Vector Marketing

Vector Marketing
Company typeSubsidiary
IndustryDirect selling
Founded1981
HeadquartersOlean, New York, US
ParentCutco Corporation
Websitewww.vectormarketing.com

Vector Marketing is a multi-level marketing subsidiary company and the marketing arm of Cutco Corporation, an Olean, New York–based cutlery manufacturer.

The company has been the subject of criticism and lawsuits for its business practices and has been accused of being a multi-level marketing company. The Los Angeles Times states that Vector meets the Federal Trade Commission (FTC) definition of a multi-level marketing company which is "businesses that involve selling products to family and friends and recruiting other people to do the same" because they sell their product through person-to-person sales. Salespeople are generally young and recruited from high school or college; Vector's recruitment tactics have been described as deceptive, and they have faced numerous lawsuits over their pay structure and treatment of its salespeople, who are independent contractors instead of employees. Vector claims they are a single-level direct selling marketing company, not a multi-level marketing company or a pyramid scheme.

The company was founded in 1981 in Philadelphia, Pennsylvania. The company sells via individual sales representatives who sell Cutco cutlery via one-on-one demonstrations, typically through home visits.

History

Vector Marketing Corporation was founded in 1981 by Don Freda in Glenolden, Pennsylvania, as an independent seller of Cutco Cutlery products manufactured by the Alcas Corporation.[1][2] It quickly became one of the top sellers of Cutco products, and in 1985, it was acquired by Alcas, which was struggling with sales following its split from former parent company Alcoa in 1983.[2][1]

In 2009, Alcas changed its name to Cutco Corporation, with Vector as its domestic sales subsidiary.[3]

In 2019, Vector Marketing reported $273.8 million in sales.[4]

Business model

Vector Marketing is a direct selling company that has built its sales force through advertising via newspapers, word-of-mouth, posted advertisements, letters and various media on the internet.[5][6][7][8] The Los Angeles Times claims that Vector meets the Federal Trade Commission (FTC) definition of a multi-level marketing company because they sell their product through person-to-person sales, but Vector argues that they employ single-level marketing and don't meet the FTC definition of "businesses that involve selling products to family and friends and recruiting other people to do the same"[9] because higher-level employees don't profit from the revenue of people they recruit.[10][11] The company has paid millions of dollars in lawsuits alleging deceptive recruiting practices.[11] Cutco does sell products, but they derive a large portion of their sales from new employees, their families, and friends.

The company recruits sales representatives from high schools and college campuses in the United States and Canada, sometimes through misrepresentation of affiliation with the school.[12][13] Sales representatives are employed as independent contractors to sell Cutco products (mainly kitchen knives) to customers, typically their friends and family members, via one-on-one demonstrations.[13][14]

Some of Vector's former independent contractors have accused Vector Marketing of deceptive business practices.[15][16] The firm frequently advertises in newspapers and on fliers posted on bulletin boards at college campuses, but the advertisements are often vague without explaining the nature of the job.[17] The LA Times advised caution to potential employees, who are often young and never had a job before. The company's recruitment practices often obfuscate the actual work they do, merely offering a good paying job without noting that the pay structure is based on selling knives by commission.[11]

Vector Marketing's compensation policies have also been criticized. Vector Marketing previously required sales representatives to make a refundable security deposit to procure a set of knives for demonstrations. However, the practices have changed and representatives are no longer required to make a security deposit. Sales representatives are loaned knives as well as given some as prizes for their "Fast Start" sales achievements.[15][16][18] Those who work for Vector Marketing are independent contractors and are not reimbursed for the time they spend at training sessions.[7][15]

Lawsuits

In 1990, Vector was sued by the Arizona Attorney General.[13] Arizona and Vector agreed to a settlement that punctuated a series of state actions against Vector's Tucson manager that spanned seven years. Vector agreed not to misrepresent its compensation system as part of the settlement.[19][13]

In 1994, Wisconsin ordered Vector to stop deceptive recruiting practices, leading the company to temporarily stop recruiting in the state.[13][19][20]

In 2003, a recruit who was successful in a lawsuit against Vector for failing to adhere to labor laws in New York, co-founded a group, Students Against Vector Exploitation (SAVE).[21][22][13][23][24][25][26][27]

In 2008, Alicia Harris filed a federal class action lawsuit against Vector. Harris alleged that Vector violated California and federal labor law by failing to pay adequate wages and illegally coercing employees into patronizing the company.[28][29][30][31][32] In 2011, Vector settled the lawsuit, "Harris v. Vector Marketing Corporation", for $13 million.[11]

In 2014, a lawsuit alleged that a girl was violently sexually assaulted by one of her customers while working for Vector and sued the company for not providing her with adequate training to prevent the situation.[33][34]

In 2016, the company paid a $6.75 million preliminary settlement for violations of the Fair Labor Standards Act in California, Florida, New York, Illinois and Michigan when workers sued for going unpaid for their trainings.[35][36][33]

In September 2017, Vector was sued in a class-action lawsuit initiated by a division manager who alleged that the company was engaging in unfair labor practices because, despite his position, he was still classified as an independent contractor, thus denying him access to overtime pay. According to the suit, division managers are the highest-ranking class of workers who are not officially classified as Vector employees.[35][36]

References

  1. ^ a b Freda, Don. "Vector History". Don Freda. Retrieved November 15, 2021.
  2. ^ a b "WHO WE ARE". Vector Marketing. Retrieved March 24, 2021.
  3. ^ Shaw, Jeff (December 20, 2008). "Alcas changing its name to Cutco". Olean Times Herald. Retrieved May 26, 2018.
  4. ^ "Sharpening Strategy and Leadership". Vistage. Retrieved November 19, 2020.
  5. ^ Moret, Darrin (September 6, 2013). "Did I Participate In A Pyramid Scheme?". Popular Science. Retrieved May 31, 2017.
  6. ^ Kellman, Beth Robinson (April 2, 2010). "Better Business Bureau offers advice on multilevel marketing". The Oakland Press. Oakland County, Michigan. Retrieved May 19, 2011.
  7. ^ a b Deal, A. Matthew (September 26, 2006). "High wages for student work – but beware". Campus News. The Carolinian. p. 1. Archived from the original on August 15, 2011. Retrieved June 5, 2008.
  8. ^ Gunn, Eileen (August 5, 2008). "Summer Job: Nice Pay, if You Can Cut It". The Wall Street Journal. p. D4. Retrieved April 21, 2011.
  9. ^ "Multi-Level Marketing Businesses and Pyramid Schemes". Consumer Information. Federal Trade Commission. May 18, 2021. Retrieved November 4, 2021.
  10. ^ "Is Vector a Scam? No. | Vector Marketing". Vector Marketing (US). Retrieved August 8, 2020.
  11. ^ a b c d David Lazarus (June 23, 2020). "Column: Beware of this 'important opportunity' for job-seeking students". Los Angeles Times. Retrieved August 8, 2020.
  12. ^ Behm, Carly (October 19, 2016). "Students Question Company's On-Campus Recruiting". Loyola Phoenix. Retrieved May 31, 2017.
  13. ^ a b c d e f Robbins, Rebecca (August 2, 2011). "The Company that Cuts Both Ways". Santa Barbara Independent. Retrieved August 2, 2011.
  14. ^ Episode 10. Street Cents, January 14, 2002 Online copy at the Internet Archive
  15. ^ a b c Lucchesi, Nick (February 4, 2004). "Vector Marketing targets unaware college students". News. The Journal. Archived from the original on April 27, 2011. Retrieved June 5, 2008.
  16. ^ a b da Costa, Polyana (August 21, 2004). "Firm misled sales recruits to sell knives, students say". Salem Statesman-Journal. Archived from the original on July 4, 2008.
  17. ^ Holt, Shirleen (February 22, 2004). "Help-wanted pitch may have surprise curve". The Seattle Times. Retrieved July 24, 2010.
  18. ^ Anderson, Matt (October 6, 2004). "Vector policies questionable". MTSU Sidelines. p. 1. Retrieved June 5, 2008.
  19. ^ a b McKay, Peter (July 1, 1996). "For vector marketing, the question of the hour". Washington Post. Retrieved November 7, 2018.
  20. ^ Johnson, Paul (April 21, 1994). "Vector suspends recruiting". Wisconsin State Journal. Retrieved November 7, 2018.
  21. ^ Gripenstraw, Kelsey (April 20, 2011). "Beware of Campus Scams". The Bottom Line. University of California, Santa Barbara. Retrieved May 18, 2011.
  22. ^ "Student Group Wants to Slice Up Vector". Consumer Affairs. August 12, 2003. Retrieved June 16, 2020.
  23. ^ "Vector marketing makes false promises". Loyola Phoenix. September 2, 2012. Retrieved June 16, 2020.
  24. ^ Gore, Alisha (September 29, 2004). "Students unite against Vector". The Seahawk (UNC Wilmington). Retrieved June 16, 2020.
  25. ^ Stallings, Ashley (September 23, 2004). "Group trying to warn others". Daily Eastern News (Eastern Illinois University). Retrieved June 16, 2020.
  26. ^ "Cutco Knife Distributor Finds Protests Close at Hand". The Cornell Daily Sun. October 23, 2003. Retrieved June 16, 2020.
  27. ^ "The truth behind the poster". University Press (Florida Atlantic University). September 14, 2009. Retrieved June 16, 2020.
  28. ^ Chen, Edward M. (September 4, 2009). "Order Granting in Part and Denying in Part Defendant's Motion for Summary Judgment". Harris V. Vector Marketing Corporation. United States District Court for the Northern District of California.
  29. ^ "Court opinion". Harris v. Vector Marketing Corporation. Justia.com. May 5, 2011. Retrieved May 14, 2011.
  30. ^ "Preliminary approval of $13 million settlement granted despite concerns". AllBusiness.com. May 31, 2011. Retrieved February 5, 2012.
  31. ^ "Levine v. Fair Political Practice Commission, 222 F. Supp. 2d 1182 (E.D. Cal. 2002)". Election Law Journal: Rules, Politics, and Policy. 2 (1): 121–129. March 2003. doi:10.1089/153312903321139103. ISSN 1533-1296.
  32. ^ "Harris v. Vector Marketing Corp. - Casetext Smarter Legal Research". Retrieved May 18, 2021.
  33. ^ a b Walsh, Sam (October 14, 2018). "Vector marketing "preys on desperate students," sources allege". The Quad. Retrieved November 7, 2017.
  34. ^ Bonner, Jonny (August 22, 2014). "Door-to-Door Saleswoman Alleges Rape". Courthouse News Service. Retrieved November 7, 2018.
  35. ^ a b Zavadski, Katie (October 18, 2017). "Cutco Probably Asked You to Sell Knives. Now It's Getting Sued". The Daily Beast. Retrieved November 7, 2017.
  36. ^ a b Roffman, Otis (February 5, 2018). "Round Table editor warns of Cutco and Vector Marketing's exploitation of student labor". The Round Table. Retrieved November 7, 2018.
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