Jamberry has its beauty product reps in a jam

Jamberry is a multilevel marketer (MLM) of beauty products, but it’s facing some ugly accusations from within its own ranks. And a deal announced last month with a provider of nutritional supplements called M. Network, which uses the same business model, appears to be on shaky ground.

A group of “elite” Jamberry representatives complained in a video posted on YouTube June 19 that they were having some “serious shipping issues” and that the Utah-based company was “later than expected on our last two commissions.” The video said Jamberry has quit communicating with the reps and they’re wondering whether anyone is managing the company’s day-to-day operations. 

“We hope and pray that Jamberry will continue shipping and continue to pay us,” said the video, which was posted by Rachel Huse, a North Carolina sales rep, but doesn’t identify the speaker. Huse declined to comment for this story.

Less than a decade age, Jamberry started out as an idea of three cost-conscious Utah sisters — Lyndsey Ekstrom, Christy Hepworth and Keri Evans — who were interested in getting nice fingernails without paying salon prices for manicures and pedicures. It’s now an international beauty brand hawked by more than 50,000 independent consultants.

Like other MLMs, such as fashion provider LuLaRoe, Jamberry’s success is due to its savvy use of social media sites such as Facebook and Instagram, along with encouraging sales rep to hold parties in their homes.

The original owners sold a majority stake in Jamberry to outside investors a few years ago, according to M. Network CEO Ryan Anderson. M. Network has offered to buy “certain assets” of Jamberry but wasn’t interested in a merger, he said, declining to be more specific.  

“M. Network plans on launching a personalized beauty brand and line of products this year,” Anderson wrote in a message to CBS MoneyWatch. “That is why the Jamberry product line would have fit perfectly into what we are doing.”

The deadline for Jamberry to agree to the M.Network transaction was noon on Wednesday, Anderson said, but he couldn’t be reached to determine if the deal was still on.

Jamberry’s nail wraps, which retail for $15, are thin vinyl sheets with designs on them and can last for up to two weeks on fingers and four weeks on toes. Its products have received positive writeups on Self, Glamour and BuzzFeed among other sites. Jamberry also sells a line of other beauty and hair care products.

“From the beginning, the company’s great challenge has been every company’s dream: overwhelming demand,” according to trade publication Direct Selling News. “To keep up with demand,” it said, “the company explored new manufacturing options, leading to initial bottlenecks and quality issues. The company has worked out those kinks.”

MLMs like Jamberry sell their products via nonemployee distributors who can earn money both by selling products and by recruiting other members to their sales teams. Other businesses that use the model include LuLaRoe, which has been accused in a lawsuit of being a pyramid scheme, along with Amway, Mary Kay Cosmetics and Pampered Chef, which is owned by Warren Buffett’s Berkshire Hathaway (BRK.A).

“The writing has clearly been on the wall for Jamberry for a while — they have been offering special deals non-stop this year,” said The Anti-MLM Coalition, an industry critic. “Cut-price offers for consultant startup packages, ‘flash sales’ one after the other, cheap sign-up for their ‘Style VIP package.'”

When M. Network announced its “alliance” with Jamberry, executives at M.Network heaped praise on its new partner. They bragged in a May 22 YouTube video that the cultural fit among the MLMs was so strong that it was like “looking in a mirror,” said Dave Webb, M.Network’s senior vice president, who described himself as “giddy” about the deal.

The good feelings, however, proved to be fleeting after the agreement failed to close as expected on June 1 and June 10. 

Jamberry didn’t respond to requests for comment. A message on Jamberry’s office line indicates that the customer service staff was overwhelmed with requests and would only respond to emails. The company didn’t respond to an email either.