We all have that friend, colleague, or relative who always tries to sell overpriced and mediocre Market America products to us. If we reject, they then try to convince us to join them to make a fortune. But why do they even do that? Is Market America A Pyramid Scheme?
It is true that there are many direct sales companies in the USA that are absolutely legit. But when it comes to MLM, an FTC report suggests that over 90% of people fail to book a profit. The situation is even worse if you talk about Pyramid Schemes.
As an advent admirer of legit WFH jobs, I always try to get first-hand experience whenever there is a money-making opportunity in front of me. And after seeing the income claims by Market America, I decided that it is necessary to try it personally. Here is what I found!
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Market America – A Quick Review
Market America is an MLM company like Herbalife and Amway, although it works quite differently.
It ensures passive income ideas to its distributors and independent contractors, where they can earn a commission by selling products and also by recruiting other people under them.
While talking about what they exactly sell, Marc Ashley, the COO of Market America and the brother-in-law of founder JR Ridinger said, “JR’s great gift is, well, a lot of guys can sell stuff, but JR sells belief.”
Last year, Market America crossed a total valuation of $7.3 billion with a sales force of over 180,000 people worldwide.
Besides the USA, it now has a presence in the UK, Canada, Australia, Spain, Mexico, Singapore, Taiwan, Malaysia, Hong Kong, and mainland China.
The award and recognition portfolio of Market America is also quite strong, as they have achieved the BBB Torch Award for Ethics twice, in 2013 and 2018.
They have also secured their place in the Top 500 companies in the Internet Retailer category in 2018.
Although Market America mainly markets itself as a product seller and reseller, they mainly generate profits from other means, such as through joining fees and commissions.
Dreamshala Rating: 3.5/5 in terms of legitimacy, as this company, as well as the shop.com website, is legit and has been in operation for quite a long time now. But 1.8/5 in terms of earning potential, as it is very difficult to make money from any MLM, direct sales, or Pyramid scheme company.
What Is Market America?
Established in 1992, Market America is a multi-level marketing and product reselling company primarily operating in the USA.
Currently, it is headquartered in Greensboro, North Carolina, and has over 180,000 independent distributors worldwide.
JR Ridinger was an Amway distributor when he first developed the idea of Market America.
Then he started this company with his wife, Loren Ridinger, in 1992. And in 2010, they acquired the shop.com domain for an undisclosed amount.
After trading publicly since its inception, Market America went private in 2001 following the purchase of all the shares by the founder JR and Loren Ridinger. And in 2016, they recruited 800+ employees to expand their operation worldwide.
Market America started marketing itself as the bandwagon of money-making in the USA, where any Americans can join them if they need money now.
Although the founder and current CEO of Market America, JR Ridinger, calls Market America a “product brokerage and internet marketing company,” it is somewhat an open truth that they are an MLM company that primarily focuses on the Pyramid scheme.
Market America currently sells many items both offline through its independent distributors and online through shop.com.
Their inventory is stacked with weight loss products to beauty items, from auto care to personal grooming, from skincare to haircare, and many more.
But despite all these, Market America is mainly known for unprecedented income claims, over-the-top performance of JR Ridinger in events, and their lawsuits against people and the federal government.
What Market America and Shop.Com Sell Anyway?
As taking part in or promoting pyramid schemes is among the illegal side hustles in the USA, Market America took a different route. It claims to lead a “digital shopping revolution” where they “convert spending into earning.”
Now, what does that really mean? Basically, there are two features on shop.com, coupon codes and price comparison (real-time).
Market America says that even if the price is the same as they are shipping from the manufacturer only, you’ll receive “shopping annuities” in terms of cashback.
It is not a unique feature, by the way, as there are several high-paying cashback sites available, like Rakuten and Ibotta, that offer the same. And trust me, you can make $20 fast on these two sites, but it won’t be easy on Shop.com.
Let’s now talk about Market America products! There is an extensive range covering almost Everything.
Some of their best-selling products are as follows:
- Isotonix (health and nutrition)
- Snap (home and garden care)
- Pet Health (Pet care & supplements)
- Autoworks (Auto care & accessories)
- TLS (weight loss and management)
- Royal Spa (Grooming)
- Fixx (personal care)
- Skintelligence (Skincare)
- Motives by Loren Ridinger (Cosmetics & beauty)
- Loren Jewels (Jewelry)
- Yours by Loren Ridinger (Customized and junk jewelry)
- Pure H2O (Water filtration and purifier)
Market America also offers personal financial management services under the brand name maCapital Resources. Besides, it offers digital marketing services under the brand name maWebCenters.
What Is The Startup Fee Of Market America?
The demand for joining any MLM or Pyramid schemes is crazily increasing, as these are jobs that don’t drug test, and you also don’t need to have any specific educational or technical qualification.
To take part in the alleged pyramid scheme of Market America, you need to spend some money first. And when I checked last time, the current investment required is as follows.
- Fast Start Program Kit: $449.95 + tax
- Starter Kit: $169.95 + tax
- UFMS (Unfranchise Management System): $21.95/month or $119.95/year
- Own storefront and subdomain on Shop.com: $20
- Annual Renewal Charges: $99
- New Distributor Training: $5
- ECCT: $50
These are not all, as independent distributors also need to stack up their inventory by buying Market America products worth $100 to $300.
Besides, distributors also need to take part in seminars and conferences by paying ticket prices. When I last checked in July 2023, there were three types of seminars Market America is offering.
- Local Seminar: $30 (Ticket for one day)
- International Convention: $200 (Ticket for four days of training)
- World Conference: $200 (Ticket for three days of training)
If you sum up all these initial investments, it will easily cross the $1K bracket. So, before you even make a single dollar, you need to spend a thousand bucks with an additional monthly burden of $100 to $200.
Training & Tools Provided By Market America
When you buy the “UnFranchise Business Owner Fast Start Program Kit” for $449.95 plus tax, you’ll get access to the “Getting Started Guide.”
It is a type of virtual mentorship offered by seniors and managers in this MLM system.
However, there are three types of training also provided by Market America.
- Basic 5 (initial training)
- NUOT (New UnFranchise Owner Training)
- ECCT (Executive Coordinator Certification Training)
Please note that each of these training needs you to pay a price that ranges from $5 to $200, depending on several factors. And they also change the course fee from time to time.
Independent contractors and UnFranchise owners also need to take part in their quarterly local seminars along with yearly world conventions and international seminars. And those are chargeable up to $200/event.
The Compensation Plan Of Market America
I’ve already given you a brief idea about how this Market America pyramid scheme works and how much you need to invest in it. And now, it’s time to know about the compensation plan.
When I first checked out their compensation plans, I felt like there was some way to double your money in no time. Then I had to dig deep to understand how a participant gets compensated.
Market America currently offers four types of profits to their UnFranchise Owners.
- Retail Bonus: Generated profit from selling products directly to consumers.
- Wholesale Bonus: Profit from buying products directly from Market America at wholesale rate and then selling those to business owners under them.
- Group Sales Bonus: Percentage of profit as a bonus from total sales of their team or downline.
- Leadership Bonus: Additional bonus when a business owner reaches a higher level.
Now try to figure out if they are paying four kinds of profits to each of their contractors, then what is the actual price of that product, and what is the actual margin.
In my calculation, the actual product price is somewhat between 8% to 12% of the retail price.
What Is A Pyramid Scheme?
To fully understand if Market America is a pyramid scheme or not, you need to know what a pyramid marketing scheme is. I have already given detail in this regard in my last GoHereNext review.
Let’s break down how the pyramid scheme works. There are two main ways to this model. The first one is through product sales, and the next one is through joining other people under them.
Product Sales: Let’s say a product has a manufacturing cost of $10. Now, in the pyramid scheme, contractors will sell it for $100. From that, the actual seller gets $20, the manager on top of them gets $10, and the leader on top of the managers gets $5. On top of that, the company makes $55.
Now, who will be that dumb to buy a product for $100 that is actually worth $10? Yes, the independent contractors buy themselves, but the company still makes a profit.
Joining Model: Let’s say a starter pack costs $500. Now, the independent contractor who sells it to a new recruit gets $100, the manager on top of them gets $50, and the leader gets $50. Finally, the company makes $300.
So, how can anyone create a sustainable income from it? It is by recruiting more people for the chain.
My Take: Neither their products are that great to quote that much price, nor their starter kit has any special thing to offer for which they are charging close to $500.
Is Market America A Pyramid Scheme?
Yes, Market America has widely considered a pyramid scheme as they focus more on recruiting people rather than selling the actual product.
Independent contractors of Market America only make extra money when someone joins under them by paying a hefty price in the name of a starter kit.
There are many Pyramid scheme lawsuits that were on Market America as well. Most independent contractors need to keep an inventory on a monthly basis by purchasing products from Market America from their own pocket.
And they hope that those products will sell, and they get the money as profit. But in reality, only a handful of people actually buy those overpriced mediocre products.
According to a published report by TINA, 90% of independent contractors and distributors in Market America suffered a net loss.
They invested more than $1,000 in starter packs and inventory on average. Besides, they also need to spend close to $500 more for seminars and training.
Market America doesn’t care if your inventory is unsold, and you have all the products with you. But you have to keep on buying products for them to stack up your inventory even more. And there is no buy-back option either.
The (Suspicious) Business Model Of Market America
All the pyramid schemes have shady and suspicious business models, and Market America is no different. First of all, there is no clear instruction on how to start a business that will yield profit.
It seems that they are only concentrating on joining others rather than selling the actual product.
While even some home businesses for women can be started within $1,000, Market America needs you to pay much more than that without any proper business plan.
The basic business model of Market America is simple. The independent contractors, distributors, and agents who joined them are called “UnFranchise Business Owners,” or UFOs. And they pay a startup fee along with a monthly maintenance fee.
In return, they get a subdomain that Market America calls “Partner Stores.” However, Market America is also clear that they don’t manufacture any product at all. So, what are they even selling?
Market America sources the products from third-party manufacturers and sells those to the UFOs for an inflated price. Most UFOs fail to sell those overpriced products. On the other hand, they must keep adding products to their inventory.
So, it finally results in an unsold and overstocked inventory without any profit. So, the UFOs try to join other people on their team to sell those products in the hope of getting referral commissions from their sales. But sadly, the cycle continues again.
Lawsuits And Allegations Against Market America
It is not an unknown fact that Market America has already received several FDA warnings to date.
Besides, there are several lawsuits against them as well. Market America markets its business model as a surprising way to make money, which it is not!
According to a CBS News report, Market America paid $100,000 in fines and $200,000 (+ interest) in a settlement with SEC for their stock sales manipulation in 1999.
The same news also reported that the residents of California filed a lawsuit against Market America for violating the state law of California.
Market America was mainly targeting Chinese immigrants and forced them to sell the products to their friends and relatives in Mainland China.
According to a published report by Court House News, Californian residents Chuanjie Yang and Ollie Lan filed a lawsuit against Market America in 2017 for violating California state law and Corrupt Organizations Act.
In that lawsuit, the citizens claimed that Market America promised their earning model as a legit job for housewives, stay-at-home parents, and low-income immigrants.
However, in reality, over 90% of distributors and independent contractors of Market America suffered a net loss.
Market America’s Feud With TINA.ORG (Truth In Advertising)
Truth in Advertising (TINA.org) is a nonprofit firm that fights against deceptive marketing and false claims. And they were quite vocal about the Market America pyramid scheme for a very long time.
TINA, from the very beginning, marked it as an under-the-table job with loads of false promises and falsified income proofs.
TINA reported that Market America published over 450 income reports with deceptive claims in 2020.
Then in December 2020, TINA issued the first warning to Market America while quoting 200 more false claims published before 2020 (making 650+ false claims in total).
Market America then had to remove all those false claims within a few weeks.
Market America also removed 100 Power Profiles from their website, along with 300+ interviews of those Power Profiles on their YouTube channel.
They then removed all the 200+ posts with the #financialfreedom hashtag and 14 misleading posts from JR’s personal Instagram account.
Pros And Cons Of Joining Market America
All the dirty ways to make money certainly have their pros and cons. So, let’s dissect Market America and try to understand all the advantages and disadvantages that it has.
Market America User Reviews – What People Are Saying?
There are hundreds of ongoing scams in the internet world nowadays. We have already published a detailed guide to spot a fake Cash App screenshot. And that time also, we contacted other users to contribute to our research.
While researching Market America, I also had a talk with previous users. Then I went through loads of different opinions found on the internet. Here are some!
- An anonymous user on BBB wrote, “I joined Market America as an Unfranchise around November of 2018 under pressure, and I stayed with till April of 2021. Top leaders assured me that I was gonna make a lot of money, but none of that happened; I lost tons of money.”
- Jason Worthen on Trustpilot wrote, “This site allows companies on here that scam people. I placed an order from a site nearly 2 months ago, and they took my money but never sent my order.”
- Tomaltach on Reddit wrote, “Everything they told me, I just felt they were either brainwashed or, they put themselves into it, to a point they can’t get out without losing what they put in. Now they’re trying to think of people who may be interested.”
A user named Kare_Bear shared her experience of going to a Market America seminar. Don’t miss this experience report if you want to know what exactly happens in these seminars and conventions.
Is Market America A Scam?
No, technically, you can’t call Market America a straight-out scam. However, there are many deceptive claims and suspicious business models in Market America’s system.
We have already encountered such unprecedented claims while making our latest reports on Cash App flips.
Market America initially marketed its distributor model as a great home business idea for women and men.
But that’s not a legit way to make money. And there are four things that make Market America even more suspicious.
- They focus more on recruiting people than selling products.
- Almost all the claims of their earning models are false.
- Most Market America and Shop.Com products are overpriced.
- The startup fee is too high, and you need to pay a hefty ticket price to attend even basic training.
My Take: It is true that Market America is not scamming people directly. But that doesn’t mean that they are not making any fake claims. There are hundreds of red flags, which I’ve already discussed. So, it is better to stay away from this pyramid scheme.
Market America runs almost a pyramid scheme where you need to pay a hefty fee just to join them and to get the starter kit. And then, you keep on paying them in terms of training fees, seminar tickets, and global (!) conventions.
As a distributor or UFO, you also need to purchase from them on a monthly basis just to meet the sales requirements. And there is no buy-back option either, even if your inventory gets unsold.
What type of business is Market America?
Market America is actually an MLM or Pyramid scheme company, although it markets itself as a product brokerage and internet marketing company.
Shop.com (owned by Market America) is a global e-commerce and retail product brokerage platform.
Who is the owner of Market America?
JR Ridinger is the current owner of Market America. Besides he is also the current CEO and the Chairman of the Market America company.
He, with his wife Loren, started Market America as a privately held company in 1992 after working as an Amway distributor.
Where is Market America located?
Market America is headquartered at 1302 Pleasant Ridge Road, Greensboro, North Carolina, USA. However, they also have branch offices in many countries.
As of 2023, Market America has 850+ full-time employees and 180,000+ independent contractors.
What is Market America UnFranchise?
Market America calls their independent contractors or distributors UnFranchise Owners. People need to pay more than $1,000 in total to become UnFranchise Owners.
And in return, they get a starter kit along with a dedicated storefront on Shop.com.
If you want even more ideas for making money, consider checking our posts on:
- 40 Best Part-Time / Late Night Work-At-Home Jobs in 2023
- 45 Best Side Hustle Ideas to Make Extra Income (2023 Guide)
- 17 Online Jobs That Pay Daily or Instantly (2023 Guide)
Hello there, I’m Siva Mahesh, an MBA Finance post-graduate and a Remote Career & Personal Finance blogger for 5+ years. Over the years, my work has been featured on US News, Entrepreneur, MSN, Yahoo Finance, GoBankingRates, EverQuote, Legal Zoom, The Simple Dollar, Databox, Business.com, Business News Daily, Venngage, Score.org, and more. My primary mission is to help our readers maximize their earning potential with legitimate online business ideas, side hustles, and passive income ideas we publish on Dreamshala. Currently, more than 100,000 readers from all around the world visit this blog every month and learn new ways to improve their finances.