Is Color Street a pyramid scheme? This multi-level marketing company isn’t a pyramid scheme, but it has an unrewarding business model.
Color Street has thousands of Independent Stylists across North America. The nail art design company draws people in with the promise of being able to run a business that “works to support you and your goals.” However, most of its stylists don’t make a livable wage. The company charges many fees, and you won’t make nearly enough to support yourself.
In this guide, I will talk about Color Street’s business model based on my personal experience and research. I will discuss the different ways to make money as one of its Independent Stylists. I will also tell you how much you can actually earn in this role.
The cons of working under Color Street’s business model outweigh the pros by a wide margin. I aim to share lessons I learned with money with you so that you can determine if this income idea is right for you.
This article is written by our Editorial Team at Incomepedia with the help of a former Color Street Independent Stylist.
Table of Contents
My Personal Experience
I learned about Color Street back in 2020 after getting an event invite from my friend Tiffany on Facebook. Tiffany was an old acquaintance from college who I hadn’t really stayed in touch with. However, I’d see her posting memes on Facebook every now and then.
The event invite seemed to be for something called a “Color Street Nail Bar”. The description said, “Come on down to my place and get your nails styled like the pros”.
Many of the people on the invite list were from our college graduation batch. So I figured it would be a fun way to reconnect with everyone. I promptly RSVP’d to the event and went over to the address the following Saturday.
I arrived at Tiffany’s house with a small bag containing my favorite nail polish colors and accessories. She answered the door, and we chatted briefly before heading inside. I met some of my college classmates and learned they too hadn’t been in touch with Tiffany.
After catching up with everyone for a few minutes, the topic changed to nail polish trends in 2020. Everyone showed off their favorite nail polish colors, and I did too.
Tiffany then began talking about how tiring the nail polish application and drying process was. Many of the girls agreed and discussed different ways to get a perfect style and finish without smudging their nail polish.
I had done my nails a couple of times a week since I was a teen. So I was pretty skilled with a nail polish brush by this point. However, even I had to admit the process seemed overly tedious.
Tiffany then opened her bag and pulled out a pack of nail polish strips, and began showing them off to everyone. She talked about how incredibly easy they were to apply and that they looked indistinguishable from the real thing.
The girls gathered around and began applying different styles. I also found a style I really liked and, Tiffany helped me apply it. Someone eventually asked her she bought them from.
Tiffany smiled excitedly and said she purchased them from Color Street directly at a discounted rate. She said she could get us more styles for cheap if we were interested.
Some girls purchased Color Street nail polish strips on the spot. While others asked Tiffany to notify them about new styles. By the end of the night, Tiffany had sold around two dozen nail polish strip sets.
I spoke to her alone before leaving her house and complimented her on her genuine sales skills. She laughed and said she enjoyed working as a Color Street Independent Stylist.
I asked Tiffany about her role, and she explained the business model. She explained how Color Street essentially lets her run her own business. She gets to be her own boss and make money whenever she wants to.
This setup sounded pretty exciting, and I asked her how I could get started. Tiffany brought out her laptop and helped me sign up on the Color Street website. I purchased their Start Kit and my first batch of products.
I looked through a few training videos and began promoting Color Street’s products to close family and friends. I also started organizing “Nail Bar” events and selling products to friends of friends.
I kept up sales with this routine for five months before quitting. To be honest, I hadn’t achieved the level of success I wanted. I sold around dozen packs of nail polish strips each month, but my profits were far smaller than I imagined.
My expenses were almost as high as my commissions, and I eventually decided enough was enough. I spent much of my precious time struggling to make ends meet as a Color Street Independent Stylist. So I want to give you an informed look at the company before you decide to join.
In this guide, I will talk about Color Street’s business model, how much you can earn with them, and the various legal cases against the company. I hope my deep dive tells you all you need to know about the nail polish product MLM company.
What is Color Street
Color Street is a direct selling company based in New Jersey. The company was founded in 2017 and currently operates across North America.
The multi-level marketing company specializes in selling nail polish strips and nail care products. They have amassed over 100,000 independent salespeople known as “Independent Stylists” in the United States and Canada.
Color Street reported annual revenue of $597 million in 2020.
History
Color Street’s founder, Fa Park, launched his company in 2017. However, he came up with the idea for it almost three decades earlier.
The story goes that Park was sitting on a public bus in New York in 1988. It eventually got stuck in a traffic jam, and Park began looking around, waiting for traffic to clear.
He eventually spotted a woman in a cab who appeared to be struggling to paint her nails. He pondered over the difficulty she was facing and thought there had to be a better way.
Fa Park spent the next few months purchasing nail polish bottles and applying them to different types of paper. He eventually formulated nail polish strips that were hard and dry on the surface but remained moist underneath. These characteristics ensured the nail polish strip remained glued to the nail properly and without compromising its strength.
Fa Park began manufacturing and selling these strips commercially in 2017. He founded a direct-selling company and named it Color Street. The company has since expanded to Canada and has recruited over 100,000 Independent Stylists across North America.
You can learn more about Color Street’s history in the following Youtube video:
CEO and Staff
Fa Park has remained Color Street’s CEO since founding the company in 2017. Park has played an important role in designing different products and expanding sales to Canada.
Color Street officially has approximately 2,400 employees at its corporate offices, according to its LinkedIn profile. The company reported having over 135,000 Independent Stylists in 2020.
Is Color Street a Pyramid Scheme?
So is Color Street a pyramid scheme?
We can’t answer this question without first examining what exactly a pyramid scheme is. There’s no legal definition for a pyramid scheme. However, the United States Securities and Exchange Commission (SEC) offers a robust definition that aptly describes such companies.
According to SEC, a pyramid scheme is “an investment fraud in which new participants’ fees are typically used to pay money to existing participants for recruiting new members.”
They state pyramid schemes display each of the following traits:
- No genuine products or services are sold;
- Members are promised high returns in a short period of time
- Members are told the business model allows them to make easy money or passive income
- There is no demonstrable revenue generated from retail sales
- Members must make a purchase to sign-up
- The business has a complex commission structure
- The business model places a high emphasis on recruiting
Why Color Street Isn’t a Pyramid Scheme
Color Street doesn’t qualify as a pyramid scheme as it doesn’t meet all the characteristics described above. Let’s look at some of these important reasons below.
#1. Color Street Sells Genuine Products
Color Street sells actual products. Their nail polish strips are available in a number of different styles and patterns. Thousands of people have also reviewed these products online.
I have also bought and sold the company’s nail products. Therefore, I can confirm they are genuine.
#2. Members Aren’t Promised High Returns in a Short Period of Time.
Color Street doesn’t state anything about being able to make “high returns” or that you can earn lots of cash in a relatively short period of time. In fact, the company’s Income Disclosure Statement includes the following passage:
“With Color Street, you have an opportunity to earn income on the sale of Color Street products to consumers. Your earning capacity depends on several factors including, but not limited to, your personal commitment, hard work, sacrifice, market conditions, and your business skills.”
Therefore, the money makes it clear your earnings will depend on your efforts.
#3. Members Aren’t Told the Business Model Allows Them to Make Easy Money or Passive Income
Color Streets doesn’t say anything about being able to make “easy money” or “passive income”. Instead, the company repeatedly states you have an “opportunity to earn income”.
Therefore, Independent Stylists can’t claim the company deceived them about how easy it is to earn money.
#4. There is Demonstrable Revenue Generated from Retail Sales.
I have sold Color Street products and know many others who have also sold products for the company. Therefore, it is safe to say part of the company’s revenue comes from retail sales.
Why Do People Think Color Street is a Pyramid Scheme?
People believe Color Street is a pyramid scheme for a few reasons. This includes:
Members Must Make a Purchase to Sign-Up
You will need to pay $129 for a Starter Kit when you sign up as a Color Street Independent Stylist. You will then need to purchase products to sell.
The MLM also requires you to pay around $10 per month to keep your Color Street website. All these purchases can make it seem like the company’s Independent Stylists are keeping it afloat.
The Business Has a Complex Commission Structure
Color Street offers a commission structure that will make your head spin. This is because you can earn money in numerous ways. However, calculating your exact earnings won’t be easy.
There is a High Focus on Recruitment
Color Street doesn’t give you cash bonuses for recruiting people. However, you can indirectly earn bonuses by achieving specific group sales volume targets. These targets are achievable only once you have amassed a large team.
So you will definitely need to recruit members if you want to make more money as a Color Street Independent Stylist.
How Much Money Can You Earn from Color Street?
So the big question on your mind is probably, “How much money can you earn from Color Street?”. The answer is not a lot.
The company offers an earnings estimate in its annual income disclosure statement. However, the numbers don’t look very promising.
As you can see, most of the Independent Stylists are at the “Stylist” starting rank. People in this rank pull in only $21 per month or $256 per year. Once you deduct Color Street’s mandatory fees from these numbers, their monthly earnings drop to $9 per month or $108 per year.
$9 per month or $108 per year is NOT a livable wage. So how far up the ladder would you have to go to reach an income level comparable to earning minimum wage? According to the above statement, you would need to reach the Director level.
In other words, you would need to be promoted four times to earn an income comparable to minimum wage!
Less than 1.6% of Color Street Stylists ever reach this rank or beyond. So you probably won’t earn a livable wage unless you’re incredibly determined to beat the odds.
How to Earn Income Through Color Street?
Color Street offers a dozen ways to earn income through its business model. However, most of these methods are incredibly complex to explain. So it might be easier to narrow them down into the following three groups:
- Commissions from Personal Sales
- Rank Advancement Bonuses
- Commissions and Bonuses from Group Sales
Method #1. Commissions from Personal Sales
Color Street offers a variable commission rate depending on your monthly sales volume. People who sell between 0.01 and 299.99 personal volume units receive a 15% commission.
Those who sell additional items that fall between 300 and 599.99 personal volume units receive 10% extra commission (i.e.: 25%). If you manage to sell a personal volume of 1,800, any additional items will get you a total of 35% in commissions.
As you can see, this commission structure can be complicated to calculate. However, the main gist is that you can earn a progressively higher percentage of commission with higher sales volumes.
Method #2. Rank Advancement Bonuses
Color Street offers bonuses for advancing in rank. You can earn $200 once you reach the Team Builder rank.
You can earn bigger bonuses up to $600 once you reach higher ranks. People in these ranks will also receive bonuses for maintaining their rank for each two-month period.
Method #3. Commissions and Bonuses from Group Sales
You can make additional money from achieving group sales volume targets. This “group” refers to the team you build by recruiting new members.
You can also receive a commission cut from the sales your recruits make. This system is incredibly complicated, so I won’t get into it. However, you can essentially earn more commissions by recruiting people who go on to recruit new members.
Once you have built up a large team, your earnings will be significantly higher than they would be if you were working solo.
You can learn more about Color Street’s compensation plan in the following Youtube video:
3 Key Advantages of Becoming a Color Street Member.
Pro #1. Selling Nail Polish Products That Appeal to Lots of People
Color Street’s business model might be unrewarding. However, even I have to admit their nail polish strips look great. The company offers many different patterns and styles, along with special holiday-themed products.
This means you are bound to find a few styles that hit the mark with customers.
Pro #2. Getting to Be Your Own Boss
Color Street is similar to other multi-level marketing companies because it entices you with the promise of getting to be your own boss. This quality will definitely attract lots of self-motivated individuals who prefer answering only to themselves.
You can work when you want and apply whatever sales strategy you want. However, will still need to abide by specific company rules.
Pro #3. Working for a Company with an Excellent Good Better Business Bureau Rating
Color Street has an A+ rating from the Better Business Bureau. This rating is influenced by the company’s reputation when it comes to resolving customer complaints.
An A+ rating implies Color Street handles complaints relatively quickly and satisfactorily. This good reputation may improve your chances of making sales.
3 Key Disadvantages of Becoming a Color Street Member.
Con #1. Sign-Up and Website Fees
Color Street requires you to purchase a $129 Start Kit to join. You will then need to pay $9.95 per month to keep your sales website running.
This initial startup cost can be relatively high, especially if you decide to quit within your first week. The website fee will also cut into your total earnings, so you should be prepared to bear these costs.
Con #2. You’re Not Compensated For Expenses
One of the most frustrating realizations about working as a Color Street Stylist is that you aren’t compensated for your expenses. You will definitely need to spend hundreds of dollars organizing your Nail Bar parties and promoting products.
This includes money spent on your phone and internet bills. Not to mention the cost of traveling to places for product demonstrations. These expenses will eat into your profits, so you really won’t be making much at the end of each month.
Con #3. High Failure Rate
As mentioned above, only 1.6% of Color Street Stylists ever reach a rank where they earn minimum wage. Most people quit well before that, so you should think twice if your goal is to make a livable wage with this company.
Major Color Street Controversy.
Color Street hasn’t been involved in any lawsuits since it was founded. However, the company has received its share of customer complaints over the years. We discuss some of the most frequent complaints from the Better Business Bureau website below:
#1. Website Ordering Issues
In one complaint, a customer claimed the Color Street website did not process their order, so they placed it multiple times. As a result, they were charged for four orders.
They contacted the company asking for a refund but were told it would not be possible at the time. The customer service representative then advised them to refuse the order shipment and that they would receive their refund later.
Color Street then provided the customer with their refund as promised. However, it is unclear if such website issues were corrected for future customers.
#2. Fundraising Scam
One of the more unique complaints on the BBB website involved a Color Street Stylist scamming a customer about donating sales for a special cause.
The Independent Stylist in question made a private agreement to donate 25% of their sales to pay for their child’s dance lessons if they hosted a sales event. The Stylist did not follow through on the agreement and also did not respond to the company’s attempts to have the payment completed.
It is unknown whether the customer ever received the donation they were promised.
Final Thoughts
As you can see, Color Street’s business model isn’t as “colorful” as you’d think. You’re definitely not going to make minimum wage unless you’re in the top 1.6% of Stylists. Reaching that rank will also take several months or even years.
I left Color Street after putting up with their terrible pay for five months. My expenses were adding up, and I was getting tired of reaching out to acquaintances and hosting Nail Bar parties. The monthly fees didn’t help either.
The only silver lining of my sales experience was that it helped me meet some new people. One of my customers even helped me secure a real job at a leading cosmetics retail store in the city. I promptly quit Color Street after acing my job interview and haven’t looked back since.
Who Would Color Street Be a Good Fit For?
Color Street’s business model might work for you if you’re good at recruiting people. This is definitely easier said than done. The company’s business model might sound great to people who are desperate to earn cash. However, you will have a hard time promoting it to people who aren’t unemployed.
I managed to recruit only three members in five months. You might fare better than I did. However, I still wouldn’t recommend this income idea to most people. I hope my in-depth look at Color Street has helped you learn about the company and how you will fare under its business model.
This MLM might not be a pyramid scheme, but you might still be caught off guard by how unrewarding it can be.
Frequently Asked Questions
How long do Color Street’s products last?
Color Street’s nail polish strips are designed to last for two weeks once they have been applied. This means your customers will hopefully return to you for more products each month or so.
Can You Lose Money as a Color Street Independent Stylist?
You could definitely lose money if you’re unable to make up for the cost of your Starter Kit. Selling products in your first week can be pretty difficult. So it’s best to stick with the company until you have made up for this initial investment.
Does Color Street force you to recruit people?
You don’t have to recruit people when you sign up as a Color Street Stylist. However, your earning options will be limited until you build a team.
Sources
- Color Street Products: Shop Color Street
- Color Street Annual Revenue: Color Street FAQ
- Color Street Company History: A Colorful Story
- Color Street LinkedIn: Color Street Profile
- Color Street Income Disclosure 2021: Income Disclosure Statement
- Color Street Recruitment Page: Color Street Enrollment
- Color Street Income Earning Methods: Color Street Compensation Plan
- Color Street Better Business Bureau Rating: Business Profile Color Street, LLC
