Cutco Scam: Pyramid Scheme or MLM? [Review]

If you’re on the lookout for a way to make some extra money, you might have come across Cutco. It’s an MLM company that offers nutritional supplements and personal care products. Maybe a friend or a family member has mentioned it to you before.

Cutco offers an opportunity to work from home as one of their independent distributors. However, let’s be real here. Success with Cutco is unlikely. 

As an online entrepreneur, I have reviewed many similar online opportunities over the years. So I can tell you what you need to know.

To be clear, I want to emphasize that I’m not affiliated with Cutco. I’m not getting paid to write this review. So you can trust that what I’m about to say is honest and unbiased.

At the end of this review, I’ll also share with you the best alternative to the Cutco MLM program that has enabled me to make a full-time passive income online. So keep reading!

What is Cutco?

Based in the US, Cutco is a company that specializes in selling knives through direct sales. They’ve got a few different brands under their umbrella, including CUTCO Cutlery Corp., Vector Marketing, Ka-Bar Knives, and Schilling Forge, but their flagship product is the Cutco brand.

Cutco has an interesting history. Back in 1949, Alcoa and Case Cutlery joined forces to create a company that would produce stainless steel knives for Alcoa’s WearEver Cookware division. That’s where the name “Al-cas” comes from. Eventually, Alcoa acquired Case’s stake in the business and spun off the company as its own private entity in 1982, thanks to a management buyout. In 1985, Cutco made a strategic move and bought Vector Marketing Corporation.

In 2009, Alcas decided to rebrand itself as Cutco, after their flagship product. These days, Cutco is all about direct sales, and they use a multi-level marketing (MLM) model through their Vector Marketing subsidiary to sell their knives.

But it’s not just kitchen knives that Cutco offers. They also make and sell hunting knives, pocket knives, and sports knives. And the best part? All of their products are made in the US, and they come with a lifetime guarantee. 

Recommendation: Here’s The Best Alternative

What Products Does Cutco Offer?

If you’re looking for high-quality cutlery and kitchen accessories, you might have heard of Cutco. This brand is known for marketing its products directly to customers through independent sales representatives, who are often students. They even do in-home demonstrations so you can see the products for yourself.

While you won’t usually find Cutco products in retail stores, the company has opened six retail locations across the United States. Some of Cutco’s products are made in Mexico and China, but the knives are made in Olean, New York.

So, what kind of knives can you get from Cutco? Well, they offer a variety of options, including kitchen knives, table and steak knives, and even sporting knives. You can also purchase knife sets, as well as gift sets for the aspiring chef in your life.

One thing that sets Cutco’s knives apart is that they’re all made in the United States. Plus, their handles are crafted from thermo-resin, which is durable, dishwasher safe, and built to last. And if you’re worried about investing in a new set of knives, you’ll be pleased to know that Cutco offers a lifetime guarantee on their products.

Recommendation: Here’s The Best Alternative

Is Cutco An MLM?

Yes, Cutco is an MLM (multi-level marketing) company. It is a legit MLM business that operates on a network or direct sales model. But what does that mean for people who join Cutco’s MLM program?

First off, Cutco won’t provide you with a regular salary. Instead, you’ll be an independent distributor of their products and receive a 10% commission for every sale you make. However, the company doesn’t specify what you must do as a representative, so it’s up to you to figure out how to sell their products.

If you’re a student, you can work at Cutco for $15 per appointment, but the interview process can be lengthy and complex. Once you’re in, they’ll send you to a three-day training course that lasts about seven hours each day. They’ll also ask you to write down the names of everyone you know, contact family or friends, and create a sales script to schedule a presentation.

To sell the knives, you’ll use an already prepared presentation, and you’ll get between 10% and 50% of all sales, or $15, whichever is greater. However, it’s unlikely that you can make a good income selling Cutco products alone. Like most MLM programs, your success relies on recruiting new members to work under you. You’ll earn a commission on the sales and new recruits generated by the people you hire once they begin producing results.

This is where things get complex. Imagine a triangle, with you at the top and the people you recruit beneath you forming your “downline.” If each person in your downline recruits ten more people, and this goes on for a while, you could potentially earn a lot of money from commissions. However, most people in an MLM would rather earn a lifetime passive income from recruiting others than a one-time commission from selling products.

Having a large number of people in your downline is essential for success in an MLM like Cutco. But keep in mind that those at the top of the triangle have the most financial success, while those at the base have the least. So, if you’re considering joining Cutco’s MLM program, make sure you do your research and understand what you’re getting into.

Recommendation: Here’s The Best Alternative

Is Cutco A Pyramid Scheme?

No, Cutco is not a pyramid scheme. It’s a legitimate MLM (multi-level marketing) company that allows members to earn money by selling their products. Unlike a pyramid scheme, members don’t have to rely solely on recruitment to make money.

In contrast, pyramid schemes promise money or services to members in exchange for recruiting others. These schemes are often scams, and members at the bottom end up losing money. To join, you have to pay a membership fee to the company running the scheme. They’ll reward you by sharing a portion of the funds raised from each additional member you recruit.

However, the problem with pyramid schemes is that they’re unsustainable. They rely on new members continually joining and funneling money to the top of the pyramid. They almost never sell valuable goods or services and are solely focused on recruiting new members and soliciting more money from current members.

In the end, the only people who benefit from a pyramid scheme are those at the top of the pyramid. The majority of members at the bottom end up losing their money. A pyramid scheme would have to grow infinitely to make money for everyone who participates, which is impossible due to the finite population of the planet.

Vemma is a good example of a pyramid scheme. The FTC accused the producer of energy and weight loss drinks of operating a pyramid scheme in August 2015, claiming that it paid more to recruit new members than to sell products. The majority of participants, who were often college students and young people promised high compensation, lost money.

You may read our article on the difference between MLM and pyramid schemes here.

Is Cutco a Scam?

No, Cutco is not a scam. According to the Oxford Living Dictionary, a scam is defined as “a dishonest scheme; a fraud.” 

Now, let’s talk about the elephant in the room: can you actually make money by selling Cutco products? Well, the truth is that a majority of Cutco reps don’t end up earning any money. However, a select few do make a decent income, but it requires a lot of effort. Plus, these high-earning reps usually make their money by aggressively recruiting others.

On top of that, Cutco has been known to make some pretty questionable marketing claims to lure in potential recruits. So, while some people do view Cutco Knives as a scam, I can’t make that call myself.

Cutco Compensation Plan

If you’re considering becoming a Cutco sales representative, you might be wondering how you can earn money through this opportunity. Fortunately, there are two ways to do so: by selling Cutco products and receiving a commission, or by building a team and earning bonuses from their sales.

When it comes to earning commissions from your own sales, you can expect to receive anywhere from 20-30%, depending on the amount of product sold. Additionally, you can also earn bonuses based on the sales of your downline, or the people you’ve brought into the company. These bonuses range from 1-10%, but your downline must sell $1,000 or more per month for you to receive them.

To ensure that you get paid for your hard work, you’ll need to submit a complete qualified presentation report to your office manager every week. This helps them keep track of your progress and make sure you’re meeting the necessary requirements. You’ll also need to sign a standard Sales Representative Agreement and deposit a $200 security deposit for your demonstration knives.

If you’re interested in building a team and earning bonuses from their sales, Cutco has a specific compensation plan in place. You’ll receive a 10-50% commission on sales, or $15 for each presentation (whichever is higher). However, it’s important to note that a presentation doesn’t necessarily take an hour to complete, which is why earning $15 per hour may not accurately reflect your earnings.

To give you an idea of what you can expect to earn, Cutco has a tiered commission and bonus structure based on your career sales. If you’ve sold between $0-1,000, you’ll earn a 10% commission. This increases to 15% for sales between $1,001-3,000, and 20% for sales between $3,001-6,000. The percentage continues to increase as your sales increase, with the highest commission rate being 30% for sales over $150,001. Additionally, you can earn bonuses ranging from 5-20% depending on your sales volume.

Overall, Cutco offers a flexible and rewarding opportunity for those interested in direct sales. Whether you choose to focus on selling products or building a team, the compensation plan allows you to earn a competitive income while also developing valuable skills in sales and marketing.

Recommendation: Here’s The Best Alternative

Why I Don’t Recommend Joining Cutco MLM Program

Difficult to Make Money

The truth is, making money with an MLM company like Cutco is not easy. Statistics show that between 72.5% to 99.9% of MLM members actually lose money. This is because members are required to sell a certain amount of products to remain active and eligible for commissions. If they don’t meet the quota, they won’t get paid. As a result, many MLM members lose a significant amount of money before even recruiting one person into the company.

Reframing Losses as Investments

Another issue with Cutco’s MLM program is that uplines may try to reframe their financial losses as ‘investments’ in the business to keep their representatives in the scheme. This is misleading because the return on “investment” is negative in most cases, and reps are unlikely to get their money back.

Cult-Like Culture

Working for Cutco can also mean becoming part of a cult-like culture. MLMs often discourage critical thinking among their representatives and chastise those who ask questions that deviate from the ‘this company is amazing’ mindset. 

Representatives are also encouraged to isolate themselves from anyone who questions their involvement, which can lead to a loss of family and friends. 

Leaving an MLM can be difficult because former representatives are often labeled as failures or bad people/influences, and reps are not allowed to contact them. MLMs may also expect representatives to prioritize their business over their personal lives, which can be damaging to relationships.

You May Have to Purchase Cutco Products Yourself

One of the major drawbacks of joining Cutco is that you may have to purchase products yourself each month if you don’t have a large network of friends and family to sell to. This can be frustrating and may end up costing you more money than you make.

Cutco Products are Overpriced

Another potential issue is that Cutco products are overpriced. While they are of good quality, there are many other brands that offer similar products at lower prices. This may make it difficult for you to sell Cutco products, as your prospects may be able to find similar items elsewhere at a cheaper price.

Cutco’s MLM Business Model Has a Bad Reputation

Cutco’s MLM business model has received criticism due to its skewed commission distribution. Most of the money goes to those in the top tier and pioneers, while those at the bottom struggle to make a profit. As a result, many people do not consider Cutco to be a legitimate business opportunity.

Exaggerated Claims of Income

It’s important to note that Cutco, like many other MLM companies, often makes exaggerated income claims. However, in reality, very few people actually make a good living by promoting Cutco knives. In fact, Cutco’s low retention rate can be discouraging, as less than 41% of its distributors are active. Additionally, according to Cutco’s payouts to distributors, over 99% of Cutco distributors never make a profit.

Recruiting is Required to Succeed

Unfortunately, recruiting is essential for success in Cutco’s MLM program. Eight out of ten ways to earn money with Cutco require recruiting, and if you don’t recruit, you are likely to lose money. For this reason, I don’t recommend MLMs like Cutco to people who are looking for a more reliable way to make a living.

Recommendation: Here’s The Best Alternative

How Much Does It Cost To Join Cutco MLM Program?

You don’t have to pay anything to become a Cutco sales rep. However, there are some things you should know before jumping in.

Firstly, you’ll need to take the Vector Marketing training course to learn how to do sales demonstrations and get people interested in Cutco’s products. Once you’re a member, Cutco will provide you with a product sample to show others, and you can even borrow sample kits to showcase the knives.

To remain a member, you must sell products for $100 each month. And if you don’t use the knife kit and aren’t active by the end of the month, you can either return it or buy it for $75, which is less than half the price. So, you need to be an active seller to keep your membership.

However, keep in mind that if you’re giving business presentations, you’ll have to pay for expenses such as travel, gas, equipment, and anything else required for the presentation. These expenses can add up quickly and make it challenging to maintain profitability.

So, while it’s great that you don’t have to pay for a membership, it’s important to understand the additional costs that come with being a Cutco sales rep. Make sure to evaluate these costs against your potential earnings before you decide to join.

Recommendation: Here’s The Best Alternative

Pros and Cons of Joining Cutco MLM Program 

Pros:

• Joining Cutco’s MLM program is completely free, making it an accessible option for anyone interested in joining.
• Cutco’s products are of high quality and are well-regarded by its customers.
• The company has been around for a long time, indicating its stability and sustainability.

Cons:

• Some users have noted that the opportunity is not suitable for low-income people as it requires a significant investment to start earning.
• Cutco has faced several legal actions over the years, which may raise concerns for some potential members.
• The program does not provide any income disclosure, making it difficult to estimate potential earnings.
• Joining Cutco’s MLM program may require additional funds beyond the initial investment, which may not be feasible for everyone.

Recommendation: Here’s The Best Alternative

Final Verdict

If you’re considering joining the Cutco MLM program to make some extra cash, I’m here to give you my honest opinion: don’t do it. In my experience, it’s a tough gig from the get-go. When you’re just starting out, finding recruits and making sales is no easy feat.

What’s worse, is that you’ll likely be pressured into asking your friends and family to join your Cutco business. Let’s face it, that’s not exactly the most fun thing to do.

To make matters worse, your upline will probably keep pushing you to buy more Business Support Material, even if you’re struggling to make sales and recruit people. In my opinion, it’s just not worth it.

Statistics back up my experience as well. According to a case study on the FTC’s website, 99% of people who join an MLM break even or lose money.

One of the biggest reasons people leave MLM-type businesses is the pressure to succeed. It can be overwhelming and ultimately lead to burnout.

If you’re looking to earn money and have a flexible schedule, why not consider starting your own online business instead? That way, you can choose what you want to promote without feeling obligated to push a certain product.

In the next section, I’ll tell you about my experience building a legit online business and making passive income. It’s allowed me to earn a full-time income in just a year, and best of all, it’s 100% legit and sustainable.

Recommendation: Here’s The Best Alternative

Is There a Better Way to Make Money Online?

If you’re looking to start your online business journey, you want to make sure you’re using a program that actually works. That’s why I want to introduce you to my #1 recommended platform: Wealthy Affiliate.

Wealthy Affiliate is an all-in-one platform designed to help you build your affiliate marketing business from scratch. When you sign up, you’ll get access to top-notch web hosting, keyword research tools, community support, comprehensive training, writing tools, and other software to help you build your online business step-by-step.

And the best part? You can register for a free account and start using the platform right away, without paying a penny. If you decide you like it, you can upgrade to a premium membership to unlock even more features. There are no upsells or hidden fees afterwards.

You may read our article about the difference between MLM and affiliate marketing.

Now, you might be wondering, how much can you actually earn with Wealthy Affiliate? Well, let me tell you, the potential is huge. One 21-year-old student was able to earn $7,395 in just one week using what he learned inside Wealthy Affiliate.

You can read our full review of Wealthy Affiliate here.

And he’s not the only success story. Wealthy Affiliate has been around for 15 years and has helped over a million members achieve their online business goals. There are countless inspiring success stories from Wealthy Affiliate members.

Joining Wealthy Affiliate is easy. You can sign up for a free starter membership with no credit card required. As a starter member, you’ll get instant access to the community, live chat, over 500 training modules, 2 classrooms, networking, commenting, 1 free website, and access to the keyword tool. All for free.

If you’re serious about building an online business, I strongly recommend you give Wealthy Affiliate a try. Register for a free account and see for yourself why it’s the best platform for affiliate marketing.

Recommendation: Here’s The Best Alternative