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Vector Marketing

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Vector Marketing
TypeSubsidiary
IndustrySales
Founded1981
HeadquartersOlean, New York, US
ParentCutco Corporation
Websitewww.vectormarketing.com

Vector Marketing is a multi-level marketing subsidiary company and the domestic sales arm of Cutco Corporation, an Olean, New York-based cutlery manufacturer. 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. The company has been the subject of criticism and lawsuits for its business practices. Salespeople are generally young and recruited from high school or college; Vector's recruitment tactics have been described as deceptive. Vector denies being a multi-level marketing company, but most sources agree that it is. However, the company is not technically a pyramid scheme as its detractors claim, as it does sell a product. The company has faced numerous lawsuits over its pay structure and treatment of its salespeople, who are mostly independent contractors instead of employees.

History

Vector Marketing Corporation is a wholly owned subsidiary of Cutco Corporation. The firm originated in a joint venture between Alcoa and Case Cutlery known as Alcas Corporation.[1] In 1947, it completed a factory in Olean, New York, and shipped the first set of Cutco Cutlery that year. Additionally, in 1974, Alcoa purchased Case Cutlery's share of Alcas.[2] Executive Chairman James Stitt came to Olean in 1975 to work for Cutco; his son, James Stitt, Jr., later went on to serve as President and CEO as of 2020.[2]

In 1981, Vector was founded in Philadelphia, PA as an independent seller of Cutco Cutlery products.[3] In 1985, members of Alcas management purchased the firm in a management buyout.[3] Since 2005, Cutco has opened 16 retail locations where customers can try out knives, take cooking classes, garden, or learn floral arrangement.[2]

In 2009, Alcas changed its name to Cutco Corporation, with Vector its domestic sales subsidiary.[1]

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

Business model

Vector Marketing is a multi-level marketing 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] Vector denies being a multi-leveling marketing company, or a pyramid scheme, but the Los Angeles Times says that it meets the Federal Trade Commission's exact definition of a multi-level marketing company. However since it does actually sell a product, it is not technically a pyramid scheme.[5][9][10]

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.[11][12] 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.[12][13]

Some of Vector's former independent contractors have accused Vector Marketing of deceptive business practices.[14][15] 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.[16] 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 around selling knives by commission.[10]

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.[14][15][17] Those who work for Vector Marketing are independent contractors and are not reimbursed for the time they spend at training sessions.[7][14]

Lawsuits

In 1990, Vector was sued by the Arizona Attorney General.[12] 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.[18][12]

In 1994, Wisconsin ordered Vector to stop deceptive recruiting practices, leading the company to temporarily stop recruiting in the state.[12][18][19]

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).[20][21][12][22][23][24][25][26]

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.[27][28][29][30][31] In 2011, Vector settled the lawsuit, "Harris v. Vector Marketing Corporation", for $13 million.[10]

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.[32][33]

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.[34][35][32]

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.[34][35]

References

  1. ^ a b Shaw, Jeff (December 20, 2008). "Alcas changing its name to Cutco". Olean Times Herald. Retrieved May 26, 2018.
  2. ^ a b c Pride, William; Ferrell, O.C. (2020). Marketing. Cengage. pp. 395–396.
  3. ^ a b "WHO WE ARE". Vector Marketing. Retrieved March 24, 2021.
  4. ^ "Sharpening Strategy and Leadership". Vistage. Retrieved November 19, 2020.
  5. ^ a b 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. ^ "Is Vector a Scam? No. | Vector Marketing". Vector Marketing (US). Retrieved August 8, 2020.
  10. ^ a b c David Lazarus (June 23, 2020). "Column: Beware of this 'important opportunity' for job-seeking students". Los Angeles Times. Retrieved August 8, 2020.
  11. ^ Behm, Carly (October 19, 2016). "Students Question Company's On-Campus Recruiting". Loyola Phoenix. Retrieved May 31, 2017.
  12. ^ a b c d e f Robbins, Rebecca (August 2, 2011). "The Company that Cuts Both Ways". Santa Barbara Independent. Retrieved August 2, 2011.
  13. ^ Episode 10. Street Cents, January 14, 2002 Online copy at the Internet Archive
  14. ^ 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.
  15. ^ 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.
  16. ^ Holt, Shirleen (February 22, 2004). "Help-wanted pitch may have surprise curve". The Seattle Times. Retrieved July 24, 2010.
  17. ^ Anderson, Matt (October 6, 2004). "Vector policies questionable". MTSU Sidelines. p. 1. Retrieved June 5, 2008.
  18. ^ a b McKay, Peter (July 1, 1996). "For vector marketing, the question of the hour". Washington Post. Retrieved November 7, 2018.
  19. ^ Johnson, Paul (April 21, 1994). "Vector suspends recruiting". Wisconsin State Journal. Retrieved November 7, 2018.
  20. ^ Gripenstraw, Kelsey (April 20, 2011). "Beware of Campus Scams". The Bottom Line. University of California, Santa Barbara. Retrieved May 18, 2011.
  21. ^ "Student Group Wants to Slice Up Vector". Consumer Affairs. Retrieved June 16, 2020.
  22. ^ "Vector marketing makes false promises". Loyola Phoenix. September 2, 2012. Retrieved June 16, 2020.
  23. ^ Gore, Alisha (September 29, 2004). "Students unite against Vector". The Seahawk (UNC Wilmington). Retrieved June 16, 2020.
  24. ^ Stallings, Ashley (September 23, 2004). "Group trying to warn others". Daily Eastern News (Eastern Illinois University). Retrieved June 16, 2020.
  25. ^ "Cutco Knife Distributor Finds Protests Close at Hand". The Cornell Daily Sun. October 23, 2003. Retrieved June 16, 2020.
  26. ^ "The truth behind the poster". University Press (Florida Atlantic University). September 14, 2009. Retrieved June 16, 2020.
  27. ^ 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.
  28. ^ "Court opinion". Harris v. Vector Marketing Corporation. Justia.com. May 5, 2011. Retrieved May 14, 2011.
  29. ^ "Preliminary approval of $13 million settlement granted despite concerns". AllBusiness.com. May 31, 2011. Retrieved February 5, 2012.
  30. ^ "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.
  31. ^ "Harris v. Vector Marketing Corp. - Casetext Smarter Legal Research". Retrieved May 18, 2021.
  32. ^ a b Walsh, Sam (October 14, 2018). "Vector marketing "preys on desperate students," sources allege". The Quad. Retrieved November 7, 2017.
  33. ^ Bonner, Jonny (August 22, 2014). "Door-to-Door Saleswoman Alleges Rape". Courthouse News Service. Retrieved November 7, 2018.
  34. ^ 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.
  35. ^ 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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