doTerra

doTerra
Private
Industry Multi-level marketing[1][2]
Founded 2008 (2008)
Headquarters Pleasant Grove, Utah, United States
Area served
 International
Key people
 David Stirling (CEO) Greg Cook, David Hill, Emily Wright, Rob Young, Corey Lindley, Mark Wolfert [3]
Products Essential oils, home products
Number of employees
 1650 (2017)[4]
Website www.doterra.com

doTerra (styled dōTERRA) is a multi-level marketing[1][2] company based in Pleasant Grove, Utah that sells essential oils and other related products. doTerra was founded in 2008 by David Stirling and former executives, employees, and distributors of Young Living, a company which also sells essential oils, and Nuskin. Stirling is its president and CEO.[1]

In 2014, the U.S. Food and Drug Administration issued an FDA Warning Letter to doTerra for marketing its products as possible treatments or cures for Ebola, cancer, autism, and other conditions in violation of the Food, Drug and Cosmetic Act.[5] Distributors subsequently continued to market the products by claiming benefits for the prevention or treatment of influenza, autism, and other medical conditions.[6][7]

History

dōTERRA kit

As of 2013, doTerra reported having about 450 corporate employees; 350 at the Utah headquarters, and 100 at offices in Taiwan, Japan, Europe and in Australia.[8] As of 2017, doTerra reported having approximately 1,650 corporate employees.[9] In 2016, doTERRA reported having more than 3 million independent distributors (i.e., non-employee salespersons), which the company refers to as "Wellness Advocates." According to the company's multi-level marketing organization, salespeople are expected to recruit other salespeople in order to increase their own profits.

In 2014, the company was selling over 150 products such as supplements, personal care items, and essential oils.[10] Its products are marketed for usage in cooking, cleaning, and health.

In 2015, the number of "Wellness Advocates" joining the company grew by more than 120 percent.[11] By year end 2015, the company claimed that it had generated more than $1 billion in sales.[7]

In 2017, the company funded a "playground and sensory garden" located at a 10,000 square-foot autism center built by Utah Valley University.[12]

2016 distributor data breach

In April 2016, doTerra sent letters to distributors advising them that a breach in a system where personal information was stored had occurred in March 2016. Personal information acquired in the breach included: name, dates of birth, social security number, address, telephone number, email address, debit and credit card numbers, username, and passwords. The company explained that a "third-party vendor" was at fault, but refused to name the vendor. To compensate, the company offered 24-months of credit monitoring through AllClear, a credit monitoring company. Many distributors have raised concern at the amount of information that was acquired and the long-term effects.[13][14][15][16]

2017 burn report

In April 2017, a woman was reported to have sustained second- and third-degree burns on her wrists and neck after applying doTerra essential oil and using a tanning bed.[17][18][19]

Distributor earnings

The U.S. Federal Trade Commission, citing a 2011 investigation involving about 350 multilevel marketing companies including doTerra, noted that the vast majority of the distributors for such operations end up losing money, and usually because they can’t manage to sell the products they’re required to buy. doTerra requires its distributors to spend at least $100 a month on the company’s products in order to qualify for sales commissions. According to the company, one-third of their distributors earn nothing from their sales efforts.[6]

Prohibited marketing claims

On September 22, 2014, the U.S. Food and Drug Administration issued an FDA Warning Letter to doTerra for marketing its products as possible treatments or cures for Ebola, cancer, autism, and other conditions in violation of the Food, Drug and Cosmetic Act.[5][20][21] doTerra marketing executive McKay Brown released a statement that attempted to distance the company from claims that its “products cure or treat disease including the Ebola virus or any other disease”, and he claimed that they were working to correct marketing materials to ensure compliance with FDA regulations.[22]

doTerra distributors have heavily marketed the company’s essential oils as an adjunctive treatment for autism and ADHD, despite legal prohibitions against such claims as well as a dearth of published scientific studies on the effects of the products on people with autism.[6] Some salespeople have offered personal stories claiming that their own child has benefited from essential oils, as a way of working around these restrictions.[6]

Response to natural disasters

In 2017, a charity affiliated with doTerra (the doTERRA Healing Hands organization) began collecting donations from its distributors in the wake of Hurricane Harvey to cover the costs of providing relief packs containing samples of the company's products to evacuees in Dallas. After collecting donations, doTERRA said that they could not deliver the shipments on time due to weather conditions. Pacific Standard described the incident as "modern example of malfeasance masquerading as altruism—a type of scam often found in multi-level marketing organizations."[23]

Subsequent to the 2017 California wildfires, it was reported that DoTerra representatives were promoting the company’s products for air purification and to protect against the health effects of smoke from the fires. Air pollution experts countered that the products in fact do not clean smoke from the air, and by releasing volatile compounds they could make air quality worse and potentially dangerous for people with respiratory problems.[24]

Lawsuits

In August 2013, Young Living filed suit against doTerra for theft of trade secrets, alleging that the company had recreated their production process illegally.[25][26] Chemist Robert Pappas has said the oils, which were tested by the Centre national de la recherche scientifique, did not match any oils sold by doTerra.[27] One unintended consequence of the lawsuit between the two companies has been a court deposition by Pappas exposing the fact that Young Living and doTerra utilize synthetic chemicals in their organic products.[28] In October 2014 the Fourth District Court dismissed the suit against doTerra.[1] In July 2018, the court ruled that Young Living acted in "bad faith" and misled the court, thus the judge ordered Young Living to cover doTERRA attorney costs. [29]

References

  1. 1 2 3 4 Harvey, Tom (October 23, 2014). "Judge dismisses much of lawsuit between rival Utah 'oils' companies". The Salt Lake tribune. Retrieved 16 March 2015.
  2. 1 2 Miers, Claire (April 8, 2015). "Essential oils a booming business". Star-Telegram. Retrieved July 22, 2015.
  3. ↑ "The Founding Executives". doterra.com. Retrieved 26 October 2014.
  4. ↑ "doTERRA on the Forbes America's Best Midsize Employers List". Forbes. Retrieved 2018-05-13.
  5. 1 2 Ohlheiser, Abby (24 September 2014). "FDA warns three companies against marketing their products as Ebola treatments or cures". Washington Post. Retrieved 26 September 2014.
  6. 1 2 3 4 Butler, Kiera (February 23, 2018). "How Multilevel Marketing Companies Got the Autism Community Hooked on Essential Oils". Mother Jones. Retrieved February 26, 2018.
  7. 1 2 Monroe, Rachel (October 9, 2017). "How Essential Oils Became the Cure for Our Age of Anxiety". New Yorker. Retrieved February 26, 2018.
  8. ↑ Allred, Cathy. "doTERRA to bring 330 new jobs to Utah County (press release)". Daily Herald (February 17, 2013). Provo, Utah. Retrieved 16 March 2015.
  9. ↑ "doTERRA on the Forbes America's Best Midsize Employers List". Forbes. Retrieved 2018-05-13.
  10. ↑ "dōTERRA Fact Sheet" (PDF). dōTERRA. Archived from the original (PDF) on 22 September 2014. Retrieved 21 September 2014.
  11. ↑ Home.org, Business For. "doTerra Hit $100 Million Per Month". Retrieved 2018-07-04.
  12. ↑ HERALD, Barbara Christiansen DAILY. "UVU officially announces plans for autism center". Daily Herald. Retrieved 2018-02-26.
  13. ↑ Davis, Jeremy Seth (April 19, 2016). "DōTERRA breach exposes customer info; including SS, DOB, and addresses". SC Media. Retrieved September 28, 2017.
  14. ↑ Associated Press (April 27, 2016). "Utah essential oil company announces third-party data breach". Seattle Times. Retrieved September 28, 2017.
  15. ↑ Romero, McKenzie (April 25, 2016). "doTERRA letter informs customers of possible data breach". Deseret News. Retrieved September 28, 2017.
  16. ↑ "Letter from Hunton & Williams Law Firm (on Behalf of DoTerra) to the Office of the New Hampshire Attorney General" (PDF). State of New Hampshire Department of Justice. April 21, 2016. Retrieved September 28, 2017.
  17. ↑ "Woman with third-degree burns warns against essential oils: 'It's been hell'". Fox News. April 27, 2017. Retrieved October 26, 2017.
  18. ↑ Miller, Korin (April 27, 2017). "A Woman Developed Third-Degree Burns After Using DoTERRA Essential Oils". Self. Retrieved October 26, 2017.
  19. ↑ DeSantis, Marissa (April 27, 2017). "Woman Gets Burns From Essential Oils and Tanning Bed". Teen Vogue. Retrieved October 26, 2017.
  20. ↑ Vowell, Nicole (September 25, 2014). "2 Utah companies respond to FDA warning over health claims". Deseret News. Retrieved 26 October 2014.
  21. ↑ Mitchell, LaTonya M (22 September 2014). "Warning letter to dōTERRA International, LLC". US Food and Drug Administration, Public Health Service. Retrieved 8 November 2014.
  22. ↑ Hanson, Kurt (September 25, 2014). "FDA sends warning to doTERRA and Young Living about oils". Daily Herald. Provo, Utah. Retrieved 16 March 2015.
  23. ↑ Marini Higgs, Micaela (October 6, 2017). "After a natural disaster, some multi-level marketers profit handsomely off relief efforts". Pacific Standard. Retrieved July 18, 2018.
  24. ↑ Butler, Kiera (October 14, 2017). "No, "Essential Oils" Will Not Clear the California Fire Smoke Out of Your Air". Mother Jones. Retrieved October 26, 2017.
  25. ↑ Harvey, Tom (1 August 2013). "Essential oils rivalry spills into Utah courts". Salt Lake Tribune. Retrieved 19 June 2014.
  26. ↑ "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. Archived from the original (PDF) on October 23, 2014. Retrieved 2014-08-20.
  27. ↑ Markosian, Richard (21 August 2014). "Report Used in Young Living Farms Case Against DoTERRA Suspect". Utah Stories. Retrieved 6 September 2014.
  28. ↑ Keeson, Arvid (15 August 2014). "Damning Evidence That Young Living and DoTERRA's Essential Oils are Adulterated". Utah Stories. Retrieved 6 September 2014.
  29. ↑ https://www.heraldextra.com/news/local/crime-and-courts/young-living-to-pay-m-for-doterra-attorney-fees-after/article_047226b1-9c06-54a8-81e1-d9f20395da31.html
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