One of the “selling points” used to lure recruits into Mary Kay is the promise of being able to get 90% of your money back on your inventory. Indeed, a recent commenter touted this “benefit” of Mary Kay:
A smart person will not invest more than 60% of their sales. How hard is that? Tracy angry. Gloria Mayfield Banks,she did it,why cant you? Oh yeah,she is an MBA Harvard Grad. And you guys do know that you get back 90% of money invested in all products sent back to the company right?? Take advantage. Please!!
Is the 90% buyback guarantee really all it’s cracked up to be? Of course not.
For starters, this “benefit” is not something that Mary Kay offers in the spirit of benevolence. It is required by Texas law in order for the company to not be deemed a “pyramid promotional scheme”:
(b) To qualify as a repurchase agreement for the purposes of Subsection (a)(2)(B), an agreement must be an enforceable agreement by the seller to repurchase, on written request of the purchaser and not later than the first anniversary of the purchaser’s date of purchase, all unencumbered products that are in an unused, commercially resalable condition at a price not less than 90 percent of the amount actually paid by the purchaser for the products being returned, less any consideration received by the purchaser for purchase of the products being returned. A product that is no longer marketed by the seller is considered resalable if the product is otherwise in an unused, commercially resalable condition and is returned to the seller not later than the first anniversary of the purchaser’s date of purchase, except that the product is not considered resalable if before the purchaser purchased the product it was clearly disclosed to the purchaser that the product was sold as a nonreturnable, discontinued, seasonal, or special promotion item.
So how does this repurchase option work? Do Mary Kay consultants really get 90% of their money back? No. Here are the “catches” to this option:
- Consultants may return only products purchased within the last 12 months. Anything older than that cannot be returned.
- Any free products or prizes receiving from Mary Kay during that 12 months will reduce the amount of your refund.
- The company policy has been to refund the most recent wholesale price of the product. If you paid more than the current price for the product, you may get a lower price credited to you.
- Shipping costs, supplies, samples, and non-inventory items (known as Section 1 products in MK) are not refundable
- If anyone you received commission on in the last 12 months returns their inventory, you must pay back the commission received in the last 12 months on their orders
- Mary Kay sales directors and recruiters are notorious for using misinformation or unethical tactics to stop consultants from returning inventory. This includes lying about the program or otherwise delaying the consultant’s return so that less product can be returned under the “last 12 months” rule.
- Mary Kay Cosmetics says that if you utilize the product repurchase option, you can never be a MK consultant again. It appears that rule is only selectively enforced, but it seems to convince many consultants that they shouldn’t use the option. They don’t want to be prohibited from trying Mary Kay again in the future.
- Mary Kay’s culture encourages not doing anything to “hurt” your recruiter or sales director. Since the recruiter and sales director will have to pay back the commission received from any products you ordered, some consultants are reluctant to return their inventory and “cause” the recruiter and sales director to incur a commission chargeback.
Mary Kay Inc. often touts the product repurchase option as a great thing. It means consultants can give MK a try and get most of their money back if they don’t want to continue. In defending the business model following a negative article in Harper’s magazine, Mary Kay repeated this talking point.
Don’t believe the hype. Yes, you can get some of your money back if you join Mary Kay and decide it’s not for you. But it’s not the “no risk” option many recruiters make it out to be. You won’t recover any money you spent on demonstrator products, supplies, meeting expenses, shipping costs, or all those other out of pocket expenses other than the inventory. Ask yourself if you can afford to lose several hundred or several thousand dollars before you sign up.