Melaleuca, The Wellness Company , often called simply "Melaleuca", is a multi-level marketing company founded in 1985 and headquartered in Idaho Falls, Idaho, USA.

The company produces and sells a broad array of nutritional, cosmetic, and personal care products.

Melaleuca was listed on the Inc. 500 list of fastest-growing companies in 1990, 1991, 1992, 1993, and 1994.^[1] Melaleuca CEO Frank L. VanderSloot appeared on the Forbes 400 list of 400 richest Americans for the year 2004.

History

The company began under the name "Melaleuca Oil" with the offering of a single product called "T36-C5 Melaleuca Oil" which was formulated from extract of the melaleuca tree, commonly known as tea tree oil. By all accounts, the company operated as a pyramid scheme whose activities would have been illegal in most US states. The company sold products whose purported uses and benefits were not verifiably documented. There were also exaggerated claims of the efficacy of the active ingredient, tea tree oil, and claims that the company was a sole source of the same, creating an impression of privileged access to a unique product.^[3]

In 1985, the company was taken over by Frank L. VanderSloot who rechristened the company "Melaleuca, Inc." and immediately launched an initiative to bring the company's product line into compliance with FDA regulations and make the compensation plan more favorable to downline distributors. Since VanderSloot has taken the helm, Melaleuca has experienced consistently increasing sales and revenues and expanded internationally.^[3] Melaleuca now has over 1,600 employees as well as sales offices in Hong Kong, Japan, and Australia, and grossed US $700,000,000 in sales in 2004.^[4]

Products and business methods

While initially based predominantly on the purported health benefits of melaleuca plant extracts, the product line has since expanded beyond this initial focus. Melaleuca now markets over 300 items such as household cleaners, personal care items, pharmaceuticals and nutritional supplements. The company markets itself as being earth-friendly, and many of their products are certified organic. They also launched a cosmetics line in partnership with fashion designer Nicole Miller in January 2003.

Melaleuca claims that its marketing hierarchy avoids the abuses inherent to multi-level marketing by limiting the marketing chain to 7 generations and prohibiting "breakaways" (disassociation from the marketing hierarchy). Additionally, the company pays a 7% commission to distributors who recruit other distributors, which the company claims is a uniquely generous benefit compared to other MLM's. According to the company, another way it is less exploitive than other MLM's is that it does not require its associate distributors to maintain an inventory. However, in order to receive "downline revenue" (commissions from one's recruits), associates must purchase a certain number of products per month to maintain a requisite level of "product points". Critics claim this requirement is effectively the same as being required to maintain an inventory and thus is no less exploitive than MLM companies with an inventory requirement.

Criticism

Like other multi-level marketing and work-from-home companies, Melaleuca has drawn criticism from members and from watchdog groups. Quackwatch has questioned the effectiveness of certain Melaleuca products, stating in one article that they are essentially grossly overpriced vitamins and fat conversion bars based on dubious science.^[5] A number of members have complained of the company being insufficiently responsive to membership cancellation requests, causing the members to incur unwanted product purchases for each additional month of membership. The company also has been the subject of an unsuccessful lawsuit in which distributors and affiliates accused the company of misrepresenting retention rates of downline distributors, which is crucial to upline distributors receiving a satisfactory revenue stream.^[6][7] Currently, Melaleuca carries a "satisfactory" rating with the local Better Business Bureau, which means that the company does not have an unusual volume of complaints for its industry and that there are no government actions concerning its market conduct.