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
05/15/2008During 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.
26 May 08 at 6:02 am
Haha: “Camargo said she doesn’t listen to such criticism.”
She should
03 Jun 08 at 10:46 am
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.
03 Jun 08 at 10:55 am
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.
03 Jun 08 at 11:03 am
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.
03 Jun 08 at 11:08 am
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.
16 Jun 08 at 5:11 pm
“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.
16 Jun 08 at 5:34 pm
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!