Mainstream Media Recognizes Mary Kay Cosmetics As a Product Based Pyramid Scheme

The success of multi-level marketing companies and pyramid schemes has been based partly upon favorable media coverage of the industry. The MLMs put out plenty of positive press releases, resulting in numerous fluff pieces in newspapers and magazines over the years.

Mary Kay Cosmetics encourages fluff pieces, especially whenever a new Mary Kay national sales director is appointed. The company hounds local newspapers to run these stories, and the newspapers fall for the bait that makes the stories sound compelling:  only 500 national sales directors worldwide, millions of dollars of products “sold” by the teams created by these women, huge accomplishment to get to the top of the pyramid, etc.

But this article in the Salt Lake Tribune turned out a little differently than Mary Kay intended it. Thanks to the investigative reporting by Steven Oberbeck, he got readers to consider the “other side” of the Mary Kay issue.

Utah woman a star in pink
Gladis Camargo reaches top level in Mary Kay’s sales force
By Steven Oberbeck
The Salt Lake Tribune
05/15/2008

During the past 13 years, Camargo has built up a marketing organization of nearly 40 sales directors who in turn are responsible for leading, training and motivating more than 3,000 independent beauty consultants.

Later this summer, she will be recognized at Mary Kay Inc.’s annual seminar in Dallas for achieving the position of “independent national sales director” – a ranking only attained by about 500 women during the company’s 44-year history.

[snip]

The company, though, isn’t without its critics, many of whom focus on Mary Kay’s pyramid-like marketing structure but acknowledge the company’s operations aren’t violating any laws.

Under such multilevel marketing arrangements, independent sales associates can earn a commission on merchandise they sell. More importantly, they get a piece of the sales from new distributors they recruit, and on down the line.

Tracy Coenen, a forensic accountant who runs the Web site www.pinktruth.com, believes Mary Kay is just such a “product-based pyramid scheme.” She said it relies on an endless recruitment of new people who purchase inventory so those at the top of the marketing organization can collect large commission checks.

Camargo said she doesn’t listen to such criticism.

“I’m happy with the business I’ve built and the career I have,” she said. “And I’m grateful for the opportunity I have to help other women because I know what this (Mary Kay) can do for people. It can change lives.”

[snip]

This article represents a big step for journalists on the issue of multi-level marketing. Until the media recognizes MLMs as legalized pyramid schemes, consumers will only hear positive things about these companies. Here’s hoping for more truthful articles about Mary Kay and other MLMs in the future.

And hats off to Mr. Oberbeck for having the courage to write this article.

11 thoughts on “Mainstream Media Recognizes Mary Kay Cosmetics As a Product Based Pyramid Scheme”

  1. Camargo should get all of his facts straight before he writes articles. This information he published is not entirely true.

    “Under such multilevel marketing arrangements, independent sales associates can earn a commission on merchandise they sell. More importantly, they get a piece of the sales from new distributors they recruit, and on down the line.”

    Maybe he should speak with someone who actually is involved in Mary Kay instead of listening to those individuals who constantly criticize Mary Kay because they couldn’t hack it or because they have nothing better to do in their spare time.

  2. Hi Tara – Thanks for your insightful comments. Yes, the sentence you quoted is quite accurate. I definitely “hacked” it in Mary Kay, just decided I didn’t want to be a part of the deceptive scam anymore.

    I use my spare time to educate women about the evils of the big pink cult because it’s very important. Mary Kay isn’t giving them the whole story, and I want them to have it before they waste their hard-earned money on a bogus pink dream.

    Thanks again for stopping by.

  3. It doesn’t tell everything and since you have been in Mary Kay you would know that. It’s sad that you have such negativity about Mary Kay that you have to go around destroying everything positive Mary Kay has done. How can a “scam” last for 45 years? Since you are the expert about Mary Kay why don’t you tell me.

  4. You’re right Tara. The story doesn’t tell the whole story by far. It doesn’t mention all the lies and deception. All the false earnings claims. All the “fake it till you make it.” The untrue “I stories.” The blatant deception used to rope women in and get thousands of dollars from them for inventory they have next to no chance to sell.

    How does any scam run for years? Mary Kay has flown under the radar for 45 years. They have marketed themselves as helping women. Well, they’re not. 99% of women lose money in MK because it is a system that sets you up to fail. The system is very profitable for the owners of the company, but almost surely a failure for all the women who buy into it.

    This is why Pink Truth is so important: To expose all the lies and deception in Mary Kay. To tell the REAL STORY behind the pink. To give consumers the chance to make an educated decision about Mary Kay. To offer the public the real facts (finally) about this company.

  5. “More importantly, they get a piece of the sales from new distributors they recruit, and on down the line.”

    It is important to note that the “piece of the sales from new distributors” comes as a commision check directly from the company and not out of the sales money that the new recruit makes. This is not money that is owed to the recruit. The recruit keeps all of the money that they have earned through their own sales efforts.

  6. And it’s even more important to note that no matter who pays that commission, Mary Kay is still a product based pyramid scheme.

    You see, the recruit hasn’t “made any money” or sold a darn thing, but people all the way up the pyramid are being paid.

    Your recruiter and sales director push you so hard to PLACE AN INVENTORY ORDER, because they start getting paid the minute you do. You may never sell a darn thing. They don’t care – they’ve already been paid.

    Oh wait… you can return that product within a year and get a refund, and teh recruiter will have to give that commission back to MK. So they want you to sell the stuff, right? Not necessarily. They’ll work hard to keep you from returning the products to MK. It doesn’t matter to them if you sell them or not. Just don’t return them!

    And the recruits make very little from actual selling of the product. There are very few retail customers for Mary Kay. The name of the game is recruiting. Mary Kay is an endless chain recruiting scheme. Recruit them and get them to order an inventory package. Wash, rinse, repeat. The more you frontload new recruits with inventory, the faster you move up!

  7. I simply use MK because I llke the product. I have a relative that sells MK and I can go on line and buy it for condiderably less.
    I live on a limited income, I treat myself to skin care products periodically. I have met successful MK consultants who own the cars which by the way don’t have to be pink anymore. I think its a combination of your social network,committment,salesmanship, and hard work. Some of us don’t have the time to commit and thought we did. Sometimes it just doens’t work out thats just the way it is. I think the MK products speak for themselves and thats why the company is so successful. I thought about selling MK but decided not to. Its easy to get sucked into something you think you can earn extra money doing. It happens all the time in this industry as well as others. Each women has to decide for themselves if selling MK is in for them. I’d like to note that the possibility of selling MK is an emotional experience just like everythig else we buy into. It’s your choice.

  8. Tracy,

    I’m sad to read all of your angry comments. Everything I have read tonight definitely gets your frustration across. However, and please don’t tune out, I understand your frustration and anger. I understand that there are women out there who get badgered into signing a consultant agreement and pushed or coaxed into buying a large inventory with the thought of being able to turn around and do so much with it. I too, 3 years ago, signed a consultant agreement and purchased one of the top packages you could get for inventory, excited about what I could do with it in preparing to be a new mom. Unfortunately, I didn’t know myself to well. I tried running the race too fast, or thought I tried, and then burned out.

    I guess what I’m getting to is that in the world we live in, no matter what aspect, there are good people and bad. People that want to try hard to make there lives better and sometimes in so doing, and having a lack of knowledge or know how, tend to push others incorrectly. It seems to me that you had an awful experience with a consultant that either didn’t have enough information getting started with her own business and “recruiting”, over loaded herself and didn’t know how to do different, or honestly didn’t care what happened after you got your inventory. I’m not disagreeing with you because I know so many others that have had the same thing happen to them, including myself. But, I hope that you can step back and see that just because too many women have done things incorrectly as consultants doesn’t mean that-that is the “Mary Kay Way” of doing things. The consultant should have taken you under her wings and taught you how to fly, but maybe she just didn’t know how to herself or her wings were broken. Mary Kay is an amazing company, doing so many things to help not just women but families all over the world. Try not to be so focused on validating your feelings that you don’t recognize the good that is being done. If there is bad being done with the Mary Kay name it is by imperfect people not the company and values of a great women.

  9. I don’t buy the “one bad apple spoils the bunch” theory that I hear so often in relation to Mary Kay. Unfortunately, there are far more people dong wrong (misleading consultants etc) in the company than there are doing right (telling the whole story and not pushing inventory packages on new recruits etc). I really don’t have any feelings about Mary Kay that need to be validated. All I know is that almost everyone who gets involved loses money and I owe it to consumers to warn them of this. I don’t want to see women’s families lose hundreds or thousands of dollars to this company with a predatory “opportunity.” I have a chance to educate them on the reality of Mary Kay, and that’s all I really care about.

  10. You should be investigating ALL MLM companies. These issues occur in ALL offline MLMs.

    People need to know the downside of a business model no matter their “feelings” on the issue. You do a great service by informing them of the downside of Mary Kay and MLM structures.

    Every business deal – if it is legitimate – would have a downside right?

    But – if you didn’t inform the world about it – where would they ever here the downside of Mary Kay or any other MLM?

    You need both sides before you can ever make a wise decision. Simple as that.

    cheers,
    Luke

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