Mary Kay Cosmetics is Suing Another Product Liquidator

Times must be tough over at Mary Kay. Instead of focusing on “enriching women’s lives” as the company is so fond of saying, they’re instead busy running around suing all kinds of people. A couple of weeks ago, Mary Kay filed suit against Yahoo for including advertisements with Mary Kay keywords in their email service.

Frankly, I don’t think they’re going to get very far with this, since users of Yahoo’s email service likely agree to let Yahoo put advertising in the emails via the user agreement. And if you’re in Mary Kay and talking about Mary Kay in your emails, it’s likely that the advertising you agreed to is going to include Mary Kay items.

But back to the subject at hand…

The lawsuit filed last year against Touch of Pink Cosmetics wasn’t the slam-dunk Mary Kay apparently thought it would be. And they still haven’t come out winners in that one. But they must press forward and keep suing liquidators. The latest targets of the Mary Kay attack are Karla Balladeres and Pink Face Cosmetics . (Remember how Mary Kay objected to Touch of Pink using the word or color “pink” because it’s so closely associated with Mary Kay??? This lawsuit makes no mention of Mary Kay’s exclusive right to use pink, but it’s interesting anyway.)

The lawsuit says that Karla became a Mary Kay consultant in July 2005, and goes on to quote the beauty consultant agreement at length. Of course, the main points repeated are that the consultant agrees not to sell in retail establishments, to protect the May Kay trademarks, and to get approval from Mary Kay before using the Mary Kay name in any advertising. Karla became a sales director on March 1, 2008, and the lawsuit goes on to quote the sales director agreement .

Here’s where it gets good… Karla has been running and has had a store on eBay. Mary Kay found out and terminated her consultant and director agreements, effective July 2, 2009. Mary Kay says Karla contacted them and said this was a case of mistaken identity, so they reinstated her agreements to give her time to clear her name. The lawsuit says:

On information and belief, Ms. Balladares provided intentionally misleading or fraudulent information to Mary Kay to maintain her status as an Independent Beauty Consultant and Independent Sales Director for the purpose of continuing her fraud against Mary Kay. More specifically, Ms. Balladares informed Mary Kay that she had been working with a police detective and that the detective provided her with the identities of two people, one of which allegedly owned Pink Face Cosmetics, and the other allegedly owned a P.O. Box associated with Pink Face Cosmetics. Mary Kay believes this information is untrue, as Mary Kay continues to find information that identifies Ms. Balladares as the owner of Pink Face Cosmetics.

Karla’s contracts were ultimately terminated on July 16, 2009. Check out this statement in the lawsuit:

Because she is no longer a Mary Kay independent Beauty Consultatn, Ms. Balladares no longer has the ability to purchase Mary Kay products directly from Mary Kay; nor does she have any contractual right or license to use the Mary Kay marks.

That was very cleverly worded. They’re right… she doesn’t have a “contractual right” to use the marks, but she still has a legal right to use the name Mary Kay. Someone who legally possess items that are authentic Mary Kay products has the legal right to tell others that the products are “Mary Kay” brand, and using the Mary Kay name in that regard is not trademark infringement (although Mary Kay is trying to make it so that it is).

The lawsuit then goes on to say that Karla recruited people to become beauty consultants so that they could provide products to Pink Face Cosmetics. Are they serious? We all know the economics of this. A consultant purchases a product from Mary Kay for $10, with a sugggested retail price of $20. Pink Face Cosmetics pays $5 for that product, and if they’re like other liquidators, they hope to sell the product for $10 on the website. What consultant in their right mind is going to be recruited for the purpose of supplying products to Pink Face? Basic math would tell them they will lose money every time.

Like in the Touch of Pink Cosmetics lawsuit, Karla is being accused of “inducing” women to violate their beauty consultant agreements with Mary Kay.

And the heart of the lawsuit is the use of the Mary Kay name. Mary Kay is saying that Karla is using their name without authorization. Again, if Karla is selling authentic Mary Kay products, the law allows her to identify the name brand. But th lawsuit says:

Defendants’ unauthorized use of Mary Kay’s trademarks and name has confused or is likely to confuse consumers as to the affiliation, connection, or association of Defendants with Mary Kay, as well as to the origin, sponsorship, or approval of Defendants’ goods, services, or commercial activities by Mary Kay. As a result of the confusion that has been or is likely to be engendered by Defendants’ activities, May Kay’s trademarks and associated valuable goodwill are therefore being irreparably harmed.

Then Mary Kay goes on to make complaints similar to the issues in the Touch of Pink lawsuit. They say Karla was purchasing keyword advertising from Google and other search engines using the words “Mary Kay.” That advertising often shows up on web pages with the words “Sponsored By” inserted by the company selling the advertising. Common sense users of the internet know this means that particular web page is “sponsored” by those paying for the advertising shown, but Mary Kay is trying to stretch this to mean that the advertising showing up is somewhow affiliated with or approved by Mary Kay. (Nice try, but that’s just silly.)

And Mary Kay says Pink Face Cosmetics is destroying relationships:

Defendants’s misconduct has harmed and continues to harm Mary Kay, its Independent Beauty Consultants, and its trademarks. Specifically, the continued willful and deceitful acts of Defendants have resulted in the loss of business, including the actual loss of valuable business relationships exisitng between Mary Kay and its Independent Beauty Consultants, harm to its reputation and goodwill. On information and belief, the intentional interference by the Defendants with Mary Kay’s contractual relationships also has resulted in the loss of sales opprotunities for other Independent Beauty Consultatns. The loss of sales opportunities for its Independent Beauty Consultants is deterimental to Mary Kay and its business model.

So what they’re essentially saying is that Pink Face sells cosmetics to customers because their prices are lower than that of beauty consultants. Guess what Mary Kay? That’s called competition. And no one is required to sell their products at higher prices just so they don’t make a sale instead of a competitor making a sale. Further, Mary Kay can’t claim any sort of loss on behalf of the consultants who didn’t sell their junk. That loss (if any) would be to the consultant, not to Mary Kay Inc.

But I suppose the company is right in one regard: The business of liquidating Mary Kay products is detrimental to the “business model” because it shows women that:

  1. The products are overpriced at retail
  2. The products are difficult to sell at retail
  3. The market is flooded with Mary Kay products
  4. The Mary Kay business isn’t viable for most consultants

Once those things are made clear to the public, it becomes more difficult to recruit new marks into the scheme. The problem with this is that Mary Kay doesn’t have any legal right to stop others from doing things that reveal what a sham the purported “business” of an Independent Beauty Consultant is.

The lawsuit goes on about the trademark issue, and claims that Pink Face Cosmetics isn’t entitled to use the Mary Kay name because it’s causing confusion and harming their goodwill.

Karla Balladares and Pink Face Cosmetics are being sued for:

  1. Breach of contract – She violated her consultant and director agreements.
  2. Fraud – She made false statements to Mary Kay and recruited consultants into Mary Kay to provide products to Pink Face.
  3. Interference with contract – She induced women to breach their contracts with Mary Kay. (Like in the Touch of Pink lawsuit, I can’t see an actual harm to Mary Kay in this. She was purchasing products from consultants that they had purchased from Mary Kay. Therefore Mary Kay already made all the profit on those products that they could. How is reselling those products harmful to Mary Kay?)
  4. Unfair competition – No explanation is provided for this part.
  5. Trademark infringement – She is using Mary Kay’s goodwill by using the name Mary Kay in the Pink Face business.
  6. More unfair competition
  7. More trademark infringement
  8. Attorneys fees – Mary Kay wants Karla to pay their fees to litigate this matter.
  9. Unjust enrichment – Mary Kay says she has been “circumventing” Mary Kay’s “direct sales model,” and has been receiving commissions and prizes constituting unjust enrichment.

What do we know about this liquidator? The Pink Face Cosmetics website is currently showing the following message:

Pink Face Cosmetics is curently closed for Maintenance. We are working so Hard to continue offering the Best Products and Prices in Market. We are in the process to add new Products.
Thanks for Choosing Us and Please Check Back Later.

But here’s what the site looked like just a week ago (click on the image to see it full size):

You’ll see a disclaimer on that page which is almost identical to the one Touch of Pink Cosmetics has been using recently:

Pink Face Cosmetics is not endorsed by, affiliated with or approved by Mary Kay Inc. We assist concultants to liquidate their inventory. We offer Mary Kay Products at great discount. Most of our items are discontinued, past shelf life or expired, which is why we can offer you such great prices.

And it would appear that they did a sloppy job of copying from Touch of Pink. Here’s what they say about their services:

Touch of Pink Cosmetics offers a liquidation service to former consultants and those who are just looking to reduce their inventory on hand. We are not affiliated with Mary Kay Inc. We buy all section 1 items at 1/2 of wholesale. The products must be new, never been used or tested. Please keep in mind too, if you product is less than 12 months old, you can send them back to Mary Kay Inc for 90% of wholesale. Please email Carolina with any futher questions at[email protected]This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

Whoops! Might want to take out “Touch of Pink”!

And you’ll find this on the “About” page for Pink Face:

Thank you for visiting Pink Face Cosmetics. We carry the Best selling brand of skin care & color cosmetics, Mary Kay, at prices up to 80% off retail . All products are new, without ever being tested or used. All of our products are NEW, and they are not expire, we don’t work with old products, we have the newest selections. All products listed on our website are in stock.If you don’t see a product listed, chances are it is out of stock. We add new items on Fridays, so check back often. Please feel free to email us ([email protected]This e-mail address is being protected from spam bots, you need JavaScript enabled to view it) with your product needs and we will do our best to fullfill them or notify you when it is back in stock. We include free samples with every order you place with us. However If you are undecided about a color choice and need a sample, please email us your name, address & the type of sample requested. Also E-mail us if you need any Beauty advise one of our professional can answer your questions. We sell genuine Mary Kay products. This website is not endorsed by or affiliated with Mary Kay Inc. This company was founded by former Mary Kay Consultants who are assisting consultants to liquidate their inventory. Any questions or comments? Phone Number: 305.323.1216 Email:[email protected]This e-mail address is being protected from spam bots, you need JavaScript enabled to view it Web Store: eBay Store: Skype: pinkfacecosmetics

Here’s what is currently up on eBay for Pink Face:

Now I’m not condoning what Karla did. If the lawsuit correctly recites the facts, Karla was in volation of her consultant and director contracts. Unfortunately, those contracts are very restrictive and while people are operating under them, they take a risk engaging in any sort of liquidation or side business related to Mary Kay products.

However, I am questioning Mary Kay’s repeated filing of lawsuits claiming trademark infringement. They’re clearly trying to scare everyone away from liquidating the products. Like I said above, if the truth gets out about what a poor opportunity is for consultants, recruiting becomes more difficult. The liquidators simply illustrate the problem… and I can see why Mary Kay is scared.

The company is going to scare the world into not (lawfully) reselling the products which consultants and directors have so difficult a time selling (thanks to the products being overpriced, of marginal quality, regularly made obsolete by the company, and simply because too much product is being pushed out on the market via the recruiting pyramid scheme)… well they’re going to have to file lawsuits that have the potential for big money. Big dollars equals big fear of the corporate giant.


  1. Tracie

    “So what they’re essentially saying is that Pink Face sells cosmetics to customers because their prices are lower than that of beauty consultants. Guess what Mary Kay? That’s called competition.” No, that’s not called competition. That’s called breach of contract.

  2. Tracy Coenen

    Wrong! The price at which the cosmetics are sold is NOT defined in the contract. People who have the products can give them away for free or sell them at any price that they want to.

  3. Holly B

    It seems that Mary Kay wants all the benefits of NOT having employees sell the products, yet still governing what these “independent” business owners do with the products after they purchase them from the company. Aren’t there laws that give people the right to sell what they have legally purchased and own? I understand that Mary Kay makes bigger profits if a lot of this product never reaches an actual consumer and just sits on a shelf until it hits the garbage can due to age, but they made THEIR profits on the original sale to the independent rep. No wonder they don’t want anyone liquidating what they couldn’t sell at the parties!

  4. Chris Enda

    First off, Mary Kay Cosmetics does not make anyone buy product from them. If you use the product you will personally make the purchasing quota that is required to stay active in Mary Kay. If a consultant wants to purchase product, like any retailer, their business depends on them selling it. If they do not sell it, it will be a business loss. Breach of contract is when a consultant is ordering for a wholesaler specifically. They should have their employment severed if they are breaching their contract. Retail, is retail. If someone wants to sell Mary Kay Cosmetics that they purchase at whatever price, they should be allowed. Consultants, quit breaching your contracts!

  5. Wanda

    There is good and bad on both sides. Being a consultant is not for everyone, and some take it too far by being pushy. That’s on them. Why do you think telemarketing and sales has such a bad name? The consultants and directors duping new consultants into over purchasing products is not the Mary Kay business model, and that’s another whole subject.
    Mary Kay, Inc makes every effort to keep the business model in tact by making available to every consultant online information and training. In addition, the company gives consultants and directors incentives to help, support, and train new consultants. However, the truth is that people have the freedom to take advantage until stopped. Unfortunately, by law is the only way that works. Getting some people to cease doing something harmful to others by asking stopped a long time ago. Some call it ingenuity, even competition.
    What is sad to hear about is people not take responsibility for their own actions. The truth about Mary Kay, Inc. is that it gives men and women the opportunity to add additional income, from $100 – $450,000, for food, vacations, extra expenses, and the ultimate opportunity to replace their income, have the use of a car, insurance coverage, and a retirement plan. There are many ways to sell Mary Kay products, just like any business. Liquidating product when you can get 90% from Mary Kay, Inc. is what does not make sense.
    Correct me if I am wrong, but Mary Kay is the only company that offers the “Try it if you don’t like it 90% refund” for one year after purchase of inventory. It sounds like Liquidators are giving former consultants much less than that. Those who choose not to sell it back because the business is not working for them, due to lack of training, consistency of effort, or whatever happened to change their mind, needs to take responsibility. It is a job. A job takes education, teamwork, and commitment.
    In my opinion those women selling online at reduced pricing have turned coat on other consultants who are working their business when they ignore the clearly stated consultant agreement they signed.
    It’s not a perfect world, but at least Mary Kay, Inc is keeping it’s promise to enrich women’s lives by protecting it’s own and the unsuspecting online shoppers who may be getting old below standard products which is not supported by Mary Kay, Inc.
    I’ve used Mary Kay for years and have become a consultant because of the results. I do loose customers who shop online.
    After 24 years of use, no one has been able to guess my age. Getting the products for 1/2 price is less than most products in the store. You can’t beat that for competition. It’s up to me to make the sales.

  6. teagirl

    I was a MK consultant not no more. I for one think that Mary Kay use that TRADEMARK thing a little far.. Someone out there needs to win a lawsuit with Mary Kay. I think if you are buying it you can do what ever you want with it. Beside Mary Kay say you are running your business .. NOT.. still had to report to a sales director.Mary Kay makes money off all consultant it doesn’t matter if the do a door to door sales or if they sell it in garage sales, internet,eBay or from a website as long as you are placing orders with me Mary Kay is still making money. So what is the big deal. I think Mary Kay has to much time and so does these other nosy people that sat on eBay or the web and surfing these sellers then turn them in to Mary Kay Legal. I think some of them needs to mind there own business. I ran into woman that bought on Mary Kay on the web they like it better because they don’t have a consultant calling all the time. So I say Pink Face Cosmetics WIN WIN WIN.

    As for Mary Kay buying back yes they will buy it back they also take back the commission they gave on it so if I would of sold mine back I had 36,000.00 worth of Mary Kay to send back The recruit would had to return her commission of 4% back to Mary Kay is that really fare to the recruiter?????

    My Mary Kay I gave away as gifts. I went 36,000 in the hole because I felt sorry for the recruit then my self.

  7. Karen

    I am trying to figure out why in the world someone would have $36,000 work of Mary Kay. I have been a consultant for 21 years and I have NEVER had that amount of would push my consutlants to. The consultants that quit the business have the opportunity to get their money back from Mary Kay. But, instead they sell it to these liquidators. Then the customer that I worked hard to get is buying from a liquidators, with no guarantee, no personal service, no knowledge if the product is out of date and spoiled……Then the customer gets mad at Mary Kay, which has nothing to do with the liquidators. It hurts the company, the consultants that ARE working their businesses. So GO Mary Kay and put in end to the “bad” business of liquidators!

  8. Tracy Coenen

    Consultants can get SOME of their money back, but often they still have products left that do not qualify under MK’s repurchase program. What should they do with the stuff? I say send it off to liquidators and at least get something back.

    As for product being “out of date” or “spoiled”….. that’s one of the myths put out their by MK die-hards. Sure, once in a while a bad product is out there on the market. But by and large, the liquidators are selling perfectly good products to customers. (If they didn’t, they wouldn’t still have customers!)

    And this idea that people shouldn’t sell MK products for less then list price because it may hurt someone who is selling at suggested retail? That’s absolute nonsense. Sell it for whatever you can get for it. Consumers are finally becoming more savvy about the MK products, realizing they’re not worth suggested retail and they’re better off getting the products at a discount wherever they can.

  9. New Mary Kay Beauty Consultant

    Oct. 9, 2009

    As a new consultant, I do think that there should be some way to help people to afford make-up in these tough economic times. The way to do this should not be through former consultants selling the product at a lower cost on the internet, however the consumer should be able to purchase discounted Make-up through Mary Kay directly. Any products that were relatively good and sent back to Mary Kay should be sold for half price if they are over three months old. Is this possible?

  10. pinksedition

    Guess what, I was a consultant and I still have inventory left long after my contract expired. I have been selling everything for a dollar, no matter what it is. I don’t care about the money. I hate MK and if I had thought of it sooner I would’ve only charged 9 cents because it’s not even worth a dime. Is that unfair competition for other consultants? HEHEHE

  11. Andie

    I can’t believe this is an issue. In this economy- Mary Kay should just be thankful that they are selling enough consumer product to maintain their manufacturuing operations and R&D. I am a long-time Mary Kay user but I stopped going through a consultant about 18 months ago. I loved her but it is ridiculous to expect that I should spend $20 for an item that I can get on eBay for $12 (including shipping!) The reality is that the current economy has forced a lot of major corporations to make major changes in pricing and sales structuring. Mary Kay can not expect to keep the same sales model in this financial climate. A smart consultant whose sales are down will turn to venues like eBay so they can continue to maintain their sales levels w/ Mary Kay. Better to sell product for a reduced profit margin then not sell anything. If eBay wasn’t an option for me I would truthfully just switch to a cheaper store brand and stop buying Mary Kay alltogether-which would result in reduced sales for Mary Kay. I’m thankful for eBay and “smart” consultants who understand the value of playing the market.

  12. Andie

    I’d like to point out that all of the product I’ve received on-line has been FRESH-when MK changed their “look” I started getting the new product also. Let’s be truthful-customer service is simply not as important as it once was. I am unwilling to pay a 50% markup for “service.” I’ve been in sales for 20 years (for one of the worlds only AAA rated companies) and we always tout the importance of our “service.” Well that isn’t keeping our customers around when they have less disposable income to spend. Period. Same for Mary Kay-they can’t keep using the same old business model and expect to stay as profitable as they once were.

  13. Laura

    Competition is not selling a product created by a company and being resold under the same product name. In the world of tickets for events – that is scalping. Competition would be creating your own product and selling it. By the way I was once a very active Consultant who earned a car and who became a Sales Director by selling the products under the “oh so restrictive” Agreement. Today I do nothing with my business, but don’t harbor anger and resentment toward the company because I decided to reduce my work level. Just as everyone cannot be a successful doctor, lawyer, teacher, mechanic, etc. – not everyone can succeed in sales of any type.

  14. dee

    I honestly can believe some these responses and this post for that manner

    I quit the biz 10 years ago but remained a customer because mk really is the best the I do question some of the consultants integrity

    But that is no hit on the company

    The bottom line is folk take responsibility for your actions. This is a business. I recently came back to MK to build a biz because to me there is nothing like direct sales

    And if you are really to be a real business women and stop blaming everybody for your woes and inventory you can’t sell you will be a better person

    Truth is you CAN sell mk at regular price. People are doing it everday. People still go to MAC even in this ecomomy and purchase their stuff and we know their stuff is expensive and the foundation in my opinion is not as good as MK

    The problem not being able to sell is not MK fault it is your own unwillingness to responsibility for your own professional development. To relying on your recruit to close your sales close your recruits and being new is no excuse either. READ BOOKS! On marketing for crying out loud learn how to be a real consultants leann how to brand YOURSELF. PROMOTE YOURSELF that’s if you as a person know how to add value to someones life and not just try to sell a lipstick. If you don’t know how then that’s another issue

    IF you learn how to truly market your products. The use of MK name will never be an issue

    And to get back on the topic yes touch of pink and all the other pinks are dead wrong. MK worked hard to build their brand they should fight and WIN

  15. Bill

    MaryKay- for some people there is no other option, no other cosmetic products that will do what these do for them. But, in ALL economies, everyone looks for the lowest price, not the highest. But they will also factor convenience, salesperson demeanor, etc. If I am locked into ONLY purchasing from a consultant at a higher or “uncomfortable” price, I WILL find something else that is “good” enough at a lower price and switch to it. Or some other company will see the opportunity to make an identical product for less and sell it at a lower price. Happens all the time. That’s economics.

    The Mary Kay name is their livelihood. But, if I were to sell a product and say, “This is similar to this Mary Kay product.” Should I be sued? I am complimenting the MK product. This is done everyday with all sorts of prouducts.

    If I have product that is un-returnable and I paid money for it, I am not just going to throw it away. I am going to find a buyer for this, especially if I can get what I paid for it or just a hair more. Depending on age of product and who I am intending to sell it to, I might just give it away. But the HIT is on ME. I made this decision. I purchased the product and thus I own it. The internet, ebay, etc. allow me to reach a larger audience than my neighborhood to sell product that I have trouble selling.

    Suggestion to Mary Kay, make your website and all your consultants have an EASY to use “Storefront” on the website to sell off discontinued or aged products at cost or something like that. If you are seeing “competitors” offering this service, than you are not. Don’t sue them out of business, make it easier for your consultants to do it on YOUR website. You’ll gain more business and positive goodwill.

    Have a Merry Christmas (or other religious holiday) and a Happy New Year Everyone.

  16. Chris

    Being an “ex” IBC I can see why so many refer to MK as a “cult” I was really blinded and that the world of MK and their “alleged” philosophy of God First, Family 2nd, Career 3rd….HA! Just try to go to you son’s play or soccer game and miss a “meeting” or other MK event…..your director will chew you up and spit you out just like mine did to not just me, but to so many of the IBCs on my team! The ONLY thing that EVER mattered was who could buy more than who and who could recruit more than anyone else…God was completely not in the mix believe me. Another thing, what IS with their stupid car logo sign that reads Mark Kay… phone number or contact. I asked MK Legal about this, because it’s very scary when you’re driving home at 10pm and there’s a car following you….all the way home. Well, after honking my horn so that my husband came out right away….I found out it was just a lady who say “my sign” and just wanted product. MK Legal “won’t” even allow an IBC to put her contact phone number….now that is just plain STUPID and DANGEROUS!!!!

  17. SD

    I am a consultant and I love it. Yes the pressure is there to buy more product but it certainly isn’t because my director forces me to or anything like that. It’s only because I want to do well with my business. I haven’t been doing all that great because well I haven’t been doing the work. I can’t blame the company or my director.

    I can understand why people get frustrated with their directors because I know some pretty dodgy ones! I count my blessings I have an excellent director and national sales director that genuinely cares about what happens to us.

    I have lost customers because they realize that they can go on eBay and buy something for half the price or less. I see where people are coming from when they think “Oh why buy it for 10 if I can get it for 5?” Well before MK I worked for a cosmetics counter… some of those brand names mark their prices up almost 95%!!! I am trying to make an honest living and I understand in this economy people are looking for the best deals but trust me… if someone were to make a site that sold MAC or Chanel at excessively lowered prices I am certain they’d have a lawsuit on their hands. Don’t think that it’s just Mary Kay that protects their own name.

  18. Salesman

    “Yes the pressure is there to buy more product but it certainly isn’t because my director forces me to or anything like that”

    Your word choice gives you away. A legitimate salesperson would feel pressure to sell, not buy. You’re a customer with a job title.

  19. Audrey

    My mother was a MK consultant for 20 years. After having a stroke we assessed her inventory and sales records. Her sales director insists that my mother was one of her top ten consultants for the last several years and had sold a lot of MK. I corrected her that my mother PURCHASED a lot of inventory, but MK SOLD a lot of inventory – that makes her one of the top ten buyers – not sellers. This was after she saw my mother’s left over inventory valued at several thousand dollars and offered us $200 dollars to take it over.

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