Cutco Probably Asked You to Sell Knives. Now It’s Getting Sued.
For decades the company has recruited students for ‘direct sales,’ and many say they were misled and left unpaid.
Just after graduating from high school, Nicholas LeBerth got an ambiguous letter inviting him to an job interview. The firm was called Vector Marketing and it promised generous compensation and flexible work schedules.
The job was selling kitchen knives, first to his parents.
“I started mostly trying to sell to my family and ran out of them to sell to in like two weeks,” LeBerth told The Daily Beast.
Vector Marketing is the sales wing of the Cutco Corporation, and a “direct sales” company that focuses its recruiting on high school and college students, and is even endorsed by some professors. And, just off a multi-million dollar settlement over unpaid training, the company is now being sued by managers who say they should be employees, not contractors.
The Vector model depends on a revolving door of contractors that allows Vector access to a large pool of salespeople at little cost. The company works with some 60,000 students yearly as independent contractors, according to a recent profile in the Santa Barbara Independent.
But many young people who attend the information sessions say they are surprised to find out in training sessions that they’re supposed to drum up their own list of customers, starting with mom and dad.
And now, back-to-back lawsuits may change the way the company operates.
In February, Vector Marketing settled a class-action lawsuit with sales representatives who were required to attend training sessions but were not paid. A judge certified the class action despite Vector Marketing’s claims that the contractors were not employees and that there were differences between those who create customer lists and those who did not. Vector paid out $6.75 million total to plaintiffs, which included LeBerth who received some compensation.
“We settled the case, not as an admission of fault or liability, but to better invest our time, money, and energy into our business,” Joel Koncinsky, Vector’s public relations manager, told The Daily Beast. “Our reps are not paid for training but, in turn, we do pay them for each appointment completed even if no sale is made. It’s a mutual commitment.”
Then in September, Vector faced a new class-acton lawsuit initiated by a division manager, alleging unfair labor practices because he, too, was classified as an independent contractor. Such a classification denied him and others in his classification overtime pay, according to the suit.
According to the suit, division managers are the highest-ranking class of workers who are not employees of the company.
The suit is still in the early stages, and the attorneys behind it did not return a request for comment. But if it is successful, it could lead to further cases about how the company’s other independent contractors are classified.
In 1996, Vector stopped recruiting salespeople in Wisconsin after concerns from authorities that it misled them about the hourly rate. In fact, they are paid by the appointment, regardless of how much work it took to set the appointment up. That is still a common refrain among Cutco contractors, many of whom take to the internet to complain.
“Vector Marketing doesn’t offer a pay of fifteen dollars an hour, it offers fifteen dollars per in-home appointment,” former marketing Kaitlyn Tomko wrote in a blog post in 2015. Tomko also claimed salespeople must get to their appointments and set them up on their own time.
“Our positions aren't for everybody,” Koncinsky admitted. “But for people that have a positive attitude, great work ethic, and want to gain valuable experience while getting paid what they're worth? They have the opportunity to make career-like income, even at a young age.”
Koncinsky indicated the company has no plans to pay for training.
And, until 2011, Vector required would-be contractors to purchase a knife set for work, which the company referred to as a refundable deposit, Koncinsky said. Each recruit had to invest money in the company before receiving a paycheck.
“Our representatives are not required to purchase a sample set to begin working with us,” Koncinsky said.
Despite these practices over the decades, Vector is endorsed by a half-dozen professors from respected universities who sit on its academic advisory board. They provide the company with feedback on how to connect with its young salespeople, advisory board member Victoria Crittenden, a professor and chair of the marketing division at Babson College, told The Daily Beast. Professors from Belmont, the University of South Carolina, the University of Calgary, the University of Texas at Austin, and Oklahoma City University did not return requests for comment.
“You know, ‘you’re really going to have to make a bigger shift in the digital world, because that’s where the college students are living right now,’” she said. “The academic advisory board is an opportunity for the company to basically run ideas past us.”
Crittenden’s academic research focuses on direct sales, a holdover from when her mother took a direct sales job with Avon to support the family.
“It’s this idea that direct selling offers such a wonderful opportunity, back in the ‘60s and ‘70s, way back then, to enable women who may not have had other opportunities for work,” Crittenden said. “Keep in mind, it was a different time period back then.”
She said she doesn’t work directly with Vector Marketing’s independent contractors, but that she’s had students who’ve worked for it from time to time. The company gives them hands-on experience in the real world of business, she said.
Crittenden said she’s aware of the lawsuits against Vector Marketing and the online testimonials from disgruntled contractors. But those do not worry her, she said.
“Just like any company that’s out there, things are gonna happen, and they’re gonna settle,” Crittenden said. “But how much of what’s online is true? How much is a person having an unhappy experience?”
“The thing is, when these people sign up to be independent contractors, they know exactly what they’re selling,” she said, referring to the students, some as young as 17 years old. “If you have a problem selling a $500 set of knives, why sign up to be a salesperson?”
And many of the initial subsequent sales would also be to friends and family of the new contractor.
And the question of exactly how much they know when they sign up remains. When The Daily Beast followed up on job postings listed in the Rochester, New York area, the application website told students they were applying to work for a small business.
“What is the job though?” The Daily Beast texted a listed number.
“Super busy right now, sorry. Check out the doc and it will provide further instructions.”
A follow-up text from a different number said the job was “a little long to explain over text” but essentially “talking with customers, answering questions, and helping place orders.”
Then it asked when this reporter was available to come in for an interview.