Updated: May 2nd, 2020
Some people say Rodan + Fields is a pyramid scheme and a good for nothing scam, while others say it’s an amazing company with great products and a legit business opportunity.
So what’s the deal.. is it legit or just another pyramid scheme?
Rodan + Fields isn’t a pyramid scheme or scam, it’s a legitimate company that sells quality skincare products. However, it is a multilevel marketing company, and as such, a percentage of consultants are buying the products just to “qualify” for commissions, which is a red flag.
In this review, we’ll look into Rodan and Fields in more detail and discuss the key differences between pyramid schemes and legit MLM companies, to help you decide if it’s a worthwhile opportunity or something you should avoid.
About Rodan + Fields
Rodan & Fields, LLC is a multilevel marketing (MLM) company that sells skincare products such as cleansers, moisturizers and anti-ageing formulas.
The company was founded by Dr. Kathy Field and Dr. Katie Rodan, who met in college in 1984. About 10 years later, they developed and sold the popular acne treatment, Proactiv Solution, which is when their entrepreneurial endeavors really started to pay off.
In 2002, the pair started Rodan + Fields, which at the time was just a regular (non MLM) company that sold skincare products in department stores and the like. But they sold this company a year later, only to reacquire it in 2007 and build it into a multilevel marketing company.
Today, Rodan & Fields, LLC is run by CEO Diane Dietz out of their San Francisco headquarters. And they seem to be doing pretty well.
In 2018 the company was dubbed “the #1 skincare brand in North America” and “the #1 premium acne brand in the U.S.” by Euromonitor International. And they’ve successfully branched out to other countries like Canada and Australia too.
All told, according to Direct Selling News, the company generates roughly $1.5 billion per year in revenue and has 100,000’s of consultants (AKA people who’ve joined the bizopp).
So they must be doing “something” right, right?
Well, all of this success is certainly good for those at the top. But does that automatically make it a legit company or worthwhile for the average person?
I personally don’t think so, no. So let’s take a look at what a pyramid scheme is, so we can compare this to how Rodan and Fields works, and make a more educated decision from there.
What Is a Pyramid Scheme?
A pyramid scheme is basically a recruiting scam where people pay to join and recruit others to do the same. This continues with people recruiting people, who recruit people, until the scheme collapses.
So the whole thing is one giant recruiting scam, as oppose to selling a genuine product or service to genuine retail customers. The only money being made is through recruiting.
Only a small percentage of people ‘at the top’ make a substantial income with a pyramid scheme. Because a large number of new recruits are required for anyone to earn decent money. At any given time, it’s the masses at the bottom of the pyramid that fund the lifestyles of the heavy recruiters at the top.
It must be this way for anyone in such a scheme to be making big money. It is mathematically impossible for it to be any other way.
And this is why all pyramid schemes eventually collapse, because there’s a finite number of people on the planet willing to join such a scheme. So eventually, recruiting slows down. And when it does, people at the lower levels start leaving and the entire scheme falls apart.
One common argument made by distributors (who are defending their scam) is that all companies are in reality pyramid schemes. Because the CEO at the top makes all the money while the workers make very little.
But, while it’s true those at the top of a traditional company make most of the money, there are MAJOR differences in how they operate.
How a traditional company operates:
- All employees earn (at least) minimum wage for the time they put in
- The company focusses on selling genuine products and/ or services
- Employees typically don’t recruit anyone, and either way it’s certainly not the main focus
- The business model is sustainable
How a pyramid scheme operates:
- Most people earn far below minimum wage, to fund the minority at the top
- The company does not sell genuine products or services without attaching it to the business opportunity
- The entire focus is on mass recruiting, so even if they do sell products, it’s typically a front for the real purpose of mass recruiting
- The business model is not sustainable
Clearly, there are significant differences between a legitimate company and pyramid scheme. But what about a pyramid scheme versus a multilevel marketing company? Read on.
How Does a Legit MLM Company Work?
Another common misconception I come across is that the multilevel marketing business model is a pyramid scheme. It’s not. They do leverage the same ‘multi level’ recruiting system as a pyramid scheme, but there are some legitimate MLM companies out there.
How so? Well, for the most part, legitimate multilevel marketing companies have a much stronger focus on retail product sales as oppose to chain recruiting. This ensures the longterm sustainability of the company and business opportunity.
That being said, there are MLM companies that do “sell a product”, yet are far from legitimate. This statement from the FTC puts it well:
Modem pyramid schemes generally do not blatantly base commissions on the outright payment of fees, but instead try to disguise these payments to appear as if they are based on the sale of goods or services.
So some pyramid schemes actually do sell “legit products”, but in reality these are just there to try to legitimize an otherwise clear cut pyramid scheme.
This is where the line starts to blur and why it becomes quite difficult to actually determine a real pyramid scheme versus a legitimate MLM company.
Which is why you really need to dig deeper into the company itself, in terms of the products they’re selling and the business opportunity, to really determine how legit the whole thing is.
So, is Rodan + Fields a Pyramid Scheme?
After looking into the company, their products and compensation plan in detail, I personally do not believe Rodan + Fields is a pyramid scheme or scam.
The company has been around since 2007 and sells a tangible product that people are actively buying all over the globe. I’m no expert in skincare, but they have reached some pretty incredible milestones so they must be doing something right.
Also, they’re very open about how the business opportunity works, how much money consultants are earning, and they don’t promote the ‘get rich quick’ mentality. So I do think the business opportunity side of things is legit overall.
With that being said, I do wonder how much of the companies total revenue is coming from genuine retail customers versus people looking to “qualify and stay active.”
Because, in order to become an “active consultant”, you must sell 100 SV (about $100 worth of product) each month, or buy this amount for personal consumption.
Which, when you boil it down, is at the center of the issue as to whether or not Rodan + Fields is a pyramid scheme or legit MLM company.
Because if (in reality) most of the revenue R+F generates comes from people trying to “qualify” for the business opportunity, that would be a huge red flag.
But without seeing the hard numbers, that only the company has access to, it’s impossible to know one way or the other if this is what’s really going on.
What we can do however, is take a closer look at how the company works. Specifically, how good the products are and how legit the compensation plan is. Because this can give us a great deal of insight. So let’s look into these in more detail, starting with the products.
Are Rodan + Fields Products Legit?
One of the main ways to figure out if something is a pyramid scheme or not is to figure out if the products are legit (versus overpriced “snake oil”).
In this case, Rodan + Fields sells individual skincare products and kits that are aimed at women wanting younger, more beautiful looking skin.
And probably the most popular of these is the “Redefine Regimen” kit which costs $208 and lasts about 60 days. It supposedly helps with the “appearance of lines, pores and loss of firmness” in the skin.
Again, I’m not an expert on skincare products, nor do I claim to be. Which is why this review is focussed mostly on the business side of things. But I have researched these products, as well as this company, at length. And I do believe they are legitimate products.
And here’s why I say this:
- These are real products that real customers are buying
- The company is fairly open about the ingredients and explain the reasons why the product is of a high quality
- There’s a lot of positive testimonials from people who use this stuff
- They’ve sold billions of dollars worth of this stuff and were named the number one skincare brand in the United States
- The official website is clearly focussed on acquiring genuine customers as opposed to promoting the business opportunity
- The company has been selling their product range successfully since 2007
With that being said, the prices are higher than average, which is a common trait among product based pyramid schemes. And there’s also a lot of complaints from people who don’t like the products.
But this doesn’t make it a scam or pyramid scheme. This is simply how the brand has positioned itself in the market, as more exclusive “high end” skincare products.
And not everyone is going to love every product from every company, regardless of whether or not it’s a direct sales or regular company.
In any case, it might be worth reading other reviews from non-consultants about the products to further your research. Like this review I found on The Derm Review for example.
Breaking Down the Rodan + Fields Compensation Plan
Now that we’ve looked into the company and its products, it’s important to understand how the Rodan + Fields compensation plan works. Because this is really what differentiates a legitimate MLM company from a pyramid scheme.
The comp plan outlines how you can earn as a consultant, and how much you can earn. Not just from selling products, but also from recruiting people who sell products under you.
And with Rodan and Fields, there are five main ways you can earn:
- Retail Profits
- Consultant Commissions
- Personal Team Commissions
- Generation Commissions
- Performance Bonuses
Let’s take a closer look at how each of these works…
1. Retail Profits
Retail Profits is about earning commissions for selling Rodan + Fields products, so there’s no need to recruit anyone to make money this way.
How much you can earn here, depends on the “customer discount level” you and your customer are at at the time you sell the product. Basically, you earn the difference between your price (Consultant Price) and whatever the customer ends up paying (Retail or Preferred Customer Price).
So naturally, you’ll earn higher retail commissions from retail customers instead of preferred customers, because the ‘gap’ between your price and the retail price is greater.
2. Consultant Commissions
From this point forward, you must become an “active consultant” to participate and earn money within the compensation plan (more on this shortly).
Consultant Commissions pay you 10% commissions on any products bought by your preferred customers, your consultants and your consultant’s retail customers.
Worth noting is that the 10% commission is calculated based on each products’ commission volume (CV) amount as per the pricing catalog. Which means it is NOT a 10% commission on the retail price, it’s a 10% commission on the consultant price of the product, which of course is less.
In any case, this is where the ‘multi level’ aspect of this comp plan kicks into gear. Because all of this is tracked through a “downline system” where people you recruit go under you, and their recruits go under them, and so on.
3. Personal Team Commissions
To earn Personal Team Commissions, you must hold the ‘executive consultant’ rank or higher. And once qualified, this pays out 5% of the CV of your ‘personal team’ each month.
What is your personal team? This includes every consultant and preferred customer within your downline up to and including the next executive ranked consultant (more on consultant ranks below).
4. Generation Commissions
To qualify for this income stream, you must hold the ‘level 1 executive consultant’ rank or higher.
The personal team commissions I explained above stops paying out when any given leg reaches an executive consultant. But this is also where the ‘generation commissions’ kicks in.
Generation 1 begins with your executive consultants’ personal recruits, and ends when anyone under them is promoted to executive consultant. This same process is repeated down 5 generations total, with each generation paying out 5% commissions based on the total CV accumulated within each.
It’s pretty confusing to say the least, but that’s MLM for ya!
5. Performance Bonuses
There are also various performance based bonuses offered to consultants who reach certain ranks and sales quotas. This includes holidays, vehicles and other benefits depending on what you achieve.
How Do You Become a Consultant?
In order to become a Rodan + Fields consultant, you need to signup and purchase the Business Portfolio kit for $45. Which you can do by simply visiting the company website.
This is actually a pretty low startup cost compared with most MLM companies, but there are some higher cost packages that come with different assortments of products.
Here’s an overview of each starter kit:
- Business Portfolio kit ($45)
- Personal Results Kit ($395)
- Core Kit ($695)
- Ultimate Kit ($995)
Becoming an “Active Consultant”
In order to earn more than just “Retail Profits”, a consultant must become (and stay) active. This means accumulating 100 sales volume (SV) points each and every month.
Earning these points can come from customer sales, or buying for personal consumption. And according to the companies latest pricing catalog, this means selling and/ or buying roughly $100 in product each month to stay active.
This is not required to earn retail profits. But it IS a requirement to earn beyond this (the other four income streams in the comp plan we discussed earlier).
Understanding “Consultant Ranks”
There are nine ranks in total and each offers a higher level of earning potential and additional requirements must be met in order to qualify for each. Here’s an overview of each rank, which outlines what it takes to qualify and maintain the rank, as well as what you can potentially earn.
|Consultant||Pay $45 for a “Business Portfolio” starter kit||Retail Profits|
|Active Consultant||As above, plus maintain 100 SV each month||As above, plus Consultant Commissions|
|Executive Consultant||As above, plus maintain 600 ‘personally sponsored qualifying volume’ (PSQV) each month||As above, plus Personal Team Commissions|
|Level I Executive||Same as first three ranks, plus recruit one executive consultant||Same as first three ranks, plus Generation Commissions (generation 1)|
|L-II Executive||Same requirements as first three ranks, plus recruit two executive consultants||Same as first three ranks, plus Generation Commissions (generation 1-2)|
|L-III Executive||Same requirements as first three ranks, plus recruit four executive consultants||Same as first three ranks, plus Generation Commissions (generations 1-3)|
|L-IV Executive||Same requirements as first three ranks, plus recruit six executive consultants||Same as first three ranks, plus Generation Commissions (generations 1-4)|
|L-V Executive||Same requirements as first three ranks, plus recruit eight executive consultants||Same as first three ranks, plus Generation Commissions (generations 1-5)|
|RFx Executive||Same requirements as first three ranks, plus recruit 15 executive consultants||Same as first three ranks, plus Generation Commissions (generations 1-6)|
Note: PSQV is sales volume from consultants (including their retail customers) and preferred customers you personally sponsor.
How Much Can You Earn as a Rodan + Fields Consultant?
Ultimately, how much money you make in ANY business comes down to how much time and effort you put in. Which is why some people earn lots, while others end up losing money.
And it’s no different with Rodan + Fields. But it is a multilevel marketing company, and the sad reality is that most people who attempt to make money with MLM fail, or get mediocre results at best. That’s just the way it is. It’s just that some MLM companies choose to disclose this, while others don’t.
So what does the average consultant make?
Well, according to the 2018 Rodan + Fields U.S. income disclosure statement (IDS), only 54% of consultants made any money at all that year. And out of those, only 1% made more than $29,056 for the entire year. Which means that less than 1% of consultants are earning what many would consider a full time income.
It’s easy to throw stones at the company when you see data like this. But for the most part, how much money anyone in any business makes (regardless of the underlying business model) comes down to the effort they put in.
So, while it doesn’t paint a very pretty picture, I personally don’t think that makes it a scam in and of itself.
It’s basically the same story in virtually every MLM I’ve reviewed over the years. Including other well known MLM companies I’ve reviewed like Mary Kay, Avon and Tupperware for example.
In this review, we looked at Rodan + Fields as a whole, the products they sell and the attached business opportunity. And based on what I’ve seen, I don’t believe it’s a scam or pyramid scheme.
But does that mean you should rush out and join?
Not necessarily. On one hand, this could be a great business for someone who loves the product and enjoys face to face selling. Typically these are the folks who are most successful.
But on the other hand, I do think there are better business models out there that don’t require you to sell to family and friends and buy/sell products just to stay qualified.
At the end of the day, it’s up to you what you decide to do, but hopefully you’ve found this review helpful as you weigh up what is right for you.
2 thoughts on “Is Rodan + Fields a Pyramid Scheme? (2020 MLM Review)”
“But for the most part, how much money anyone in any business makes (regardless of the underlying business model) comes down to the effort they put in.” – This is not true. If you saturate the market, you can work your soul off and still not get to where you “should” be according to the effort you’re putting into the business. That’s why Mcdonalds and other franchised brands look so deep into these matters, as business owners (which mlm reps ARE NOT) they make money from selling products/services and not from recruiting people. If the company’s best costumers are their reps (regarding the need to buy to stay “active”), something is very wrong.
You should have done your research better. If only the 1% is making money and you depend on your team to bring in more people to make you money, sorry to tell you but that is a pyramide scheme.
This is a pyramid scheme just like all the rest. The focus is on recruiting others so that you can earn more. The distributors are the only people buying the product to stay “active.”