The Mary Kay Inventory Scheme: How Pink Predators Put Families Into Debt & Bankruptcy
As a spouse or loved one who has ever wondered how so many women can put their families into financial peril with Mary Kay Cosmetics, here is just one way it often happens: The Mary Kay Inventory Scheme.
As a company with $3 billion in sales, Mary Kay Cosmetics claims it does not track the sales that go to the end user. In other words, the reported $3 billion in sales is the wholesale amount of cosmetics it sells to its sales force.
Conveniently for Mary Kay Cosmetics, as women spend hundreds and thousands of dollars per month on Mary Kay products in the hopes of eventually selling it, the actual amount of wholesale inventory that is ordered and subsequently sits on consultant “shelves” in their “stores” goes unchecked and unreported.
Mary Kay’s ‘Plausible Deniability’…
During a 2012 radio interview, Crayton Webb, Mary Kay Cosmetics’ Director of Corporate Communications and Corporate Social Responsibility, claimed repeatedly that Mary Kay consultants can start their “businesses” with only $100.
While that may be technically true, it is also not the normal practice encouraged by Mary Kay’s predatory sales force.
Here is an example how one Mary Kay predator, Cindy Keske, spins the “need” to buy inventory.
‘Not Required’ But Strongly Encouraged
Like other multi-level-marketing companies, though they are careful to say that large inventory purchases are “not required,” new consultants in Mary Kay force are strongly encouraged to load up on inventory for their “stores” as Mary Kay’s Keske demonstrates in her video.
Virginia Sole-Smith, the writer who wrote The Pink Pyramid Scheme: How Mary Kay cosmetics preys on desperate housewives explains on her blog:
Just because you aren’t required to buy inventory in Mary Kay, doesn’t mean you won’t get the hard sell about why you’d be crazy not to buy inventory. My experience and the experiences of the women in my story suggest that you’ll be pressured heavily to buy inventory “if you’re serious about your business.” [Emphasis added.]
A basic store, according to the website of a former Mary Kay “director-turned-coach,” runs from a low of $600 to a high of $4800 for the Pearl Star Package.
Based on the experiences of many Mary Kay victims and their families, it is the large amounts of inventory–and the continual push for production (funded largely through inventory purchases often placed on a Mary Kay credit card) that drives so many Mary Kay consultants and directors into debt and, in some cases, bankruptcy.
As the website Pink Truth notes for new consultants:
Get ready for the “inventory talk.” Most importantly, you’ll be told that inventory is “optional” and that “it’s completely your decision.” Those things are said so that if you later regret ordering that inventory, the recruiter or director has an “out.” It was your choice, remember? [Emphasis added]
Mary Kay National Sales Director Diana Sumpter posts her suggested inventory as having a “full store” — $3600 in wholesale. How does she recommend women pay for it? Sumpter recommends women out themselves and their families into debt.
The most popular way to fund business is to go to the bank and borrow it, now; this is NOT a car or TV. One skin care class a month can cover your payment to the bank, and all of the other sales will be split between product replenishment and salary for you! It doesn’t matter if you start with the $600 o the $3,600 inventory, the payment will be the same because the larger the loan, the longer you can spread out the payments, and ALL OF THE INTEREST IS TAX DEDUCTIBLE
By borrowing money, you are establishing credit in your name, plus that monthly payment gives you a wonderful incentive to get out there and share your product! [Emphasis added.]
While NSD Sumpter does not “require” new consultants to buy inventory, she does openly give her opinion (in ALL CAPS and exclamation points) on what she, the National Sales Director, thinks is best.
Often a new Consultant will ask that I suggest for them, Of course this is a personal financial decision. However, because of my experience in the business, I do offer the following suggestion: If you are planning to succeed and want PROFIT RIGHT AWAY AND OFFER THE ULTIMATE MARY KAY EXPERIENCE TO YOUR CUSTOMERS, if possible order the FULL INVENTORY. If you are absolutely TERRIFIED or looking for HOBBY RESULTS, you may consider a partial inventory. But, know that you will need to reinvest! [Emphasis added.]
And, if there is a problem paying for it, Sumpter, Mary Kay’s National Sales Director has a host of options available–including the Mary Kay Cosmetics Visa–for women to order their inventory [see page 4].
Mary Kay Inventory – NSD Diana Sumpter
Mary Kay National Sales Director Sharon Buck, in her literature below, also heavily promotes having more inventory on hand.
Mary Kay Inventory and Money Management – NSD Sharon Buck by MaryKayVictims
To make matters worse, once Mary Kay consultants have made director status, the hamster wheel of maintaining “production” begins.
Mary Kay sales directors have quotas–or minimum production requirements (aka wholesale inventory purchases)–to meet per month. That number is $4,000.
If the sales director and her unit fall short for two consecutive months, the director may lose her directorship.
- For example, if a director’s unit only orders $1500 in a given month, very often the director will make up the $2500 difference with her own personal order on credit card(s), or some other method–adding more to the burden of debt onto her family.
To many within Mary Kay, the fear of losing directorship is what causes women to rationalize the adding of more debt. If they don’t and the lose directorship, they would have to re-qualify for directorship again at some point in the future which is not an easy task for most.
Emotionally, the fear of losing the “elite” director status and no longer being near the top of the Mary Kay pyramid is, for many, akin to the fear of being excommunicated from a church or a family…or a cult. If she loses directorship, she is out, no longer part of the inner circle, or “the club”–she is a loser who must climb her way back to the top by starting all over.
As opposed to losing that “status,” many women will throw financial prudence and the well being of their families to the wind by ordering thousands of dollars of inventory.
Whether any of it ends up in consumers hands is not something that Mary Kay Cosmetics knows (or cares to know). After all, Mary Kay Cosmetics, with its $3 billion in wholesale sales, is doing just fine by turning a blind eye to the destruction it leaves in its pink path.
- [Inside the Pink Pyramid] But You Aren’t Required To Buy the Inventory…
- Pink Truth: Another Mary Kay Inventory Con
- Pink Truth: Mary Kay Creates Debt For Many Who Work Hard
- Pink Truth: Mary Kay Myth – You Can Start Your Own Business For Only $100.
- Pink Truth: A Mary Kay Sales Director Faces Failure After 30 Years
- Forbes: Million-Man Sales Force
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