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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 that sells essential oils and other related products. The company was founded in 1993 by Donald Gary Young,[2] a controversial figure previously convicted for the unlicensed practice of medicine.[3][4][5]

In September 2014, the U.S. Food and Drug Administration warned Young Living over the illegal marketing of its products as treatments or cures for Ebola virus,[6][7][8] and other conditions, including "Parkinson’s disease, autism, diabetes, hypertension, cancer, insomnia, heart disease, post-traumatic stress disorder (PTSD), dementia, and multiple sclerosis."[9][10][11]

History

According to Mary Young, Donald Gary Young ('Gary') gained an interest in alternative medicine after suffering a back injury in the early 1970s.[12] Young had offered medical services in Spokane, Washington, including water births and cancer treatments, beginning in 1982. After an undercover investigation in 1983, Young pleaded guilty to a misdemeanor for practicing medicine without a license; he received a suspended sentence and was placed on probation for one year.[13] [12][5] By 1986 Young was practicing as a naturopathic doctor in Tijuana, Mexico and offering cancer and lupus treatments, with a claimed 90% cure rate for the latter.[13][14] Young became interested in essential oils after meeting with a French lavender distiller at a conference in California some time before traveling to France to learn distillation. He purchased a 160-acre farm with his wife, Mary, in the early 1990s, located in St. Maries, Idaho.[12][15]

Young Living was founded in 1993 in Riverton, Utah, with Gary Young as CEO,[16] and was incorporated in 1994.[15] Young purchased a second farm in Mona, Utah, in 1996.[15] Young opened his first international farm in Ecuador in 2006.[15]

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".[15] In 1996, the company projected sales of between $8 and $10 million,[17] and reported annual sales of more than $1 billion from 2015 and 2017[18]

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.[12]

In 2008, David Stirling, was fired from the firm and - along with other ex-executives from Young Living - founded the rival company doTerra. doTerra aimed to sell essential oils to a wider client base than Young Living, and like Young Living they saw rapid growth in the market.[12] In August 2013, Young Living filed suit against doTerra for theft of trade secrets, alleging that the company had recreated their production process illegally.[2][19] In October 2014, the Fourth District Court dismissed the claims made against doTerra; 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.[20] Young Living lost the case in 2017[21] and in 2018 a judge ordered it to pay doTerra's legal fees amounting to $1.8 million.[22]

Young stepped down as CEO in 2015, and his third wife, Mary Young, assumed the role.[23] The company moved their corporate operations to Lehi, Utah, in 2014, receiving significant tax breaks in order to expand their operations,[16] and in 2017 started construction on their new corporate headquarters.[18] Gary died in 2018.[15]

Business model

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'."[2] 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.[12] 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."[12]

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, in 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.[24][4]

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.[25]

Prohibited marketing claims

In September 2014, the U.S. Food and Drug Administration warned Young Living against illegally marketing its products as possible treatments or cures for Ebola virus[6][7][8] and other conditions, including "Parkinson’s disease, autism, diabetes, hypertension, cancer, insomnia, heart disease, post-traumatic stress disorder (PTSD), dementia, and multiple sclerosis", after they identified multiple instances of such claims being made by Young Living's distributors on social media and other websites.[9][11][26][10] The letter named specific essential oil products "promoted for conditions that cause them to be drugs under section 201(g)(1)(B) of the Federal Food, Drug, and Cosmetic Act (the Act) [21 U.S.C. § 321(g)(1)(B)], because they are intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease."[10] The warning further stated that the marketing and distribution of these essential oil products as drugs by Young Living without FDA approval are violations of the Act.[10][27] Young Living subsequently agreed to address the violations cited by the FDA.[6][28][11]

Litigation

In 2000, the Utah Occupational Safety and Health Division (UOSHD) investigated an August 17, 2000, explosion of a distiller, that fatally wounded a worker at Young Living Farms in Mona, Utah. UOSHD fined Young Living Farms $10,280 for seven safety violations, stating that "no consideration was given in the design and construction of distillation vessels with respect to American Society of Mechanical Engineers (ASME) pertaining to design and construction of pressure vessels", and that "none of the pressure vessels are equipped with any type of pressure relieving device". According to the UOSHD, "the entire operation had been designed by Young Living founder Donald Gary Young and built onsite".[29][30]

According to Business Insider, from 2013 to 2014, at least 11 reports of “Young Living customers claiming serious adverse event reactions to the products” were received by the FDA. In one case, a woman claimed that her "esophagus exploded after using Young Living's AlkaLime drink”, ultimately requiring intensive care and surgery; the FDA concluded that the cause was a "possible product failure." The other incidents were determined to be “not due to possible product failures, but the result of other issues, such as incorrect usage or an allergic reaction.”.[31]

Business Insider reported that in 2014, Young Living settled a lawsuit with a woman who claimed that she suffered “severe burns” after using the company’s bergamot oil on her skin “and spending two hours in the sun, sustaining a permanent injury to the skin on her throat and wrists”.[31]

In September 2017 on a ruling against Young Living, the US Department of Justice announced a fine of $760,000 and guilty plea on federal misdemeanor charges for the illegal trafficking of rosewood oil and spikenard oil in violation of the Lacey Act of 1900 and the Endangered Species Act of 1973. The illegal activities were discovered by an outside investigator hired by Young Living, and the company subsequently voluntarily disclosed the concerns to the government.[32][33][34] In addition to the fines levied, the company was placed on probation for a period of five years.[33][32]

In April 2019, a proposed class-action lawsuit was launched in California under the RICO Act against Young Living; company executives Mary Young, Jared Turner, and Benjamin Riley; and several other high-level members of the company. The complainants, seeking $5 million in damages, alleged that Young Living is an unlawful pyramid scheme created under the guise of selling essential oils for quasi-medicinal purposes.[35][36][25]

In 2020, in response to a complaint filed by SC Johnson & Son, the National Advertising Division of the Better Business Bureau ordered Young Living to stop claiming that its products are ‘therapeutic grade’ because the claim conveyed “an unsupported message that the essential oils confer a beneficial healing physical or mental health effect on the body or mind.” The company also agreed to stop making various health and wellness claims about its products and their ingredients, such as that they “promote feelings of calm and relaxation; help consumers sleep; provide clarity, focus, and/or alertness; energize; and improve consumers’ mood and increase their motivation.”[37][38][39]

References

  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 Harvey, Tom (August 1, 2013). "Essential oils rivalry spills into Utah courts". The Salt Lake Tribune. Retrieved June 19, 2014.
  3. ^ Prager, Mike. (March 10, 1983) Arrest Result Of Attempt To Police All Professions", The Spokesman-Review p12. Retrieved January 31, 2019.
  4. ^ a b Cox, Kate (October 3, 2017). "5 Things We've Learned About The Booming Essential Oils Business". Consumer Reports. Retrieved January 29, 2019.
  5. ^ a b Einbinder, Nicole (July 29, 2020). "Inside Gary Young's criminal history, secret past, and his cultlike leadership of the Young Living 'essential oils' empire". Business Insider. Archived from the original on July 29, 2020. Retrieved August 20, 2020.
  6. ^ a b c Ohlheiser, Abby (September 24, 2014). "FDA warns three companies against marketing their products as Ebola treatments or cures". Washington Post. Retrieved September 26, 2014.
  7. ^ a b Grush, Loren (September 26, 2014). "FDA Takes Action Against Companies Selling Fraudulent 'Ebola Cures'". Popular Science. Retrieved February 10, 2019.
  8. ^ a b 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.
  9. ^ a b "The Fine Line Between Essential Oils and Treating Disease". Pharmacy Times. February 3, 2015. Retrieved January 29, 2019.
  10. ^ a b c d Mitchell, LaTonya (September 22, 2014). "Warning Letter: Young Living". U.S. Food and Drug Administration. Retrieved November 17, 2014.
  11. ^ a b c Hanson, Kurt (September 25, 2014). "FDA sends warning to doTERRA and Young Living about oils". Daily Herald. Retrieved February 10, 2019.
  12. ^ 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.
  13. ^ a b Doug Clark (October 28, 1986). "Does he relieve people of pain or of their wallets?". news.google.com. Retrieved May 1, 2020.
  14. ^ Hurst, John (October 23, 1987). "'Patient' Submits Blood (From Cat), Is Given Diagnosis". Los Angeles Times. Retrieved October 19, 2007.
  15. ^ a b c d e f "D. Gary Young", (May 18, 2018), Daily Herald, Utah County, Utah, U.S. Retrieved January 29, 2019.
  16. ^ a b Gorrell, Mike (December 12, 2014). "Perks Offered to Create 1,600 Jobs". the Salt Lake Tribune.
  17. ^ 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.
  18. ^ 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
  19. ^ "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. Retrieved August 20, 2014.
  20. ^ Harvey, Tom (October 23, 2014). "Judge dismisses much of lawsuit between rival Utah 'oils' companies". The Salt Lake tribune. Retrieved March 16, 2015.
  21. ^ Harvey, Tom (July 17, 2017). "Utah jury finds doTERRA creators did not breach contracts after leaving Young Living Essential Oils". The Salt Lake Tribune.
  22. ^ 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.
  23. ^ "Mary Young Transitions to CEO of Young Living", (June 29, 2015). Direct Selling News. Retrieved January 30, 2019.
  24. ^ Monroe, Rachel (October 9, 2017). "Something in the Air". The New Yorker. New York: Condé Nast. Retrieved October 8, 2017. According to a public income statement, more than ninety-four per cent of Young Living's two million active members made less than a dollar in 2016, while less than one-tenth of one per cent—that is, about a thousand Royal Crown Diamonds—earned more than a million dollars.
  25. ^ 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.
  26. ^ Andrews, Natalie (October 3, 2014) "FDA cracks down on sellers touting Ebola treatments", Wall Street Journal. Retrieved March 7, 2019.
  27. ^ 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."
  28. ^ Monsen, Ali. (September 25, 2014). "FDA cracks down on Utah's essential oil companies", ABC 4 Utah. Retrieved February 10, 2019.
  29. ^ 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.
  30. ^ "Citation and Notification of Penalty", (December 7, 2008), Labor Commmision, Utah Occupational Safety and Health Division
  31. ^ a b Einbinder, Nicole (July 29, 2020). "Some members of multilevel-marketing company Young Living are making questionable claims about 'essential oils' curing cancer and coronavirus". Business Insider. Retrieved August 21, 2020.
  32. ^ 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.
  33. ^ a b "Young Living guilty of trafficking oils from endangered plants". Daily Herald. September 19, 2017. Retrieved January 29, 2019.
  34. ^ "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
  35. ^ Barker, Holly (April 29, 2020). "Essential Oils Seller Required to Litigate Pyramid Scheme Claims". Bloomberg News. Retrieved June 19, 2020.
  36. ^ "Young Living lawsuit claims it's a 'cult-like' pyramid scheme". Truth in Advertising. April 24, 2019. Retrieved June 19, 2020.
  37. ^ "NAD Recommends that Young Living Essential Oils Discontinue "Therapeutic Grade" and Health-Related Claims for its Essential Oils; Advertiser to Appeal". BBB National Programs.
  38. ^ "MLM News Alert". Truth in Advertising. August 10, 2020. Retrieved August 25, 2020.
  39. ^ 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.
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