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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]

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,[5][6][7] and other conditions, including "Parkinson’s disease, autism, diabetes, hypertension, cancer, insomnia, heart disease, post-traumatic stress disorder (PTSD), dementia, and multiple sclerosis."[8][9][10]

History

According to Mary Young, Donald Gary Young ('Gary') gained an interest in alternative medicine after suffering a back injury in the early 1970s.[11] Young had offered medical services in Spokane, Washington, including water births and cancer treatments, beginning in 1982. His wife had her baby through water birth in his clinic, and their baby died after drowning. After an undercover investigation in 1983, Young pleaded guilty to a misdemeanor for practicing medicine without a license and received a suspended sentence.[12] [11] 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.[12][13] 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.[11][14]

Young Living was founded in 1993 in Riverton, Utah, with Gary Young as CEO,[15] and was incorporated in 1994.[14] Young purchased a second farm in Mona, Utah, in 1996.[14] Young opened his first international farm in Ecuador in 2006.[14]

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".[14] In 1996, the company projected sales of between $8 and $10 million,[16] and reported annual sales of more than $1 billion from 2015 and 2017[17]

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.[11]

Young stepped down as CEO in 2015, and his third wife, Mary Young, assumed the role.[18] The company moved their corporate operations to Lehi, Utah, in 2014, receiving significant tax breaks in order to expand their operations,[15] and in 2017 started construction on their new corporate headquarters.[17] Gary died in 2018.[14]

doTerra

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.[11] 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] Chemist Robert Pappas, who has spoken at the conventions of doTerra, has said the oils, which were tested by the Centre national de la recherche scientifique, did not match any oils sold by doTerra.[20] Additionally, Pappas has given a court deposition saying that Young Living utilized synthetic chemicals in some of their organic products.[21] Young Living lost the case in 2017[22] and in 2018 a judge ordered it to pay doTerra's legal fees.[23]

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.[11] 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."[11] 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]

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[5][6][7] 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.[8][10][25][9] 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."[9] 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.[9][26] Young Living subsequently agreed to address the violations cited by the FDA.[5][27][10]

Litigation

In 2000, the Utah Occupational Safety and Health Division (UOSHD) investigated an August 17, 2000, explosion of a distiller, fatally wounding 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".[28]

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.[29][30][31] In addition to the fines levied, the company was placed on probation for a period of five years.[30][29]

In April 2019, a nationwide 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.[32][33]

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 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.
  6. ^ a b Grush, Loren (September 26, 2014). "FDA Takes Action Against Companies Selling Fraudulent 'Ebola Cures'". Popular Science. Retrieved February 10, 2019.
  7. ^ 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.
  8. ^ a b "The Fine Line Between Essential Oils and Treating Disease". Pharmacy Times. February 3, 2015. Retrieved January 29, 2019.
  9. ^ a b c d Mitchell, LaTonya (September 22, 2014). "Warning Letter: Young Living". U.S. Food and Drug Administration. Retrieved November 17, 2014.
  10. ^ a b c Hanson, Kurt (September 25, 2014). "FDA sends warning to doTERRA and Young Living about oils". Daily Herald. Retrieved February 10, 2019.
  11. ^ 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.
  12. ^ a b Doug Clark (October 28, 1986). "Does he relieve people of pain or of their wallets?". news.google.com. Retrieved May 1, 2020.
  13. ^ Hurst, John (October 23, 1987). "'Patient' Submits Blood (From Cat), Is Given Diagnosis". Los Angeles Times. Retrieved October 19, 2007.
  14. ^ a b c d e f "D. Gary Young", (May 18, 2018), Daily Herald, Utah County, Utah, U.S. Retrieved January 29, 2019.
  15. ^ a b Gorrell, Mike (December 12, 2014). "Perks Offered to Create 1,600 Jobs". the Salt Lake Tribune.
  16. ^ 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.
  17. ^ 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
  18. ^ "Mary Young Transitions to CEO of Young Living", (June 29, 2015). Direct Selling News. 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. ^ Markosian, Richard (August 21, 2014). "Report Used in Young Living Farms Case Against DoTERRA Suspect". Utah Stories. Retrieved September 6, 2014.
  21. ^ Keeson, Arvid (August 15, 2014). "Damning Evidence That Young Living and DoTERRA's Essential Oils are Adulterated". Utah Stories. Retrieved September 6, 2014.
  22. ^ Harvey, Tom (July 17, 2017). "Utah jury finds doTERRA creators did not breach contracts after leaving Young Living Essential Oils". The Salt Lake Tribune.
  23. ^ 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.
  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. ^ Andrews, Natalie (October 3, 2014) "FDA cracks down on sellers touting Ebola treatments", Wall Street Journal. Retrieved March 7, 2019.
  26. ^ 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."
  27. ^ Monsen, Ali. (September 25, 2014). "FDA cracks down on Utah's essential oil companies", ABC 4 Utah. Retrieved February 10, 2019.
  28. ^ "Citation and Notification of Penalty", (December 7, 2008), Labor Commmision, Utah Occupational Safety and Health Division
  29. ^ 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.
  30. ^ a b "Young Living guilty of trafficking oils from endangered plants". Daily Herald. September 19, 2017. Retrieved January 29, 2019.
  31. ^ "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
  32. ^ Barker, Holly (April 29, 2020). "Essential Oils Seller Required to Litigate Pyramid Scheme Claims". Bloomberg News. Retrieved June 19, 2020.
  33. ^ "Young Living lawsuit claims it's a 'cult-like' pyramid scheme". Truth in Advertising. April 24, 2019. Retrieved June 19, 2020.
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