Market America is a multi-level marketing (MLM) company that has been in operation since 1992. It promotes itself as a business opportunity for individuals looking to achieve financial freedom through e-commerce and product distribution. However, over the years, Market America has been the subject of numerous allegations and lawsuits, with critics claiming it operates as a pyramid scheme. This article explores the company’s business model, how it operates, its legal challenges, and whether it truly offers a legitimate opportunity.
What Is Market America?
Market America is a product distribution and marketing company founded by JR Ridinger in 1992. The company is headquartered in Greensboro, North Carolina, and runs the e-commerce platform Shop.com. Market America sells a variety of products, including health supplements, cosmetics, household goods, and pet supplies.
The company operates as an MLM, meaning that independent distributors—known as “UnFranchise Owners”—sell Market America products while also recruiting others to join the business. Market America claims to offer a lucrative earning potential, but critics argue that its structure closely resembles that of a pyramid scheme.
How Market America Works
Market America’s business model relies on a binary compensation structure, where participants are encouraged to recruit two people, who then recruit others, forming a hierarchical network.
New distributors must purchase a starter kit and pay monthly fees to remain active. They are required to generate a certain level of sales volume to qualify for commissions. Market America claims that distributors can earn money by selling its wide range of products to consumers. However, the primary focus is often on recruiting new members rather than product sales.
UnFranchise Owners earn commissions when their recruits also bring in new members. The more recruits an individual has under them, the higher their earning potential, but this follows the classic pyramid scheme structure where those at the top benefit the most. Distributors must also purchase a set amount of products monthly to qualify for commissions. If they fail to meet these quotas, they do not receive their earnings, forcing them to spend more money to stay in the system.
Pyramid Scheme Allegations
Market America has faced various accusations and lawsuits that argue it operates as a pyramid scheme. The primary concerns include the focus on recruitment over sales, high initial investment costs, and a low success rate for participants. Many argue that a large portion of distributor earnings comes from recruiting rather than direct sales of products. Additionally, participants must make continuous purchases to remain eligible for commissions, often leading to financial losses. According to past legal cases, a vast majority of distributors fail to make sustainable incomes, with many even losing money.
2017 Class-Action Lawsuit
In 2017, a class-action lawsuit was filed against Market America, claiming that the company misled participants by promising high earnings while failing to disclose the low success rates. The lawsuit argued that Market America functioned as a pyramid scheme by:
- Encouraging members to invest in expensive starter kits and mandatory purchases.
- Rewarding recruitment over actual retail sales.
- Presenting misleading income opportunities.
The case further revealed that most distributors earn little to no money, with the vast majority of profits going to those at the top of the structure.
Market America’s Defense
Market America has denied all allegations of being a pyramid scheme. The company argues that it sells real products, differentiating it from illegal pyramid schemes that rely solely on recruitment. It also claims to offer training and mentorship to help distributors succeed. Market America insists that the success of an UnFranchise Owner depends on their effort and ability to sell products. However, critics argue that the company’s emphasis on recruitment, high costs, and unrealistic earnings potential resemble classic pyramid scheme characteristics.
Is Market America A Pyramid Scheme?
While Market America has not been officially classified as a pyramid scheme, its business model shares key similarities with one. It does sell real products, but its income structure is largely based on recruitment.
Participants are required to make ongoing purchases, and the majority struggle to achieve financial success. These factors place Market America in a gray area between MLMs and pyramid schemes.
| Criteria | Market America | Pyramid Scheme |
| Sells real products | Yes | No |
| Income primarily from recruitment | Yes | Yes |
| Requires continuous purchases | Yes | Yes |
| High failure rate among participants | Yes | Yes |
| Legal classification as a pyramid scheme | No | Yes |
Based on these factors, Market America operates in a space that raises ethical concerns.
Should You Join Market America?
Before joining Market America, consider the financial risks. The majority of MLM participants fail to make significant income, and ongoing costs can exceed earnings. If a company places greater emphasis on recruiting over actual sales, it is a red flag. Many former distributors report financial losses rather than profits, making it crucial to evaluate whether the opportunity is truly worthwhile.
Conclusion
Market America presents itself as a business opportunity, but its structure has drawn criticism and legal scrutiny. While it is not officially classified as a pyramid scheme, its business model closely resembles one. If you are considering joining, be aware of the financial risks and the high likelihood of minimal earnings.
For those looking for a profitable business venture, alternative models with more transparency and lower risks may be a better option.
FAQs
Is Market America a legitimate business or a pyramid scheme?
Market America sells real products, but its income structure heavily relies on recruitment. While it hasn’t been legally classified as a pyramid scheme, its business model raises concerns.
How do UnFranchise Owners make money in Market America?
UnFranchise Owners earn money through product sales and recruiting others. However, many report struggling to turn a profit due to high costs and ongoing purchase requirements.
What are the risks of joining Market America?
The main risks include high initial investments, monthly purchase requirements, and a low success rate. Many members fail to earn significant income and often lose money.
