Is Mary Kay An MLM? - The List

It's important to know the difference between an MLM and a pyramid scheme. Both operate in similar ways: Rather than hiring employees to sell their products, they recruit sellers (sometimes known as "distributors," "consultants" or "coaches") for their products, and the sellers in turn bring aboard other salespeople for a percentage of their profits. The most successful agents have a large network of sellers working under them and make most of their income from the commissions. 

But unlike legit MLMs, pyramid schemes are a scam. According to the Federal Trade Commission, a company is considered a pyramid scheme if their sellers can't earn an income off their own sales alone. If you have to bring in a minimum number of new recruits in order to see any profits, that's a red flag. Typically, pyramid schemes offer special bonuses or perks only to sellers who buy a certain amount of their product. And pyramid-scheme companies are also masters of the hard sell, promising big profits with little effort and urging the newcomers to join on the spot.

By the federal definition, Mary Kay is a legitimate MLM because its sellers aren't required to build a network of recruits. It's possible to earn income simply by selling the products. Consultants buy Mary Kay inventory at wholesale prices, then sell it at either the suggested retail price or a price they set themselves. However, their methods have been criticized as very pyramid-like.