On April 12, 2019, class claims were filed against Young Living Essential Oils in Texas federal court by a company representative who claimed that the company is operating under a “pyramid scheme” business model.
In the complaint, named plaintiff Julie O’Shaughnessy alleges that she became a Young Living representative in 2015 after being recruited at a Young Living party. According to the plaintiff, the recruitment of new representatives is a key component of the company’s business model, where existing representatives are given a bonus for each new representative they recruit. New representatives must purchase an essential oil “starter” kit, priced at $100 for a basic kit and $260 for a premium kit, from an existing representative who then receives a commission from the sale. The plaintiff argues that while the defendant company vaguely promises representatives an abundance of financial rewards, the main mechanism for earning a profit is to recruit new representatives. In addition to the cost of the starter kit, representatives are required to personally purchase a certain volume of essential oil products on a monthly basis. The products are sold to representatives for a 24% discount and can therefore be resold to customers at full price to generate revenue. However, the plaintiff argues that there is no real market for the product as customers can purchase the oils at the same, discounted price on the company’s website making it illogical for customers to pay full price through a representative. In total Ms. O’Shaughnessy claims that she invested in $4,700 worth of Young Living products during her time as a representative.
The suit brings causes of action for violations of the Racketeer Influenced Corrupt Organizations Act (“RICO”), 18 U.S.C. §1961. The plaintiff seeks damages in the amount of financial losses incurred by class members as a result of Young Living’s misrepresentations, in addition to temporary and permanent injunctive relief enjoining defendants from further unfair, unlawful, fraudulent and deceptive acts, including supporting the alleged pyramid scheme.
The case is: O'Shaughnessy v. Young Living Essential Oils LC et al., Case No.: 1:19-cv-00412, in the U.S. District Court for the Western District of Texas.
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