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Life not so rosy for women selling Mary Kay cosmetics

Mary Kay is a storied brand in the beauty products industry. But an investigative story in Harper's Magazine suggests the company's success comes at the expense of the women who sell the products.

Tess Vigeland: What image pops into your head when I mention Mary Kay cosmetics? The pink cadillac, right? Well-attired women holding parties with potions and lipsticks and all manner of beauty aids to sell. It's an almost mythical success story in the annals of American business. But there's more to that story and not all of it is pretty. Virginia Sole-Smith wrote the cover story for the August issue of Harper's. It's titled is "The pink pyramid scheme: How Mary Kay cosmetics preys on desperate housewives." Welcome to the program.

Virginia Sole-Smith: Thank you for having me.

Vigeland: So the first party that you ever went to was really a recruitment meeting as much as a tool to sell makeup. How much were you told you could earn as a Mary Kay consultant?

Sole-Smith: So in the magazine article, the first party that I attend -- the first party that I attended ever for Mary Kay -- was hosted by a senior sales director named Daria Rocco. What Daria painted the picture of was that we could expect to make an executive-level income or a corporate-level income, those were the terms she used. She was driving one of the pink Mary Kay cars out in the parking lot, it was brand new and gorgeous. She was wearing a beautiful Mary Kay suit. She was the very picture of success.

Vigeland: And what kind of income are we talking about?

Sole-Smith: What I was then told when I met with a recruiter, she told me that if I held one skin-care class a week, I would be able to earn $17,040 a year. She also told me, 'A lot of my consultants are making $100 an hour.' In reality, the best that we were able to figure out for actual numbers is that of the U.S. sales force of 600,000 women, maybe 300 of them are making six figures. The rest are, at best, making $25,000-30,000 a year. It's really a minimum wage or a sub-minimum wage job.

Vigeland: And you use the phrase, "the best we were able to figure out." This is not a public company, so it's not easy to get numbers like this.

Sole-Smith: All they tell us is that they do $3 billion in wholesale orders a year. They don't track retail sales. So we don't know, once you buy your inventory from Mary Kay, how much of it ends up in the retail market; we don't know how much the consultants are actually pocketing as their salary.

Vigeland: What's really striking in this story is the women that you interviewed who ended up with thousands of dollars in debt, marriages fallen apart because of this endeavor. How is it that so many of these consultants get in over their heads when it only costs $100 to start up?

Sole-Smith: Right. Mary Kay loves to say that. It's a very low barrier to entry. A hundred dollars, all it gets you is a couple of samples, some sales brochures, some catalogs to pass out to your friends. But it doesn't give you everything you need to really run the business. So as soon as you buy that $100 starter kit, you're at your orientation, step one to launch your business and be successful is place your inventory order -- before you've made a single sale, before you've even met with a customer.

Vigeland: And you mentioned in the article that when you said, 'Well I don't have that kind of money' up front, they suggested that you apply for a Mary Kay Rewards Visa card.

Sole-Smith: They certainly did. Antonella explained to me that she actually discourages her sales recruits from spending cash on their products. She said the better way to go would be to open up this credit card. When I said to her that I'm not looking to go into any credit card debt, she she said, 'Oh no, no, it's not debt. It's an investment in your business.'

Vigeland: You do point out that the Federal Trade Commission has never taken any action against Mary Kay. The federal government has not done anything. But you do bring up the phrase Ponzi scheme. What is the difference between Mary Kay, as you describe it, and a pyramid scheme?

Sole-Smith: The FTC defines a pyramid scheme as a business where the primary way you make money is by recruiting others to join the program and charging them fees for participation -- not by selling products to the retail public. Really, the only way to make money is by recruiting other people to sell products as part of their sales unit, which they then get paid a commission off of every time those women place a wholesale order. And that does look like a pyramid scheme.

Vigeland: What's been the reaction from the company?

Sole-Smith: So they want to have it both ways. They really want to say, 'Oh we offer tons of support for our women. We are there for them every step of the way. But if they're doing badly, it's not our fault. They're just independent business people.' And I don't think that works.

Vigeland: Virginia Sole-Smith is a New York-based journalist. Her article in the August issue of Harper's is "The pink pyramid scheme: How Mary Kay cosmetics preys on desperate housewives." Thank so much for joining us.

Sole-Smith: Thank you for having me.


Vigeland: We called Mary Kay for a response. This is what they said:

Mary Kay has a long and strong history as a premiere skin care and color cosmetics company - we've been in business for almost 50 years. We have more than 2.4 million independent beauty consultants in more than 35 countries worldwide selling our products and for the vast majority of them, it's been an extremely positive experience. That said, of course, like anyone who starts a small business, it may or may not be a fit and no entrepreneur is guaranteed success - it's a lot of hard work. Different people start a Mary Kay business for different reasons - some are looking for just a little extra income; some, especially with the current downturn in the economy, are looking for a new career; some are looking for the social aspects.

What's true for every independent beauty consultant is a simple model - she signs an agreement directly with the company, purchases her products directly from the company at a wholesale price and then sells the product to her customers at a suggested retail price. If she sells a $13 lipstick and bought it for $6.50, the profits are hers to keep. It's each person's choice on how much product she wants to purchase from the company to sell to her customers. What's also true for everyone who starts a Mary Kay business and isn't pleased: if she does decide to buy inventory, she can return any products she purchased and we will refund 90 percent of the purchase price within one year of purchase. The incredible and continued interest in Mary Kay along with the longevity, reputation and success of the Company speaks for itself.

About the author

Tess Vigeland is the host of Marketplace Money, where she takes a deep dive into why we do what we do with our money.
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Wow! It's so funny to see the pink ladies circling the wagons in an apologist ritual. 1.) This article isn't one-sided. Only one side consented to be interviewed. Mary Kay copped out with a written statement that can't answer questions very well. 2.) It's the gambit of the desperate or those that prey on the desperate. 3.) It is, by definition, a pyramid structure. If anyone comes to you with a "business opportunity" - they're recruiting you! Run!

Even worse? Now they're posing the scheme as "career development" and building professional "executive" women. Ha! You're building a permanent underclass. The facts are the facts no matter how the pink ladies obfuscate them.

Wow! It's so funny to see the pink ladies circling the wagons in an apologist ritual. 1.) This article isn't one-sided. Only one side consented to be interviewed. Mary Kay copped out with a written statement that can't answer questions very well. 2.) It's the gambit of the desperate or those that prey on the desperate. 3.) It is, by definition, a pyramid structure. If anyone comes to you with a "business opportunity" - they're recruiting you! Run!

Even worse? Now they're posing the scheme as "career development" and building professional "executive" women. Ha! You're building a permanent underclass. The facts are the facts no matter how the pink ladies obfuscate them.

SEVEN DOLLARS PER HOUR from Estee Lauder, Clinique, Lancôme, Chanel. Dishwasher $9 per hour college kids. I make over $100 per day with Mary Kay.....Love You Mary Kay and thank you! Professional makeup artists make less than a dishwasher...for all the rest

Very disappointing that a "professional" reporter as Tess would put her name on a biased, very one-sided "interview" with an apparently disgruntled individual who maybe has a hard time saying "no" to someone who tries to sell her something. I can't understand why Tess didn't find a Mary Kay consultant or, better yet, a seasoned, successful sales director, to give the side of the story that proves you can be extremely successful in Mary Kay, and would DISprove many of Sole-Smith's claims that MK is any kind of pyramid (recruits do NOT pay a fee to their recruiter, and they can EXCEED their recruiter in sales and success); you DON'T have to buy any inventory up front, even if someone highly recommends you do, and you don't have to buy it on credit; and the $100 starter kit has substantially more than the couple samples and brochures or catalogs Sole-Smith claims - does she think you can run a whole business for a year or longer just on the same initial $100? Come on, you have to invest back in your business to make it grow, and not run dry! How silly!

When people like NotFooled make comments like, "The business model from what I have seen (and ms. Sole-Smith points this out) is to entice women, many of them complete novices, into purchasing obscene amounts of inventory for their "businesses" before they have sold anything! This is because their "up-line" gets a commission on the big inventory packages." it proves how ignorant they are of how Mary Kay pays commission for one thing (they make the same percentage of commission on the "small potatoes" orders as the "big inventory" and that percentage is determined by how many active recruits they have in their group). But the main thing is, it makes me wonder...WHAT RETAIL STORES CAN YOU OPEN, SELLING PRODUCTS, WHERE YOU *DON'T* HAVE TO BUY INVENTORY FIRST? You people are balking about the idea of opening a business for yourself where you DON'T have to invest anything first! But the fact is, with Mary Kay you DON'T have to buy inventory first - it is just a sound practice if you do, but not if you aren't going to work the business and actually find customers to BUY the product.

Consultants don't buy their inventory from their director or recruiter - they buy it directly from corporate Mary Kay. I realize BusyPoorDad wrote his ill-informed response a year and a half ago, but anyone new reading this article might believe his input is accurate, and it is not.
Has anyone noticed that in 50 years in business, Mary Kay did not really advertise their products the way most companies do? Only in recent years have there been some print and TV advertising. This is because of word-of-mouth advertising, and the recruitment plan of business to bring in new sales consultants who will also use word of mouth to promote their direct selling practice.
And the person who gets acne FROM Mary Kay is the exception, not the rule.

A pyramid scheme is where the upline (the higher-ups in the company, the ones who were in early on) make money directly off their recruits; that is, the recruits pay their director or recruiter to be in their circle, basically. That is not the same thing as a commission, and that is not how it works in Mary Kay. The commissions earned in Mary Kay from the sales of people "under" you is paid BY MARY KAY. That is NOT a pyramid. Recruits only pay Mary Kay, the company, for the initial kit, any product purchased for sale or demos, business cards and other selling tools if they buy them from Mary Kay, and website if they want one (which they would be foolish NOT to do).

Wow, I have been in Mary Kay for 15 yrs, and let it go when I moved and started doing others things in my life.. but I came back to it a yr ago. Im going to have to say that the article was very biased and full of incomplete information. Actually, your business is what you make of it. If you dont do anything, you wont make anything. Simple. If you go to work anywhere, and do nothing, you get fired, unless your in Congress. When you get your starter kit, you are open able to begin your business. No, there is no magical money tree in there.
Yes, when you go to makeovers, you listen to the marketing plan, you will get a makeover, and once you say no, we get no. I think belara is not being very honest there. And no waaaayyyy anyone is going to order your product without you knowing it. I mean ....Seriously!

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