naturally derived oils. Its products are sold online and through distributors.[2]

A report by Business Insider in 2020 documented at least 11 complaints made to the FDA between 2013 and 2014 of "Young Living customers claiming serious adverse event reactions to the products". The FDA concluded the cause of one case to be a possible product failure while the others determined to be the result of incorrect usage or allergic reaction.[14]

Prohibited marketing claims

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In September 2014, Young Living was one of three companies warned by the U.S. Food and Drug Administration for its marketing practices. The FDA identified multiple instances of claims being made by Young Living's distributors on social media and other websites where they marketed Young Living products as possible treatments for cures of Ebola virus[15][16][17] and other conditions.[18][19][20][21] The letter also stated that Young Living's website made claims that promoted products in such a way that the federal government would classify the products as drugs.[21][22] The company subsequently agreed to address the violations cited by the FDA.[15][23][19]

In 2020, the National Advertising Division of the Better Business Bureau recommended Young Living stop claiming that its products are 'therapeutic grade', as it did not have the requisite scientific support to support such claims. The company disagreed and stated they would appeal, while at the same time agreeing to stop making various health and wellness claims about its products and their ingredients.[24][25][26]

In 2022, the FDA issued a warning letter to Young Living for illegally marketing several of their products as misbranded, unapproved, new drugs, including "Essential Oil", "Vitality", "Ningxia", and "Nature's Ultra CBD", when none of such products had been adequately studied by "adequate and well-controlled clinical studies in the published literature that support a determination that any of these products are generally recognized as safe and effective for use under the conditions prescribed, recommended or suggested in their labeling."[27] Specifically for the product containing cannabidiol (CBD) called "Nature's Ultra CBD", the FDA stated that a "nonprescription drug product containing CBD cannot be legally marketed without an approved new drug application, regardless of whether the CBD is represented on the labeling as an active ingredient or an inactive ingredient. To date, no CBD-containing drug has met applicable FDA requirements to be legally marketed for nonprescription use."[27]

Litigation

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In 2000, the Utah Occupational Safety and Health Division (UOSHD) investigated a distiller explosion that fatally wounded a worker at Young Living Farms in Mona. UOSHD fined Young Living Farms $10,280 for seven safety violations.[28][29]

In 2014, Young Living hired counsel for an internal investigation of its importing practices. The investigation resulted in the voluntary disclosure of violations of the Lacey Act of 1900 and the Endangered Species Act of 1973 for illegally trafficking rosewood oil and spikenard oil.[30][31][32] The company was subsequently fined $760,000 in 2017 after pleading guilty to the charges. In addition to the fines levied, the company was placed on probation for a period of five years.[31][30]

In April 2019, a proposed class-action lawsuit was filed under the RICO Act, alleging that Young Living is an unlawful pyramid scheme. The suit was dismissed in 2021 for failing to adequately allege the claims made by plaintiff.[33]

References

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  1. ^ "Local biz: New executives at doTerra and Young Living Essential Oils (Press release)". Herald Media. July 7, 2015. Retrieved July 18, 2015.
  2. ^ a b c d e f g Monroe, Rachel (October 9, 2017). "How Essential Oils Became the Cure for Our Age of Anxiety", The New Yorker. Retrieved January 29, 2019.
  3. ^ a b c d e f "D. Gary Young", (May 18, 2018), Daily Herald, Utah County, Utah, U.S. Retrieved January 29, 2019.
  4. ^ a b Gorrell, Mike (December 12, 2014). "Perks Offered to Create 1,600 Jobs". the Salt Lake Tribune.
  5. ^ Hardy, Rodger (July 14, 1996). "Essential Oils: Founder of Company Says Ancient Herb Extracts Hold Secrets of Modern Healing", Deseret News. Retrieved January 30, 2019.
  6. ^ a b Neely, Karissa. (March 28, 2018) "Young Living posts third billion dollar growth year", Daily Herald, Utah County, Utah, U.S. Retrieved January 30, 2019.
  7. ^ a b c Harvey, Tom (August 1, 2013). "Essential oils rivalry spills into Utah courts". The Salt Lake Tribune. Retrieved June 19, 2014.
  8. ^ "Young Living Essential Oils, LC (Plaintiff) v. doTERRA, Inc., et al. (Defendants)" (PDF). United States District Court for the District of Utah Central Division. July 18, 2013. Archived from the original (PDF) on October 23, 2014. Retrieved August 20, 2014.
  9. ^ Harvey, Tom (July 17, 2017). "Utah jury finds doTERRA creators did not breach contracts after leaving Young Living Essential Oils". The Salt Lake Tribune.
  10. ^ a b Harvey, Tom (October 23, 2014). "Judge dismisses much of lawsuit between rival Utah 'oils' companies". The Salt Lake tribune. Retrieved March 16, 2015.
  11. ^ Carlisle, Nate (July 12, 2018). "Judge finds Young Living acted in 'bad faith,' orders it to pay doTERRA $1.8 million". The Salt Lake Tribune.
  12. ^ "Mary Young Transitions to CEO of Young Living", (June 29, 2015). Direct Selling News. Retrieved January 30, 2019.
  13. ^ Cox, Kate (October 3, 2017). "5 Things We've Learned About The Booming Essential Oils Business". Consumer Reports. Retrieved January 29, 2019.
  14. ^ a b Einbinder, Nicole (July 29, 2020). "How Young Living lures desperate people into its multilevel sales network, where 89% of members make, on average, $4 annually". Business Insider. Archived from the original on August 2, 2020. Retrieved August 20, 2020.
  15. ^ a b Ohlheiser, Abby (September 24, 2014). "FDA warns three companies against marketing their products as Ebola treatments or cures". Washington Post. Retrieved September 26, 2014.
  16. ^ Grush, Loren (September 26, 2014). "FDA Takes Action Against Companies Selling Fraudulent 'Ebola Cures'". Popular Science. Retrieved February 10, 2019.
  17. ^ Sepkowitz, Kent (December 5, 2014). "Honey Boo Boo, Snake Oil, and Ebola: The Weird World of Young Living Essential Oils". Daily Beast. Retrieved January 16, 2015.
  18. ^ "The Fine Line Between Essential Oils and Treating Disease". Pharmacy Times. February 3, 2015. Retrieved January 29, 2019.
  19. ^ a b Hanson, Kurt (September 25, 2014). "FDA sends warning to doTERRA and Young Living about oils". Daily Herald. Retrieved February 10, 2019.
  20. ^ Andrews, Natalie (October 3, 2014) "FDA cracks down on sellers touting Ebola treatments", Wall Street Journal. Retrieved March 7, 2019.
  21. ^ a b Mitchell, LaTonya (September 22, 2014). "Warning Letter: Young Living". U.S. Food and Drug Administration. Retrieved November 17, 2014.
  22. ^ Papple, Dawn. (September 25, 2014). "FDA Warning Letters: Young Living, dōTERRA Consultants Must Cease Marketing Claims That Essential Oils Fight Disease", Inquisitr. Retrieved January 31, 2019. "However, Young Living's CEO was reprimanded for more than just consultants' claims. Young Living’s own website made claims that promoted products in such a way that the federal government would classify the products as drugs, according to the FDA."
  23. ^ Monsen, Ali. (September 25, 2014). "FDA cracks down on Utah's essential oil companies", ABC 4 Utah. Retrieved February 10, 2019.
  24. ^ "NAD Recommends that Young Living Essential Oils Discontinue "Therapeutic Grade" and Health-Related Claims for its Essential Oils; Advertiser to Appeal". BBB National Programs.
  25. ^ "MLM News Alert". Truth in Advertising. August 10, 2020. Retrieved August 25, 2020.
  26. ^ Schultz, Hank Schultz (July 27, 2020). "Young Living appeals NAD decision that it must stop making 'therapeutic grade' claim on its essential oils". NutraIngredients-USA. Retrieved August 25, 2020.
  27. ^ a b E. Mark Harris, District Director (June 10, 2022). "Warning letter: Young Living Essential Oils Corporate". US Food and Drug Administration. Retrieved August 23, 2023.
  28. ^ London, William M (January 9, 2019). "D. Gary Young (1949–2018), Diploma Mill Naturopath And Promoter Of Essential Oils". Skeptical Inquirer. Retrieved August 21, 2020.
  29. ^ "Citation and Notification of Penalty", (December 7, 2008), Labor Commission, Utah Occupational Safety and Health Division
  30. ^ a b Noble, Mariah (September 19, 2017). "Utah-based Young Living Essential Oils pays $760,000 for illegal oil imports". Salt Lake Tribune. Retrieved January 29, 2019.
  31. ^ a b "Young Living guilty of trafficking oils from endangered plants". Daily Herald. September 19, 2017. Retrieved January 29, 2019.
  32. ^ "Essential Oils Company Sentenced for Lacey Act and Endangered Species Act Violations to Pay $760,000 in Fines, Forfeiture, and Community Service, and to Implement a Comprehensive Compliance Plan". US Department of Justice. September 18, 2017. Retrieved September 20, 2017. Several company employees and contractors harvested, transported, and distilled rosewood (Aniba roseaodora or Brazilian rosewood) in Peru and imported some of the resulting oil into the United States, through Ecuador. The importation of illegally harvested wood and timber products harms law-abiding American companies and workers and threatens forest resources around the world
  33. ^ "Young Living Gets Essential Oil Deception Suit Tossed, for Now". Bloomberg Law. December 17, 2021. Retrieved January 13, 2022.
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