Melaleuca Scam: Pyramid Scheme or MLM? [Review]

If you’ve been looking for ways to make some extra cash, chances are you’ve heard of Melaleuca, an MLM company that sells a range of products including nutrition, cosmetics, and personal care items. Maybe a friend or family member has mentioned it to you before.

As an online entrepreneur, I have reviewed many similar online opportunities over the years. So I can tell you what you need to know.

I want to make it clear that I’m not affiliated with Melaleuca in any way. This review is entirely honest and unbiased.

If you’re looking for a reliable way to make a full-time passive income online, I can tell you that there are better alternatives. At the end of this review, I’ll share my top pick for an alternative program that has worked wonders for me.

Let’s dive in.

What is Melaleuca?

Melaleuca offers a bunch of different stuff like dietary supplements, cosmetics, and personal care products. VanderSloot founded it back in 1985, and they’re headquartered in Idaho Falls, USA.

You can buy all sorts of Melaleuca products right from their website or in their retail stores. And if you refer people to the company and they make a purchase, you can earn commissions on those sales. Pretty sweet, huh? They call it “consumer direct marketing,” which they’ve even trademarked.

Fun fact: Melaleuca is named after a plant with the same name. They say that the plant is responsible for the excellent quality of their products, but I can’t say for sure since I haven’t tried them myself.

The majority of the items they sell are vitamins, supplements, beauty products, detergents, and cleaning products. They also claim that their products are free from non-green ingredients like chlorine, formaldehyde, coated pills, and more.

Recommendation: Here’s The Best Alternative

What Products Does Melaleuca Offer?

Melaleuca has got you covered with an extensive range of items that cater to different needs and preferences.

From keeping your bathroom sparkling clean with their shower cleaner and tub & tile cleaner, to refreshing your breath with their toothpaste and keeping your skin hydrated with their shampoo and lip balm, Melaleuca has a product for every purpose.

But that’s not all, folks! Melaleuca also offers vitamins, fiber supplements, and other health and wellness products that you can incorporate into your daily routine. Their tea tree oil is a popular choice among customers, too.

What’s even better is that you can easily purchase Melaleuca products on Amazon. 

Who is the founder of Melaleuca?

Melaleuca is an American company that was founded by Frank VanderSloot. You might have heard of him – he was ranked as the 92nd largest landowner in the United States in 2011 by The Land Report. And with a net worth of $2.7 billion, he’s also the richest person in Idaho and the 302nd richest American according to Forbes (2017).

Aside from Melaleuca, VanderSloot is also involved in other ventures such as Riverbend Ranch and Riverbend Communications. He’s a member of the board of directors and executive committee of the US Chamber of Commerce. He’s also a big supporter of Republican presidential candidates and political campaigns in Idaho. In fact, he’s even paid for ads against several Democratic candidates in Idaho.

VanderSloot is known for his philanthropic efforts as well. He’s the major donor to the American Heritage Charter School in Idaho Falls. Overall, VanderSloot is a well-known figure in the business and political world, and has made a significant impact in his community through both his business ventures and charitable contributions.

Recommendation: Here’s The Best Alternative

Is Melaleuca an MLM?

Yes, Melaleuca is an MLM. However, Melaleuca considers itself a “Consumer Direct Marketing” company, which is a fancy way of saying MLM.

As a Melaleuca distributor, you won’t receive a regular salary, but you’ll be running your own business as an independent distributor of Melaleuca products. You can earn commissions by referring people to purchase Melaleuca products, and by having your customers refer others as well, through seven “referral generations”. The commission rate is about 7%, which can add up quickly if you bring in a lot of new members. However, you’ll need to purchase a certain number of product points each month to maintain your status and continue receiving payments.

Melaleuca has different levels of selling their products, from product advocates to corporate directors. As a product advocate, you just sell some products to people you know. As a business builder, you still just sell products, but you take it more seriously. The multi-level aspect kicks in once you reach Director level 3+, where you’ll be expected to hire team leaders who will report to you.

While Melaleuca never refers to its recruitment methods as “MLM,” it’s important to note that it is an MLM, and it’s up to you to decide if it’s the right fit for you. You can buy or sell products without recruiting any new members, but the top earners in Melaleuca usually manage teams of people who also sell memberships.

Recommendation: Here’s The Best Alternative

Is Melaleuca A Pyramid Scheme?

No, Melaleuca is not a pyramid scheme. It is a legitimate MLM company that allows its members to make money by selling health products. As a distributor of Melaleuca, you don’t have to rely solely on recruiting others to make money.

It’s true that in 1991, Melaleuca received a cease-and-desist order for violating Michigan’s anti-pyramid scheme laws. However, the company signed a consent decree with the states of Michigan and Idaho in 1992, agreeing not to engage in the marketing and promotion of an illegal pyramid. Since then, Melaleuca has not been classified as a pyramid scheme.

So, what exactly is a pyramid scheme? It’s a scam that recruits members by promising them money or services in return for recruiting others. The scheme is unsustainable and typically only benefits those at the top of the pyramid, with members at the bottom losing money.

Unlike a pyramid scheme, Melaleuca distributors are not paid to recruit new members, and there’s no direct financial incentive to do so. In fact, the company’s profits come from selling valuable goods and services, not from recruiting new members.

Pyramid schemes are profitable only for the people at the top, who receive a portion of the funds raised from each newly recruited member. The scheme only works as long as new members are recruited and money flows to the top of the pyramid.

Vemma, a producer of energy and weight loss drinks, is a good example of a pyramid scheme. In 2015, the FTC accused Vemma of operating a pyramid scheme that paid more to recruit new members than to sell products. Participants were required to pay for starter packages and monthly products, and the majority of them lost money.

You may read our article on the difference between MLM and pyramid schemes here.

Is Melaleuca a Scam?

No, Melaleuca is not a scam. It is a legitimate company that differs slightly from traditional MLMs. The company has been vocal against the abuses in multi-level marketing and prohibits practices like inventory loading and “breakaways.” Melaleuca Marketing Executives are not required to maintain an inventory, but they must produce at least 35 product points per month to receive commissions and offer a 30-40% discount to their customers.

The products offered are everyday items, such as shampoo and cleaning products, and are meant for typical household or personal use. While Melaleuca is not a scam, the company has been known to make disingenuous and irresponsible marketing claims to recruit members.

According to a study conducted by the U.S. Federal Trade Commission, less than 0.29% of Melaleuca distributors make a profit, and more than 99% of distributors lose money. The FTC has also issued a warning to Melaleuca for making unsubstantiated profit claims during the COVID-19 pandemic.

If you’re considering becoming a Melaleuca distributor, it’s important to note that making a profit requires a lot of effort, and the most successful distributors tend to recruit aggressively.

Recommendation: Here’s The Best Alternative

Melaleuca Compensation Plan

We’re here to break down the Melaleuca Compensation Plan in plain and simple terms.

Firstly, there are nine ways to make money with Melaleuca. The first way is through commissions, which can be earned by referring others to join the company. You’ll earn 20% for your referrals and 7% for the seven tiers of referrals below them.

The second way to earn money is through advancement bonuses. Melaleuca has 49 status levels, and as you rank up, you’ll earn a bonus.

If you rank up within a certain time frame, you’ll also earn a pacesetter bonus. You can also earn a mentoring bonus when your enrollees move up the ranks, as well as a core mentoring bonus and a double core mentoring bonus.

As you climb higher in the ranks, you can earn a leadership growth bonus. There’s even a monthly car bonus for certain ranks, as well as a 20/20 bonus for enrolling 20 people in your first five months.

While all of these bonuses and rewards may sound exciting, it’s important to note that there’s only one way to earn commission on sales: by recruiting new employees. The remaining eight ways to make money all require you to recruit others.

Overall, the Melaleuca Compensation Plan offers many opportunities to earn money and advance within the company. However, it’s important to understand that recruiting is a crucial aspect of the business.

Recommendation: Here’s The Best Alternative

How Much Does It Cost To Join Melaleuca?

It only costs $19 plus tax to get started. This fee is an annual fee, so once paid and joined, you’re good to go and can start earning money.

But, to stay “active” as a Melaleuca member, you must earn 35 “product points” per month. Some say it’s possible to do so for as little as $50 per month. However, after researching and checking out the product pricing pdf, I believe the best monthly price you could pay is $60 or more.

The great thing is that you can offset these costs by selling the products to others. However, keep in mind that as a new member, you’ll probably have to cover the costs for the majority of the first year, if not all of the costs.

So, to break it down, for the first year, the total cost is at least: $19 + $60 x 12 = $739. 

Pros and Cons

Pros:

• Great Products: Melaleuca boasts a diverse range of high-quality products, making it one of the biggest MLM brands in the world.
• Established Company: With over 35 years of experience, Melaleuca is one of the oldest MLM businesses that hasn’t changed its name.

Cons:

• Hidden Costs: Although the brand claims that membership only costs $19 plus tax per year, the actual cost to stay in the program is $739. So be prepared for this added expense.
• Expensive Items: While purchasing and reselling products for a higher price every month may seem like a good idea, it can end up being quite costly. Make sure to compare prices with similar items from other stores to get a better idea.
• Lack of Consistent Income: While Melaleuca may help you make money, it’s important to note that it’s difficult to earn a consistent income from the program, especially since finding “executives” is a challenging task. So don’t expect to earn six figures per year.

Recommendation: Here’s The Best Alternative

Why I Don’t Recommend Melaleuca MLM Program

False Claims on Supplements

Melaleuca offers a range of nutritional products that claim to provide various health benefits. 

However, some of these claims have been deemed misleading by the U.S. Food and Drug Administration. It’s essential to be cautious of the health claims made by any supplement company, as dietary supplements are subject to less stringent FDA regulations. 

Additionally, some natural supplements may interfere with prescription medications, so it’s always a good idea to consult a doctor before taking any supplements.

Difficulty Making Money with Melaleuca

Success in an MLM company like Melaleuca can be challenging to achieve. Statistics show that a high percentage of MLM members lose money, and MLMs have sales quotas that members must meet to remain eligible for commissions. Many MLM members lose money before even recruiting one person into the company.

Losses Are Reframed as Investments

Melaleuca MLM uplines may try to reframe financial losses as “investments” in their business to keep reps in the MLM scheme. However, these are not actual investments, and the return on investment is usually negative. Calling it an investment is misleading and cheating.

Cult-like Company Culture

One thing to be aware of is that MLMs like Melaleuca often have a cult-like company culture. This means that critical thinking is not encouraged, and representatives who question the company are chastised and even isolated. Leaving the MLM is also discouraged, and former reps may be labeled as failures or bad people/influences. This can lead to devastating losses, as many MLM reps consider their colleagues to be like family. 

Additionally, MLMs may expect reps to prioritize the business over their personal lives, which can strain relationships with friends and family.

You May Need to Purchase Products Yourself

Another potential drawback of joining Melaleuca is that if you don’t have a large network of friends and family, you may need to purchase products yourself each month in order to meet sales quotas. This can be costly and may not be sustainable in the long run.

Overpriced Products

Finally, like many MLMs, Melaleuca’s products can be overpriced compared to other brands on the market. This may make it difficult to sell products to customers who can find similar products elsewhere for lower prices. As a result, many MLM reps focus more on recruiting new members rather than selling products.

Skewed Commission Distribution

Melaleuca’s commission structure heavily favors the top tier and pioneers. Unfortunately, this means that the majority of people at the bottom will struggle to break even. This has led some people to question the legitimacy of Melaleuca as a business opportunity.

Exaggerated Income Claims

Like other MLM companies, Melaleuca makes exaggerated income claims that are difficult to achieve. Their low retention rate of less than 41% is also discouraging. According to their payout records, over 99% of Melaleuca distributors never make a profit.

Recruiting is Required to Succeed

Eight out of ten ways to earn money with Melaleuca require recruiting. If you don’t recruit, you are likely to lose money. That’s why I don’t recommend MLMs to people. 

Recommendation: Here’s The Best Alternative

Final Verdict

If you’re thinking of joining Melaleuca as a distributor to make money, you might want to consider other options. Starting out can be challenging, and finding people to join your team can be difficult. You might even find yourself struggling to make any progress, despite your best efforts. What’s more, you’ll have to rely on your friends and family to help you get started, which isn’t always the most enjoyable experience.

On top of that, you may feel pressured by your upline to buy more Business Support Material, even if you’re not making much progress in your business. According to a case study on the FTC’s website, 99% of people who join MLMs end up breaking even or losing money. It’s not surprising that many people feel overwhelmed and eventually decide to leave.

If you’re serious about making money, you might want to explore other opportunities that don’t involve MLMs. There are many legitimate ways to earn money, whether it’s starting your own business, freelancing, or working for a company. Don’t let the hype of MLMs cloud your judgement – do your research and find the best option for you.

In the next section, I’ll share some tips on how to build a legitimate online business and make passive income online. This is how I’ve been able to make a full-time income in just one year. Unlike MLM models, this approach is 100% sustainable and legit.

Recommendation: Here’s The Best Alternative

Is There a Better Way to Make Money Online?

If you’re looking to start your own online business, you want to make sure you’re using a platform that gives you the best chance of success. That’s why I recommend Wealthy Affiliate as my #1 choice.

Wealthy Affiliate is an all-in-one platform that provides you with everything you need to build your own affiliate marketing business from the ground up. With Wealthy Affiliate, you’ll get access to first-class web hosting services, keyword research tools, community support, comprehensive training, writing tools, and other software that will guide you through building your business step-by-step.

The best part? You can sign up for a free account with Wealthy Affiliate and start your affiliate marketing journey right away without spending a dime. If you like the platform, you can upgrade to a premium membership to gain access to everything the platform has to offer.

You may read our article about the difference between MLM and affiliate marketing.

But you may be wondering, how much can you earn with Wealthy Affiliate? Well, let me tell you – there are some incredible success stories. For example, a 21-year-old student earned $7,395 in just one week using the techniques taught inside Wealthy Affiliate.

You can read our full review of Wealthy Affiliate here.

Wealthy Affiliate has been around for 15 years and has over a million members, making it one of the most popular platforms out there. And to give you even more inspiration, there are plenty of other success stories from Wealthy Affiliate members.

The pricing scheme for Wealthy Affiliate is straightforward – there’s a free starter membership and a premium membership that costs only $49/month or $395/year. As a starter member, you’ll get access to the community, live chat, over 500 training modules, 2 classrooms, networking, commenting, 1 free website, and access to the keyword tool – all without spending a penny.

So why not give Wealthy Affiliate a try for yourself? Sign up for a free account today and see how it can help you build a successful affiliate marketing business.

Recommendation: Here’s The Best Alternative