The 90% Buyback Guarantee

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 fan of Mary Kay touted this “benefit” to me:

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 something they do so they won’t identified as 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.
  • Consultants may only return products they purchased directly from the company. If they traded products with other consultants, those things can’t be sent back. Mary Kay will check all products against historical purchases by the consultant to verify if the correct products were sent back.
  • Any free products or prizes receiving from Mary Kay during that 12 months will reduce the amount of your refund.
  • Shipping costs, supplies, samples, and non-inventory items (known as Section 2 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.

 

12 Comments

  1. BestDecision

    Wait…I thought we were all supposed to be making 50% of what we sell. And an executive income.

    Your grammar and lack of basic business knowledge make me SO glad I’m no longer in MK. I bet you wear house slippers to Seminar, too.

  2. toolbelt

    An MLM could survive strictly on shipping and handling fees alone, even if they credit 100% of products returned. The products could simply be used to increase shipping and handling fee revenues, especially when MLM purchases are typically low ticket/high volume. A magazine publisher can prosper by having 100,000 subscribers paying $5.99 an issue each month which is the same as 100,000 MLM distributors paying $5.99 each in shipping and handling on single orders.

  3. NayMKWay

    “…non-inventory items (known as Section 1 products in MK)…”

    Aren’t they called Section 2 products? I was never in Mary Kay, but seem to remember discussions about Section 2 items being a non-refundable (and a significant) expense coming up before.

  4. MLM Radar

    In a real retail store the store manager can return products for exchange or refund, without being forced to go out of business.

    In MAry Kay you’re pressured to buy a big “full store” of inventory long before you have any idea what your future customers may want. A few months later, when you realize the hard way that you spent thousands on inventory nobody wants, you’re not allowed to return or exchange ANY of it unless you’re quitting Mary Kay forever. Instead, you’re pressured to buy even more inventory.

    Do you need any more evidence that Mary Kay is just a big inventory buying scheme?

  5. EyesWideShutNoMore

    What happens if someone doesn’t pay back the commission they made? Does it actually go to Collections?! Say someone made a commission on a recruit and then the recruiter quit MK. Does corporate hound the person until they get it like some kind of pink mafia?

    1. Lazy Gardens

      They deduct the “chargeback” from the commissions the recruiter makes if possible.

      If I recruited you and then quit right after collecting that commission and you quit 6 months later, they would send me a bill for the commission I got.

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