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The Mary Kay legal department offers this document to help you understand why Mary Kay isn't a pyramid scheme. But the questions this document suggests you ask should really be asked of Mary Kay! The truthful answers would be really revealing! It also makes several assertions about the Mary Kay opportunity that seem to fly in the facf of reality. (Ex. You can't buy your way up... Oh yes you can!)

Why Mary Kay Is Not a Pyramid or Multi-Level Marketing Plan

If imitation is the sincerest form of flattery, Mary Kay has many “admirers.” Over the years, Mary Kay has attracted the attention of many new direct selling companies, some of whom attempt short cuts or attempt to duplicate elements of our program. They may not have the resources to develop a quality product line that can sustain a broad consumer base, they open with a big recruiting promotion with dubious claims, reach a peak quickly and end up battered by regulatory investigations or in bankruptcy. Many lack the retail product sales to support their commission structures, which eventually causes collapse. The following comments are intended to help you sort fact from fiction, it shares our facts, and it will help you as you are asked questions about your business.

“If It Sounds Too Good To Be True, It Probably Is!”

“Once in a lifetime opportunity!” Ground floor, window of opportunity. A legitimate business should be as good next year as it is this year. Your company has a 40 year growth record, stability, and financial security.

“Make up to 25% Commissions!” This pales in comparison to a Consultant and a Director’s earnings. Ask them how many levels of recruits must one have to earn that commission percentage.

“Make $40,000 monthly in your spare time!” Maybe a lottery ticket, but rarely at the beginning of a business. Look at how many people are earning that kind of money, how many recruits would one need to earn that amount, what can a beginner expect in the first year or two?

“You don’t have to sell anything! Just recruit.” Legitimate companies base their businesses on actual product sales to consumers. Pyramid schemes pay a “bounty” for signing up new recruits. The pool of new recruits eventually dries up. Retail sales are key to supporting the commissions and incentives. Often, women are left to package the products and men are the ones to recruit. Also, they will give their organization a different name from the parent company or will not clearly invite you to listen to XYZ’s company presentation, for fear that it is a “turn-off.” We are proud of and always say who we are and what we do.

“Revolutionary New Products!” Words such as “leading edge and natural” can be inviting, but few ingredients can be 100% natural or new. Does the company manufacture its own products under its own control or does it rely on outside contracts? Can all claims be substantiated? Is there a 100% satisfaction guarantee?

What the Terms Mean

Multilevel: A marketing plan with several tiers of participants through which products and commissions pass. Only those at the top buy directly from the company.

Participants “downline” purchase products from “upline” distributors. The discount is determined by a person’s level in the organization.

Network Marketing. A recent term, may have been coined to counteract multilevel. You “network sales through an organization of recruits rather than through personal
efforts.

Pyramid. These are illegal. Large numbers of people at the bottom of the pyramid pay money to a few at the top for the chance to advance to the top and profit from payments of others who might join later.

Career Path. Some companies claim we are “saturated.” This year alone, almost 40 women became National Sales Directors. There is plenty of room at the top for women who possess the commitment, drive and willingness to work. There are rewards and recognition at every step of our career path, not just at the very top.

Product Quality. We have been the Best Selling Brand in America for 9 years and intend to remain so because of the generation of new young women beginning to use our products and because of the millions of dollars invested in our manufacturing and distribution centers. We manufacture almost every product ourselves to assure the highest standards of quality. Product safety, customer satisfaction, guarantees and programs are in place to insure customer loyalty for years to come.

Review
Mary Kay’s business is selling products, not “business opportunities.” We are not in business to recruit women to buy products from us, but to buy and sell for herself. No “investment” is required, only the purchase of a showcase. No sales force position may be “bought” by the payment of fees or the purchase of large inventories.

Everyone begins the same way, as a Beauty Consultant and advances solely on the strength of her recruiting and sales abilities.

There are no levels of wholesalers between the company and consumer. There is only one wholesale sale from the company to the consultant and one retail sale from the consultant to the customer. Everyone, regardless of her status in the sales organization, purchases products directly from the company based on the same discount schedule, for resale to the consumer.

Mary Kay guarantees in writing that any consultant who terminates her relationship with the company may return any new and unused products purchased within one full year prior to return and receive a 90% buy-back, unlike some companies that either offer no buy-back or 30, 60, or 90 day offers.

All commissions are paid directly to consultants and directors. In many other companies, checks are written back and forth from the distributors, and no relationship is present between the main company and its distributors until a certain size organization is gained.

The Mary Kay Legal Department can assist you with any concerns!

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Lazy Gardens   |2009-09-05 21:57:30 Quote: Pyramid schemes pay a “bounty” for signing up new recruits. Remind me again about the "building bonuses" that directors get. How many $$$ for each "qualified recruit" is it? $100? If that's not a bounty, what is it? Quote: The pool of new recruits eventually dries up. Yes, it does.

The Scribbler   |2009-09-05 22:13:20 “Once in a lifetime opportunity!” I find it hysterical that a recruiting document I'd found on NSD Caterina Harris's website matches the same carnival barker verbiage that Corporate is coming down on.  And I quote: "I'm giving you the opportunity of a lifetime!  For $100, I promise that if you Suit Up and Show Up, you'll have more confidence, higher self-esteem, cash flow, and tons of fun. Don't you think that's worth $100?" Even funnier: This document has the gall to begin with the line, "I'm not going to try and talk you into anything!"

The Artist   |2009-09-06 04:17:39 What? Are they on crack?

pinkhell   |2009-09-06 04:59:23 Everyone begins the same way, as a Beauty Consultant and advances solely on the strength of her recruiting and sales abilities. What happened to 'no sales abilities needed, the product sells itself?'

pinkpeace   |2009-09-06 06:32:16 Quote: Legitimate companies base their businesses on actual product sales to consumers. True, however, the only real "executive income" promised all throughout the company is only theoretically possible through recruiting.  There is no way to advance in Mary Kay if you don't recruit.  Period. Quote: Everyone begins the same way, as a Beauty Consultant and advances solely on the strength of her recruiting and sales abilities. I thought a legitimate business is based on actual product sales. Why did you say that a Beauty Consultants recruiting abilities are essential? Quote: Words such as “leading edge and natural” can be inviting, but few ingredients can be 100% natural or new. What about words such as "on-trend" and "fashion-forward"?  Whoops. Quote: Mary Kay’s business is selling products, not “business opportunities.” From the October 2009 Applause: Mary Kay® products and information about the opportunity are popping up everywhere! From national TV ads to local networks and newspapers, everyone is talking about how Mary Kay offers value-conscious products and a great at-home business opportunity. You know, Mary Kay?  Whatever. Call it what you want, but an MLM is an MLM is an MLM.

dupedbypinkfriend   |2009-09-06 06:43:47 Quote: “Make $40,000 monthly in your spare time!” "Earn executive pay with part time hours!" Same dubious claim. Quote: Look at how many people are earning that kind of money, how many recruits would one need to earn that amount, what can a beginner expect in the first year or two? Well, we could do that if Mary Kay released the true numbers. Alas, the facts that MK claims are fiction. And that is no way to go into a business. The corrupt leading the bamboozled leading the blind.

raisinberry   |2009-09-06 07:23:56 I've got one thing to say. PUBLISH RETAIL SALES. That's it. That's all. (think Miranda Priestly) This entire bullsh/t article is dissolved in 3 words.

raisinberry   |2009-09-06 07:24:58 Oh wait, let me be clear...ACTUAL retail sales.

raisinberry   |2009-09-06 07:38:44 Multilevel: A marketing plan with several tiers of participants through which products and commissions pass. Only those at the top buy directly from the company. ****Crap alert**** "only those at the top buy directly from the company". This insertion is carefully crafted to throw you off the trail, and is in no way a definer of multi-level. Multi-Level means many levels. The Levels indicate COMMISSION percentages. Watch now how we do this... Senior~4% Team Leader~9% Team Leader plus your own 600~ 13% Director~ 13%, 10% bonus, recruiting bonus and your personal recruiting commission Senior Director~ 4 or 5% more on the downline Executive~ more and more 1st and 2nd and 3rd line offsprings, bigger numbers means bigger percentage NSD- More still, plus 18% on your own Unit, 10K bonus for NSD offspring, Bonuses for how many "stars" in your area,yada yada. Gee...if I squint my eyes and turn sideways I think I see MULTIPLE LEVELS.

gotheart   |2009-09-06 09:49:45 "duel marketing" is the term used in mk. however it is only referring to MK SALES aspect of the scam, and the customer's (ibc) purchase. as long has they can hide behind the required "product needs to be sold" they are not considered a mlm company. this is why they do not GIVE A RATS ASS IF THE IBC SELLS ONE PRODUCT AFTER IT LEAVES THE COMPANY! THIS IS ANOTHER REASON THEY DO NOT KEEP TRACK OF THE IBC TOTAL SELLS OF THE PRODUCT AT YEAR END!!! THEY DONT CARE! IT IS NOT ABOUT SELLING THE PRODUCT! this is how they throw ya off the mlm path. lies by omission. as raisenberry above clearly explained, (great job). never does mk refer to themselves as a mlm company because the KNOW NO ONE WOULD JOIN! the bait is the product. this is why they start with"ya make 50% commission" NO YOU DONT! within a week after you become an ibc you are told of the 60/40 split. the 60 os for reinvesting and the 40 is for YOU! ha cept "be sure to run your business out of your 40 first and what is left is your paycheck." there is nothing left! your 40 is used to purchase supplies that are used to advertise for the mkc! except ya think you are advertising for yourself! WRONG! you are the live bate to catch other women to join the on going mlm scam. the evidence is seen in how quickly they lure ya in with selling the product then, get ya to order product, which is to the benefit of the person who RECRUITED YA AND HER SD, then the recruiting, never ending mantra begins. mlm. this is why they dont need to advertise! they have 700,000 walking advertisements that are pushing the company! but they tell the ibc that we dont advertise because it will take away from the prizes of the star consultant program and the car program and the director trips. nuff out of me today.

Hunney   |2009-09-06 10:05:52 So after reading this, could someone explain to me exactly HOW Mary Kay is NOT a pyramid? I'm still waiting...

recoveringmkaddict   |2009-09-06 10:06:15 Isn't every organization a pyramid? Think about your typical corporation...there's only one CEO, several VP's, more managers and the lower levels would be populated by most of the workers/employees. To me, it's not the descriptive terms we use to define the structure of these companies, it's the behaviors they foster to get ahead. In a typical corprate setting, there is massive accoutability though annual reviews, management standards and corporate regulations and reporting. In direct selling, we are told that we are independent contractors with the right to control our own business. For some, that can be a recipe for disaster, especially when the leadership is less than ethical. Reading this site on a regular basis, I have come to realize the direct selling in general is not the best way to contribute to household finances. Starting any business whether direct selling or not, seems to require a big investment of time and money and can be a huge risk. Self-employment is not for everyone. I'm in the process of changing my "brainwashed" thinking and realizing that positively contributing to a company as an employee is indeed a noble calling and can be very fulfilling.

Still Breaking The Basic   |2009-09-06 16:54:55 "There is only one wholesale sale from the company to the consultant and one retail sale from the consultant to the customer." More kaybonics for we only care about the wholesale ones we report in Applause. "PUBLISH ACTUAL RETAIL SALES." Raisin, maybe they will the day a product actually cold calls someone and sells itself.

holycow   |2009-09-06 19:22:39 Quote: ...everyone is talking about how Mary Kay offers value-conscious products and a great at-home business opportunity. Um, no, they're not.

TRACY   |2009-09-06 23:55:28 Recovering - "Pyramid" is not used to describe how many people are at each level. It's used to describe the PAY TO PLAY concept which is the key part of the MLM structure. The way that pay to play works, there must be many people at the bottom paying in, and the money gets split up amongst people as it goes toward the top of the pyramid. Thus there ends up being few at the top, collecting money from many at the bottom. THAT is the type of pyramid we're referring to. People often reference corporate America as a pyramid. But the difference there is you don't PAY TO DO YOUR JOB. You GET PAID in corporate America. So saying the management structure in corporations resembles a pyramid... well that's not the same thing as what we're talking about here.

recoveringmkaddict   |2009-09-07 07:06:01 Point taken...I guess I just was looking at it as a more "loose" term and didn't fully understand the whole concept in general. Maybe that's why I bought into the fact that Mary Kay was so different than all those other companies for all those years. I know better now!

Isabelle   |2009-09-07 07:49:31 Quote: Make up to 25% Commissions!” This pales in comparison to a Consultant and a Director’s earnings. Ask them how many levels of recruits must one have to earn that commission percentage. Why asking??? Its not suppose to be a pyramide...no? Quote: Make $40,000 monthly in your spare time!” Maybe a lottery ticket, but rarely at the beginning of a business. Look at how many people are earning that kind of money, how many recruits would one need to earn that amount, what can a beginner expect in the first year or two? That one is really funny   Quote: You don’t have to sell anything! Just recruit OK, I got it.... now we are absolutely NOT talking about pyramide schemes! Quote: Pyramid schemes pay a “bounty” for signing up new recruits. The difference between Mary Kay and QuickStar is when I get a recruit, the recruit has to be activate with an order to the compagny to get my commission. In Quickstar, I have the commission when I simply recruit a person. And if my recruit change her mind and return the products to MK, I lose the commission... what a wonderful business!!! Quote: they will give their organization a different name from the parent company or will not clearly invite you to listen to XYZ’s company presentation Well.... its not really different in MK.... they had me by telling me I was invited to be a model for their training... bla bla bla...  Imagine if they would tell me the truth... Look Ma'm we want you to our meeting to try to recuit you and make money on your back... we will tell you that money is soooo easy to earn in this crap but in reality, you will have to sell you soul to the evil to make a little bit of money... pffff!!! Quote: Revolutionary New Products ALWAYS same products, ALWAYS just change the package of the product year after year... Quote: This year alone, almost 40 women became National Sales Directors Only 40????? Not that much for a sooo wonderful company!   Quote: Product Quality. Bof....maybe.... but I really don't think so... Quote: Mary Kay’s business is selling products, not “business opportunities. mouahhhhhhh       That one is my best one.... sure, they really don't sell the business opportunities... no... never!!!! but.... Quote: No “investment” is required Ok, now its too much, I'm peeing in my pants... Quote: Everyone begins the same way, as a Beauty Consultant and advances solely on the strength of her recruiting and sales abilities. Depending of your credit card, you can go faster in Mary Kay... Fake it t'il you make it...   Quote: Mary Kay guarantees in writing that any consultant who terminates her relationship with the company may return any new and unused products purchased within one full year prior to return and receive a 90% buy-back, Yeah... but I had to go in court to get my money back pfffff.... Quote: unlike some companies that either offer no buy-back or 30, 60, or 90 day offers. That is absolutely false... I've already been reimburse when I left Amway! Quote: All commissions are paid directly to consultants and directors. In many other companies, checks are written back and forth from the distributors, and no relationship is present between the main company and its distributors until a certain size organization is gained. The relationship and friendship is ONLY when you has a part of Mary Kay.. they LOVE you if each month you make your order.. but the day you left... you will never eared about them... your supposely best friend pfff   Quote: The Mary Kay Legal Department can assist you with any concerns! No thanks!

MRW   |2009-09-07 17:33:34 From the Direct Selling Association's (DSA)own website: http://dsa.org/about selling/faqs/ Q. What is the difference between direct selling and multilevel marketing? A.  Direct selling refers to a distribution method, whereas multilevel marketing refers more specifically to a type of compensation plan found in direct selling. A direct selling company that offers a multilevel compensation plan pays its representatives/distributors based not only on one's own product sales, but on the product sales of one's "downline" (the people a representative/distributor has brought into the business, and, in turn, the people they have brought into the business). Q. What is the difference between single level and multilevel compensation plans? A.  Single level compensation plan means a representative/distributor is compensated based solely on one's own product sales. In a multilevel compensation plan, representatives/distributors are compensated based not only on one's own product sales, but on the product sales of one's downline. Mary Kay is a DSA member. From DSA's definition, Mary Kay is multilevel. I wonder why, when you click on the link for Mary Kay from this site, it does not specify their compensation plan as multilevel, when other companies are designated as such? You'll see that part is just left blank. http://dsa.org/forms/Co mpanyFormPublicMembers/view?id =7F300000256 This is all you see on that page: Mary Kay Inc. Address: PO Box 799045 Dallas, TX 75379-9045 Phone:  972-687-6300 Fax:  972-687-1611 E-mail: Web Site(s):  http://www.marykay.com Produc ts / Services: Cosmetics, Skincare Company Description: Mary Kay's mission is to enrich women's lives. Compensation Plan:  Sales Strategy: Party Plan AND Person-to-Person Countries of Operation: United States, Argentina, Australia, Brazil, Canada, China, Czech Republic, El Salvador, Finland, Germany, Guatemala, Hong Kong, Kazakhstan, Malaysia, Mexico, Maldova, Republic of, Netherlands, New Zealand, North Korea, Norway, Philippines, Poland, Portugal, Russian Federation, Spain, Sweden, Taiwan, Ukraine, United Kingdom, Uruguay

ttp   |2009-09-07 18:08:48 That's very interesting MRW.  Especially this part: "...compensated based solely on one's own product sales. In a multilevel compensation plan, representatives/distributors are compensated based not only on one's own product sales, but on the product sales of one's downline." Because as we all know, MK does not track product sales.  They recognize product orders and all monies/prizes are awarded on said product ORDERS. And no one can tell me that MKC honestly believes all that is ordered is sold.

gotheart   |2009-09-07 19:04:56 ladies with the information provided by MRW i think we have grounds for fraud and a class action suit. am i out in left field or what?

FreefromPinkatLast   |2009-09-08 13:25:33 gotheart, I think you're absolutely right! I'm there with you!

Angelwoman   |2009-09-09 09:35:15 MK financially operates like a pyramid scheme. MK should be sued and shut down. My Illinois MK SD neighbor has been involved in this scam for 25 years. She shouldn't be driving a MK vehicle, she should be serving some jail time. She is the biggest liar and con woman. Her husband should serve some jail time and the kids be taken away. My MK SD neighbor fully knows that she is scamming unsuspecting women. I am surprised that one of her IBCs haven't taken her to court.

niecee77   |2009-09-09 21:51:00 Esp to Angelwoman: In Mary Kay, any regular beauty consultant(BC) can surpass her other team consultants and even her director(s). For this reason only, MK is not technically a pyramid scheme. If a BC becomes a director, she can move up the ladder and become more successful than the ones that brought her in. In pyramid schemes, underlings contribute their hard work and their own dollars to make the top dogs rich. In MK, everyone has an equal chance of earning good money; and an equal chance of moving up if they put the work into it. As for the ones who have claimed if you have money you can go as far as you want, that's only partially true, and that's if you cheat. If you have enough friends and family that are willing to let you use their name, you can front the bill for them to become BC's but that defeats the purpose of the whole system. I know from experience that MK BC's can be over the top, but many BC's genuinely care about helping other women feel better about themselves. And though it seems shallow, one of the best ways to help insecure women is to enhance the way they look on the outside, whether it be a haircut, new clothes, or a makeover. Every woman wants to know they can look good.

icanbecomesane   |2009-09-09 22:27:47 This is gonna be fun.

clk213   |2009-09-18 10:05:15 I agree in part with niecee77, you can go even further then the IBC/Director/team leader that brought you in.....if you put in the effort. Working a Mary Kay business is like working anything else be it your own business or working for someone else, you won't get anywhere with it if you don't put in the work and the effort. yes, it is not entirely accurate when MK Directors, etc tell women that "the products sell themselves" You will not sell anything..MK or otherwise if you do nothing but sit on your butt! To sell the products you need to get up and go out and talk to women. For the women who sign up to be IBC's and expect they will be able to say "hey everybody I sell Mary Kay!" and then they can just sit around while the orders roll in... yes you will more then likely fail! And yes if you just spent $100 plus to be an MK IBC based on you taking what is said literaly and you are not recieveing huge checks in a month...you will feel like you you are being scammed, when the only reason your business failed is lack of effort and work! The only "bad" thing that I do not like about becoming an IBC is that they tell you when they sign you up that you get a 50% commision. This is true but you don't find out unitl you make your first order that if you don't make a "qualifying order" you can NOT order the products at 50% Roughly every 3 months you must purchase the $200 then you can make any size order for 3 months at the wholesale price. The only real way around this is if you purchase a personal inventory, with your own inventory you can basicly sell it for whatever you want as long as you pay MK the appropriate price (retail if you did not qualify, wholesale if you did...plus taxes and shipping) So as they tell you when they sign you up....it is more beneficial to start off with as much inventory as you can afford....otherwise you have to do like I am and start out the hard way, order by order! I have worked a few "work from home" things and I have to say that unlike the others, everything I was told by MK has been accurate....the harder you work to build your business, the better you will do and it is much better to get an inventory if you can then to try to run your business order by order!

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