Melaleuca Scam? Yes It Is In My Opinion!
When some multi-level marketing companies developed a bad name for the industry, potential recruits started avoiding anyone that mentioned multi-level marketing. To address this problem companies in the industry started using the term network marketing. Some multi-level marketing companies even started to deny that they were a multi-level marketing company. My subscribers have requested I take a look into a company called Melaleuca. Here is what I have found.
Melaleuca Scam Claims
Melaleuca is on a mission to enhance the lives of those we touch by helping people reach their goals.
When customers purchase Melaleuca products each month profits from those sales go directly to families across North America rather than to large corporations.
Whatever your goal, Melaleuca has the answer.
Melaleuca Lives Change Here Video:
Melaleuca Scam Reality
Melaleuca, Inc. has been in business since 1985. It manufactures (at facilities in Idaho and Tennessee) and markets consumable personal care, nutritional and home cleaning products directly to consumers. They offer over 400 products.
Melaleuca is a 1.2 billion dollar corporation that profits each month off of the referrals of their 100% commission sales force.
As a representative for the company you refer people to the company to make sales. 100% of the products are sold directly to the customer by Melaleuca.
I have two simple questions. Why do you pay Melaleuca for the privilege of buying or selling their products? Why do they require you to maintain monthly product purchases that increases when you bring in more customers and make more money for the company?
In my opinion, there is one simple answer. You should not be paying Melaleuca anything to buy or sell their products.
Any people that you refer to Melaleuca which become customers are off limits for you and all members of your immediate family to sell them other companies competing products and business opportunities. This is the case even 12 months after you stop being a representative of Melaleuca. – Source Melaleuca Statement of Policies
In my opinion, you are not much of an independent business owner with this company.
Melaleuca Direct Customer – $25 plus applicable sales tax. You can purchase products at retail prices.
They charge you to become a retail customer.
Melaleuca Preferred Customer – $25 plus applicable sales tax. You have to purchase 35 product points each month (It is approximately $1.50 per point). Preferred Customer Memberships automatically renew on an annual basis for $12.00 US ($15.00 CDN) plus applicable sales tax. You can purchase products at discount prices.
If you simultaneously submit a Melaleuca Independent Marketing Executive Agreement and Customer Membership Agreement, your cost is $29.00 plus applicable sales tax. This fee includes the customer membership fee and gives you the opportunity to refer and enroll customers and build an Independent Melaleuca Business. It also includes a Melaleuca Membership Kit to help you get started.
There is a monthly data processing fee that varies. They charge you for the data to create your monthly statement.
Also, there are charges for attending meetings and large events.
They claim you save by shopping with Melaleuca. – Source Melaleuca.com
I did not find that Melaleuca prices were competitive.
Here are two examples:
Melaleuca Whitening Tooth Polish – Fresh Mint 3.8 Oz $6 Retail $3.89 Discount
Aim Tooth Paste – Ultra Mint 6 Oz $0.85 Walmart
Tom’s of Maine Natural Wicked Cool Fluoride Toothpaste – Mild Mint 4.2 Oz $3.99 Retail $2.89 Discount Amazon – Affiliate Link Example
Melaleuca Classic Dental Floss – Fresh Mint 55 yards $6 Retail $3.99 Discount
Johnsons Reach Floss – Mint Waxed 55 yards $1.99 Discount Riteaid
RADIUS Vegan Xylitol Soft Floss – Mint 55 yards $3.49 Discount Amazon – Affiliate Link Example
This company tries to convince you that they are not a multi-level marketing company.
No commissions will be paid on customers who have not purchased 29 points or more of products. – Source New Day Compensation Plan
Melaleuca has created a way for you to earn ongoing commissions from word of mouth referrals with 7 generations of customers telling customers. In fact, 7 different families can benefit from each and every product purchased from Melaleuca each month. When you enroll as a preferred customer Melaleuca plugs you into their computer data base, assigns you an internal customer ID number and then they start to keep track of the customers you refer to Melaleuca. Those would be people in your immediate sphere of influence. You can personally enroll as many customers as you wish and place them in open positions in your customer data base. Many times you’ll be teaming these people up with your previously enrolled customers. We call this a 5×7 expanding organization as your customers can begin to refer others themselves, and so on, and so on, and so on. Since we allow everyone to have 5 customers in their first generation, this system would create a spot for 25 customers in your second generation. There would be 125 customers in your third generation. 625 in your fourth. All the way up to 78,125 potential customers that could be placed in your 7th generation. That’s a total of over 97,000 potential customers that any one marketing executive could have in his or her organization.
There are 5 people on the 1st level and 78,125 people on the 7th level. This is a giant pyramid of people making commissions off of the people below them.
To qualify for commissions, a Marketing Executive is required to “Personally Produce” revenue of at least 29 product points per month. In order for a Marketing Executive to advance to the status of Senior Director or above, the personal production requirement increases to 70 product points. – Source New Day Compensation Plan
The Melaleuca compensation plan is not a single level marketing plan, but it is a 5×7 matrix multi-level marketing plan.
Multi-Level Marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they generate, but also for the sales of the other salespeople that they recruit. This recruited sales force is referred to as the participant’s “downline”, and can provide multiple levels of compensation. – Source Wikipedia.org
Kevin Thompson the MLM attorney explains why Melaleuca is a MLM company:
They do not give you the percentage of retail direct customers. You have no idea how large the retail market is for Melaleuca products before you join.
They do not give you the percentage of people that signup to be a representative and are unable to find customers.
Marketing Executives which make up the majority of Melaleuca representatives on average are losing money each year when you take into account required product purchases and typical expenses. The highest ranking Marketing Executives make on average $550 per year before monthly expenses.
Only .72 percent of customers are able to make on average full-time minimum wage or higher for the year before monthly expenses.
Only 1.74 percent of customers are able to make on average part-time minimum wage or higher for the year before monthly expenses.
Melaleuca has a 60 day 100% customer satisfaction guarantee that does not cover shipping and handling. Your customers will lose money if they do not like the products. Melaleuca Terms and Conditions outline that return shipping is to be paid for by the customer.
Customer Fee – 60 days.
Membership Kit – 120 days for full refund.
Product Return Policy – If I am not completely satisfied with any product I purchase from Melaleuca, I may return the unused portion of the product together with a copy of the purchase receipt to Melaleuca within 60 days of the date of purchase and Melaleuca will (1) credit my customer account for the total purchase price of the product (less shipping and handling charges), or (2) upon my written request, replace the product without charge, or (3) upon my written request, refund the total purchase price of the product (less shipping and handling charges).
Melaleuca will repurchase from Marketing Executives who have canceled their Independent Marketing Executive Agreements all unencumbered products which are in resalable condition which were purchased by the Marketing Executive from Melaleuca within the previous 12 months, at a price of not less than ninety percent (90%) of the original net cost to the Marketing Executive. All products or materials must be returned to Melaleuca with shipping prepaid by the Marketing Executive in order to receive the above refund. Melaleuca will charge back all commissions, bonuses and rebates paid by Melaleuca relating to the purchases of those products.
– Source Melaleuca Statement of Policies
You can cancel at any time, but that does not mean you are going to get your money back.
In 2013 there were over 100 complaints made about Melaleuca. Many of them were about how people lost money because they could not cancel their account before their auto-shipment was sent to them. You have to contact the company before the 25th of the month or they will charge you for your auto-shipment.
Here is an example of the complaints:
The company tricked me into signing up for a monthly spending program to buy their products and are saying that I can only get out of the contract if I send a hand written letter. I submitted a request online, but that only ‘suspended’ my account, not cancelled it, so they are still insisting that they are going to charge me and send me a kit I didn’t order. I also spoke with 2 employees to cancel my account and they would not do so. This is a scam and they trick people into this program by telling them they are going to make tons of money and that all you have to lose it $29 enrollment fee. In fact they billed me $62 for a bar of soap, body wash, lotion, and laundry detergent that I didn’t order and apparently this exact same thing is going to happen EVERY month. It is a huge rip off and they need to be stopped. I want the process to get out of this to be easier and more reasonable. This is not acceptable that they bill you for products that you do not need or want and there is nothing you can do about it. – Source BBB Boise Complaint
Another way they take money from you is when you have a credit with the company. They charge you a $10 monthly service fee.
If I have unredeemed credit on my customer account, I understand that Melaleuca may make efforts to locate me and advise me in writing of the credit. Melaleuca may continue to make such attempts on a monthly basis and will charge my customer account a $10 service fee for each month’s notification process for as long as I have a credit on account, unless otherwise restricted or prohibited by law. – Source Melaleuca Customer Membership Agreement
Melaleuca Scam Conclusion
In my opinion, Melaleuca is a recruiting scheme that makes its money by selling the dream of financial Independence and requiring everyone who wants to reach that dream to “Personally Produce” a minimum amount of products each month. They are a multi-level marketing company in disguise. I would avoid the Melelecua business opportunity.