Before answering the question “Is Market America a Pyramid Scheme,” make sure you understand the difference between an MLM and a Pyramid Scheme.
Whether or not you are knowledgeable about the characteristics of a pyramid scheme, Market America is considered a legitimate MLM or a pyramid scheme. If you have concerns about the charges and the way they operate their business, you are not alone. Do you have any issues with this company?
Given the wide reach of the company, anyone who is able to recruit or sell can do so anywhere. America Market is a company that sells a wide variety of products, including auto care products, cleaning products, food products, electronics, skin care products, weight loss products, and cosmetics.
Market America Lawsuits and Allegations
In 1999, Market America reached a settlement with the SEC, paying a sum of more than $200,000 along with interest and a fine of $100,000 for accusations related to stock sales. While they did not confess or refute the allegations, a settlement was reached.
The lawsuit brought by California residents claimed that the company violated state laws, as well as engaged in corporate corruption and racketeering to recruit distributors from other companies and encourage them to sell products to their friends and family, particularly in China. The accusations included the claim that the company targeted Chinese immigrants, believing that they could achieve income opportunities that were simply unattainable, thus alleging that the company was involved in an illegal pyramid scheme. Consequently, the company faced a federal lawsuit in America’s Market.
The lawsuit alleges that more than 90% of distributors experienced net losses due to the systematic marketing plan that rewarded recruitment of other distributors, rather than making money from product sales. The plaintiffs claim that while the owners of the company were able to achieve a business valuation of $7.3 billion, they were only able to achieve financial success by quitting, and that the company stipulates a blueprint for success that can be achieved by any person within two years. Other accusations against the company state that it specifically targeted Chinese American immigrants, who do not have regular legal channels available to protect them.
Is Market America Considered a Pyramid Scheme?
Regular MLM companies would put emphasis on recruitment over sales and prioritize the buying of inventory before you have what you sell. People who work for the company are required to attend monthly meetings and continuously purchase inventory, which they have to pay for out-of-pocket. The America Market is considered a pyramid scheme because the emphasis is on getting money from you, not selling products or services.
Under the category of pyramid scheme, the emphasis is heavily placed on recruiting other distributors to sell products. There is a regular requirement to continually purchase new products without the option of a Buy-Back. There is also an emphasis on sign-up fees and the requirement to attend training events. Additionally, representatives are required to spend money on products and attend seminars and training events, with a requirement to spend between $300 and $130 on products. There is also a monthly payment requirement and a start-up fee of $129, along with a start-up fee of $399. Despite all these expenses, most people who worked as distributors for America Market experienced a net loss of 90%.
What options do I have?
If you have a problem with Market America functioning as a pyramid scheme, you are unable to join a class-action lawsuit or settle through consumer arbitration, as there are no other options available.