Is Market America a Pyramid Scheme?

Were you victimized by Market America? Tell us about your experience.

Before answering the question “Is Market America a Pyramid Scheme,” make sure you understand the difference between an MLM and a Pyramid Scheme.

Do you have a problem with this company, the way they run their business and the charges you have faced? Are you starting to think they might be a pyramid scheme? If so, you’re not alone. But what really makes a pyramid scheme and how do you know whether Market America is a pyramid scheme or a legitimate MLM?

What is Market America?

Market America is a company that sells a wide variety of items including cosmetics, weight loss products, skin care products, electronics, food, cleaning products, auto care products, and more. Given the wide reach of the company, people who decide to conduct sales are able to sell or recruit anyone, anywhere.

Market America Lawsuits and Allegations

In 1999, Market America reached a settlement with the SEC for allegations pertaining to stock sales. They did not admit guilt nor did they deny it but they paid a settlement of over $200,000 plus interest and a fine of $100,000.

Market America faced a federal lawsuit and accusations of being an illegal pyramid scheme that specifically targeted Chinese immigrants into believing that they could achieve income opportunities that were simply untenable. This lawsuit was brought by residents of California who claimed that the company violated the racketeering influence and corporate organizations act as well as California state law. One of the accusations is that representatives were encouraged to sell products to their family and friends specifically in China and that they systematically rewarded recruitment of other distributors over the sale of the products.

A similar lawsuit specifically says that the company targeted Chinese American immigrants who wouldn’t have regular legal channels available to help them protect their rights. Other accusations include that the company stipulates that by following a two-year blueprint, any person can achieve whatever level of financial success they want and that the only way to fail was to quit but the owners of the company were able to achieve a business valuation of 7.3 billion dollars while most plaintiffs made nothing. The lawsuit alleges that people failed to make money because the marketing plan systematically rewarded the recruitment of other Distributors over the sale of products and this led to over 90% of Distributors averaging net losses.

Is Market America Considered a Pyramid Scheme?

Market America is considered a pyramid scheme because the emphasis is on getting money from you and not selling products or services. People who work for the company are required to continually purchase inventory and attend meetings on a monthly basis, which they have to pay for out-of-pocket. Regular MLM companies would put the emphasis on selling what inventory you have before you buy more inventory and focusing on sales over recruitment.

Over 90% of distributors who worked for Market America average a net loss and most people did not make any money. They attend seminars and pay fees and spend on products, the start-up fee of $399, and monthly payments of $129, and the requirement of representatives to spend between $130 and $300 on products, alongside the requirement to attend training events and seminars which cost between $20 and $200. The emphasis on sign-up fees, the requirement to continually purchase new products on a regular basis without a Buy-Back option, and the heavy emphasis on recruiting other distributors over selling the products falls under the category of a pyramid scheme.

What options do I have?

If you have a problem with Market America functioning as a pyramid scheme and you are unable to join a class-action lawsuit or get a settlement in any other capacity, there are still options including consumer arbitration.

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