Is Optavia a Pyramid Scheme?

People will often use the terms multi-level marketing and pyramid scheme when referring to the same thing. I’m not really opposed to it. I’m guilty of doing that myself. Multi-level marketing schemes and pyramid schemes do share the same kind of compensation structure. It often looks like a pyramid. That’s where the name comes from. The main difference between the two is that MLMs are a bit more legitimized compared to pyramid schemes. In MLMs, you can earn money from commissions when you sell the products offered by the company. In pyramid schemes, you earn money from the people who join that scheme after you. Pyramid schemes don’t often sell products. They just promote an opportunity to earn money. When pyramid schemes no longer get new paying members, the stream of money basically stops.

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Optavia falls on the side of multi-level marketing schemes. The company was founded in 2002 by then Medifast CEO Bradley MacDonald and Dr. Wayne Andersen. Back then, company took on the name was Take Shape For Life. It basically served as Medifast’s direct sales unit that helped sell Medifast’s meal replacement kits through ordinary consumers instead of through medical professionals. The company eventually rebranded to Optavia in 2017. Medifast basically considers Optavia as their main sales channel. The company’s current CEO is Dan Card.

The thing that differentiates Optavia from a lot of the other multi-level marketing companies that operate in the health and wellness industry is that they offer meal replacement kits. Usually, health and wellness-related MLMs gear towards nutritional supplements and the like. Those meal replacement kits are part of a weight loss program that Optavia follows. It’s called the 5&1 Plan. What happens in that program is that you will eat a total of five of the pre-portioned meals that Optavia sells and one meal of your own choosing through an entire day. You eat those meals every two to three hours. A lot of weight loss journeys that involve Optavia have been publicized through magazine and morning show features.

All multi-level marketing companies employ some kind of affiliate program. That’s how a lot of people earn money from MLMs. In order to become one of Optavia’s “independent coaches,” you have to purchase a business kit that costs $199. That kit basically gives you some guide on how to maximize your earning potential and some order forms. You have purchase the product kits separately. The product kits range from $379 to $423. Those kits have a total of more than a hundred servings. The products that Optavia sells are nutritional bars, drink mixes and those microwaveable meals that you would often see in the freezer section of your local grocery store.

The compensation plan for MLMs work the same way in all of them. There are certain ranks in the compensation plan, and it usually involves a certain quota that you have to hit every month. When you start out in any multi-level marketing affiliate program, you aren’t entitle to earn certain commissions. Usually, though, you get a percentage of the retail sales for every product that you sell. But in order to actually earn commissions in this structure, you have to recruit people to join the program. Once you’ve hit the quotas needed, you’re basically entitled to get affiliate bonuses. Your recruits will then have to recruit people of their own for them to get commissions.

That’s why a lot people do use pyramid scheme and multi-level marketing schemes interchangeably. Both of them are basically just building up a pyramid in terms of how many people get left behind a certain hierarchy. Multi-level marketing schemes are successful because they sell products. Those products basically help fund the entire enterprise. Pyramid schemes don’t have that kind of revenue stream. That’s why there’s a lot more failed pyramid schemes than MLMs. It’s hard to sustain a scheme when there’s no other way of earning money.

That’s why I rarely recommend these multi-level marketing schemes to anyone. The whole structure of it puts the people joining them at a disadvantage. Working hard can lead to better outcomes. But not when the cards are stacked against you. There’s just a risk involved in these schemes that I don’t think is worth it.

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