Okay, so, it's not technically a scam. It's an MLM. The salesman has to buy the stuff they want to sell up-front, and then they have to try and sell it to people. If no one wants to buy, then they're stuck with a whole bunch of whatever--knives in the case of CutCo/Vector--and out the money that they spent. If they happen to be an exceptionally good salesperson, then they can sell everything they purchased, and use their profit to buy more, and sell more, etc.

The issue is that the knives aren't particularly great. They're solidly 'okay', and that's about it. But despite being just kind of okay, the prices are on the higher end. That is, you can get Global or Shun for a similar price, and Global and Shun are both quite good. So if you're a serious cook, your going to spend the same and get better knives. If you're a typical home cook, you're not going to see the value in spending that much on kitchen knives.

But! The real money is in convincing some poor sucker to buy his stock to sell from you. You buy from your supplier, and then you sell at a markup to some other poor schmuck that then has to sell knives at either a higher cost or lower profit margin to someone else. It's a game of hot potato, and the person holding it at the end gets burned.