2 Ways to Not Lose Your Shorts in a Pyramid Scheme

pyramid scheme

130350858_4d27ba99c1_zI?m sure we?ve all been invited to at least one home ?party? at some point or another. You know, the kind where you are talked into to going to ?help a friend.” Then you hear a constant sales pitch for an hour (or two), and then are guilted into spending at least a few dollars on a product you?ll likely never use, and finally you are offered some kind of crappy snack on your way out the door.

This the business model of lots of home businesses, like Tupperware, Pampered Chef, Scentsy, Thirty-One, Mary Kay, and many more.

What?s amazing is how many people get sucked into hosting these parties, attending these parties, and even signing up to do things for the company to put their friends and family in the same awkward position they were just in.

I?ll admit it, a few years ago I was sucked into the world of home parties by one of these very companies. I signed up to be a consultant and I worked hard to peddle my products for about a year with mild success.

Luckily, I was never talked into ordering thousands of dollars of product that I hadn?t sold just so I could ?qualify? for a new business level or get some lame dollar-store prize.

Since then I?ve gotten smarter and while I am still a part of one of these pyramid schemes (although they prefer the term multi-level marketing, it?s a fine line), I am able to participate without guilting anyone to buy my products and without being part of the 99 percent that lose money in these companies.

Here are a few ways you can keep yourself from losing your shorts in a pyramid scheme, straight from a still active Mary Kay consultant.

Don?t Sign Up for the Pyramid Scheme

Some of these pyramid schemes have decent products, and that?s how they continue to thrive and pull new people into their company. I do use products from several of these companies, but the easiest way to avoid losing money in a pyramid scheme is to avoid signing up in the first place.

Most companies get people to sign up by telling them that by signing up they get products at wholesale, which cuts the cost between 20-50 percent. The trouble is that in order to get products at this cheaper cost you often have to order several hundred dollars of product at a time several times throughout the year in order to ?stay active? and keep your discount.

If you aren?t comfortable paying full-price for products, perhaps you should look elsewhere instead of signing up to save money on products. Many times the larger ordering volume that?s required will?only end up costing you more?than you really should be spending in the first place.

Don?t Order More Than You Need

Just in case you do end up signing up for a company to get a discount or even to sell their products, make sure you don?t order things you don?t need.

For instance, when I signed up for Mary Kay in 2013 I was told that I needed to ?invest? in an inventory of products. It?s now 2015 and now I have to dispose of some products that I?ve never sold despite having been a very active salesperson for my first year in the company.

Besides the products, there are lots of other little costs that add up if you decide to sign up to sell the products. Sending mailers out to your customers, setting up a company website, and buying supplies and samples for parties all add up very quickly. If you aren?t earning any money from your business it can be hard to justify these costs and you can end up losing money. That’s also not to mention the clutter you can accumulate in your house thanks to the given product you have to sell.

As mentioned, I?m still an active sales consultant to this day although I?m no longer out actively seeking to do home parties or sell my products. Instead, I only earn a little bit of money each month from customers I made contact with during the year that I was more active with my business. The only reason I?m still a member of the company is because I can get my makeup for free via my sales to customers.



What’s your take on pyramid schemes? Have you ever been a part of one? What’s the most ridiculous one you’ve seen before?



Photo courtesy of: Mathew Knott

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  1. I have never sold anything in a pyramid scheme, but I know plenty of people who have and still do work for one. One lady I know told me she spend $1,000 on Arbonne products to become a dealer than never sold more than a few hundred dollars in stuff.

    • Kayla says:

      Ugh! That’s one of the ways they get you. Luckily I never fell for that type of stuff. I have actually made a profit in my company (although only a small profit).

  2. The best way to not lose money is to not sign up! My friend in college was invited to a party and I went along with him. When we got home, we crunched the numbers and saw just how hard it would be to make money doing this. He ended up passing on joining and saved himself a lot of money and headaches.

    • Kayla says:

      I agree, the best way is to not sign up at all. That’s why I say if you don’t want to pay full-price for the products as a customer you shouldn’t sign up to sell them just to get a discount.

  3. I do not partake in pyramid scheme. It is illegal and very risky ?get-rich-quick? schemes that can cost a lot of people a lot of money. And, I don’t know how these people are encouraged and how this scheme is still here despite the fact the most people become victims. My warning sing is that the promoter makes claims like ?this is not a pyramid scheme? or ?this is totally legal?. And, my advice is use just your common sense.

    • Kayla says:

      I do understand what you mean Jayson, but unfortunately these companies have been to court multiple times to prove they are not pyramid schemes (despite the fact that they basically are), so they remain legal. It’s a tough situation.

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