My dog got a rash on her belly after using coconut oil. When I took her to the vet, the vet said they were pimples that burst, and that they were normal in young dogs (I guess like in young humans?). But she did advise that if I were already feeding a quality diet, which I was, coconut oil might not add much.
I still occasionally give her some, because she LOVES the taste. I am not seeing the safe thing happen anymore, so it might have been a coincidence.