“Pyramid Schemes Take From the Bottom People to Pay the Top People”

But Mary Kay isn’t a pyramid scheme!!! A woman is beside herself because she mentioned Mary Kay in a group and got a negative reaction. There were a bunch of supportive comments, but the funniest one was that “pyramid schemes take from the bottom people to pay the top people” and Mary Kay isn’t like that!

She says they don’t take from your team member’s commissions to pay you. No, they just take money directly from those team members and use it to pay you. The upline doesn’t get paid if the downline doesn’t order and give money to Mary Kay Inc. MK then takes that money and distributes to the upline.

But you can “contact corporate to get more info.” LOL. Here’s what they will tell you.

19 Comments

  1. Lazy Gardens

    Yes … it’s passed through the Mary Kay accounting department, but the commissions anyone gets come from the money used to buy the products. As do the prizes, trips, car payments, and production bonuses. Up to 25% of the money an IBC pays is passed through MK and to her upline.

    1. MLM Radar

      Yes, all payments to the up line do come directly from the consultants. Laundering the money through the Mary Kay accounting and finance department doesn’t change that fact.

      Based on what I’ve tallied up for Director bonuses, “team” order commissions at multiple up line levels, and payments that flow to NSDs, I think 25% is an understatement. It looked closer to 50% last time I did the math.

  2. The Patient Whisperer

    “…because they think I just want to sell them stuff or sign them up.” <~~ commenter, re: doing facials

    Um…isn’t that the entire point of HOLDING so-called facials/classes? 🤔

    1. Neverpink

      I was just about to post this!

      “…because they think I just want to sell them stuff or sign them up.”

      That’s because that’s what you’re going to do, hun. People are more wise to it now than ever before!

      1. Enorth

        “…because they think I just want to sell them stuff or sign them up.”

        But isn’t that why you’re in business? Isn’t that how you make money?

        Or are you running a charity?

  3. NayMKWay

    Before the FTC took action against them, AdvoCare’s business model was largely indistinguishable from Mary Kay’s. This is from the FTC’s website, October 2, 2019:

    “Today, the FTC announced a case against Texas-based AdvoCare International, a multi-level marketer of energy drinks, shakes, and supplements. AdvoCare claimed people could earn unlimited income, quit their day jobs, and gain financial freedom by selling its products and recruiting other people to sell them too.

    “The company used. . .conferences, podcasts, and more to pitch what it called a life-changing business opportunity. The FTC calls it a pyramid scheme and says AdvoCare swindled hundreds of thousands of consumers.

    “According to the FTC, people paid AdvoCare thousands of dollars to become ‘distributors,’ buy inventory, and become eligible for cash bonuses and other rewards. But, the FTC says, AdvoCare rewarded distributors not for selling product but for recruiting other distributors to spend large sums of money pursuing the business opportunity. That push to recruit is a classic sign of a pyramid scheme.

    “The complaint alleges that 72 percent of AdvoCare’s distributors lost money or earned nothing from the company and 18 percent earned between a penny and $250 a year. When these distributors’ hefty costs are added, nearly all of them lost money.”

    Source: https://www.consumer.ftc.gov/blog/2019/10/ftc-advocare-business-model-was-pyramid-scheme

    Sound familiar? Buy inventory from the company to start up your pretend business and recruit others to do the same, on the promise of life-changing riches if you work hard enough. Mary Kay may be a bit less egregious, but not much. And the emphasis on recruiting and the money flow are exactly the same, as are the results.

    People involved in these MLM companies think having a product to sell to others means it can’t be a pyramid scheme, but having a product to sell and actually selling it are two different things.

    Unlimited chain-recruiting inevitably saturates the market with sellers, and the population of buyers outside the pyramid is far too small to support all those inside. The reason Mary Kay keeps zero records of product sales to end customers is so they don’t have to face that reality. Their public statements remain vague, like: “Women love to buy our products over and over.” They know better, but they choose plausible deniability as their cover.

    They. Are. Evil.

      1. NayMKWay

        See? Tracy agrees with me so much she built a time machine to post the same message last October. It’s OK, Tracy, I forgive you for pre-emptively copying off of my paper. I’m sure we’ll both be laughing about this yesterday.

  4. Wild Collards

    “Money laundering”. I’m going to use that phrase instead of “pyramid scheme” from now on to describe MLM. There’s always the “It’s not a pyramid scheme” pushback and that’s been used so much it’s lost its potency.

    1. MLM Radar

      The money laundering is through the MLM company. Bottom level participants pay the company. The company deducts for co-pays and chargebacks, then pays the rest of the “qualifying” percentage to the upline participants.

      This sleight-of-hand money laundering allows the participants to claim that they aren’t participating in a Pyramid scheme, because they aren’t personally paying cash to the up line.

        1. NayMKWay

          The products are an alibi and a means for laundering/hiding the money flow.

          “It can’t be a pyramid scheme. We have PRODUCTS, and pyramid schemes don’t have products.”

          “It can’t be a pyramid scheme. We’re paid by the COMPANY! In pyramid schemes, you’re paid by the people below you.”

          Both are lies. Most pyramid schemes have some sort of product as a cover, and nearly all pass money through the top and back down again. Just visit behindmlm.com and it’s quite clear. Right, Char?

          1. Char

            Right. I wonder, do people understand why having a product does not excuse it?

            Seems like they are willing to admit it would be a pyramid scheme without a product, so I ask them:

            Instead of running a pyramid scheme as they define it (no product), what’s to stop the founder from ordering bulk plastic rings for $1 and selling them for $100? That would leave him with $99 to play with – instead of $100. No biggie.

            Who would pay $100 for a $1 ring? People who are promised an opportunity to make back more than their $100 investment by recruiting others to also buy the rings, and making the same promise to them. Does it really matter then what the rings are worth? Nope.

            Can the founder now call it NOT a pyramid scheme because he, in fact, has a product?

            These folks, “It can’t be a pyramid scheme. We have PRODUCTS, and pyramid schemes don’t have products” aren’t the brightest bulbs.

            There must be non-affiliate consumer purchases to prove real value of the product. Otherwise, any product at any price can just mask the scheme – like the cheap plastic ring. If fraudsters really want to hide their scheme well, the cover product is slightly more convincing. Mary Kay being a good example of that.

  5. Diamond girl

    In my Country, El Salvador, mary kay consultants and directors enroll fake people. And this business let you “Wash Money” you made in another weird business cause the mk program itself let Let you do this. Its a piece of cake for bad guys.

    1. TRACY

      The same is done here. It has to be a real person, but the consultant or director can sign someone up and pay for their starter kit and product order. It happens all the time, especially when they are tying to finish requirements for a car or to become a director.

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