Vector Marketing was accused of running a pyramid scheme targeting high school kids

Cutco, an American cutlery company founded in 1949, built its business on a direct sales model operated through its subsidiary Vector Marketing. The model targeted a uniquely vulnerable demographic: high school and college students. Recruiters used campus job boards and online ads promising '$15-17 per hour base pay' and 'flexible hours.' The reality was different: students were asked to buy a $175+ starter kit, recruit their friends and family, and sell $30 steak knives at in-home demonstrations. Most made far less than minimum wage after expenses.

Critics, including the Los Angeles Times, accused Vector Marketing of operating a pyramid scheme. Under Vector's model, salespeople earned commissions on their own sales and bonuses for recruiting new salespeople — who also had to buy starter kits. The LA Times found that Vector met the FTC's definition of a multi-level marketing company. Vector appeared on Hawaii's list of state-authorized MLM companies. The company faced numerous lawsuits over its pay structure, its classification of salespeople as independent contractors, and its deceptive recruitment practices.

The business model weathered decades of lawsuits and criticism. Vector removed its kit deposit in 2011 under legal pressure, but still required new recruits to buy sample products. The company's defense was always the same: it is a single-level direct sales company, not an MLM — even as its compensation rewarded recruitment. For the thousands of young Vector salespeople, Cutco's model was a lesson in how a company stays profitable by transferring the cost of sales to the salespeople themselves.