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Before answering the question “Is Mary Kay a Pyramid Scheme,” make sure you understand the difference between an MLM and a Pyramid Scheme.
Have you heard of MaryKay? Maybe you or your friend sold their products and now you are worried they are a pyramid scheme. You are not alone.
What is MaryKay?
Mary Kay Incorporated is a leader in beauty products and they have over 3.5 million independent beauty consultants around the world where they sell over 200 products in 40 different countries. Mary Kay Incorporated became quite popular and helped women to achieve financial independence while continuing with their family’s or other jobs and giving a great deal of flexibility in working from home.
Mary Kay Allegations and Lawsuits
Many of the lawsuits involving the Mary Kay Company are actually initiated on behalf of the company against individuals who have sold their products. The company has sought an injunction to prevent people from selling Mary Kay cosmetics at their retail locations stipulating that one of the agreements in being a distributor is that you’re not allowed to sell at a retail location. A similar lawsuit was filed from the Mary Kay Company against Reibel saying that they illegally sold expired Mary Kay products and that the company not only didn’t get the Mary Kay codes from independent Beauty Consultants, but they didn’t properly store and handle the products and in selling expired products violated the terms of those consulted to are contractually obligated to keep the products properly stored and handled.
One of the more popular lawsuits involved the former national sales director, Amy Dunlap. Mary Kay initiated the original lawsuit against Dunlap claiming that she violated her agreement but in an amended answer to the lawsuit, Dunlap filed claims that Mary Kay violated the Texas business and commerce code and promoted a pyramid scheme. She says that she spent over $125,000 to purchase products from Mary Kay but that Mary-Kate intentionally deceived her as to the extent of the legitimate retail value of those goods. In her response she claims:
“Throughout her relationship with Mary Kay, until the very end, she was deceived by the company’s continuous, non-stop, orchestrated campaign through speeches at the annual Seminars, business opportunity meetings, CDs, DVDs, cassette/VCR tapes, brochures, letters and emails, representing to her and the other Consultants in her National Sales Director unit (known as her “Area”), and throughout the company for that matter, that they were being provided by Mary Kay the business opportunity of “owning” their “own business.”
In spite of the many lawsuits filed by the company and the one lawsuit involving Amy Dunlap, there are very few lawsuits or serious allegations against the company. The Better Business Bureau has only 13 complaints over the last 3 years and this business has been operating for 56 years. Of those complaints there are a few pertaining to problems with products and services where the company didn’t issue a refund for products that the beauty consultant could not sell and wanted to return.
Why is MaryKay not Considered a Pyramid Scheme?
Even though the Mary Kay Company does play some emphasis on recruiting, they place more of an emphasis on selling their products which is the hallmark of a legitimate MLM. They are not considered a pyramid scheme because they do not provide better bonuses for recruitment over product sales, a higher emphasis on recruitment over product sales, nor do they make exaggerated claims about the earning potential for their independent beauty consultants.
This does not mean, however, that there aren’t cases where consumers have problems with the services or the products.
What can I do?
If you have dealt with Mary Kay and you have an issue with the company policies, a lack of refund where you were otherwise guaranteed one, and you tried to bring your complaint to their attention but received no help, there are things you can do. One of your options is consumer arbitration.
