In a proposed class action, three plaintiffs allege that multi-level marketing company Market America is no more than a pyramid scheme in which distributors are tricked into thinking they can earn a profit by selling health products.
In a proposed class action recently transferred to North Carolina federal court, three plaintiffs allege that multi-level marketing company Market America is no more than a pyramid scheme in which distributors are tricked into thinking they can earn a profit by selling nutritional supplements and health products.
Filed against Market America, Inc., Market America Worldwide, Inc., and the company’s three top executives, the lawsuit claims the defendants represent to distributors that they can earn a six-figure salary by selling Market America products and, more importantly, recruiting a “sales distribution team” of other distributors. The case alleges that the only way to earn money with Market America is not by selling products, but by acquiring a “downline” of recruits whose start-up fees and monthly contributions will filter up to benefit those above them, which the suit says is the mark of a classic pyramid scheme.
“MarketAmerica has very little costs, nor production requirements because it does not directly manufacture its own products,” the complaint reads. “Instead, MarketAmerica offers products from third party manufacturers, but requires distributors of MarketAmerica to pay monthly fees just for the opportunity to sell these third-party products, the touchstone of a pyramid scheme.”
Distributors, who the case says are “doomed from the start,” are allegedly required to pay an initial start-up fee of $399.00, followed by a monthly fee of $129.00. Additionally, each enrollee, according to the complaint, must spend at least $130 per month on Shop.com—the website operated by the defendants—in order to maintain enrollee status. The lawsuit attests that over 90 percent of Market America distributors lose money, and only those at the top of the so-called pyramid are able to earn the lucrative salaries and bonuses represented by the defendants.
The case further alleges that regardless of the amount of time and effort invested, no distributor is able to make a profit solely from selling Market America products because the products themselves are overpriced. Not only are some of the items offered by Market America “unhealthy and toxic,” the suit alleges, but consumers can purchase the products online for cheaper than the prices at which distributors sell them. Moreover, Market America prohibits distributors from selling their products online and in almost every brick-and-mortar location, the case says, and instead encourages them to sell one-on-one in their own homes or the homes of friends and family—an “extremely difficult” method of earning profits.
As for the plaintiffs, the case claims the three individuals have respectively lost $35,000, $7,000, and $10,000 due to the defendants’ misrepresentations.
Though originally filed in May 2017, the lawsuit has recently been transferred to North Carolina for arbitration proceedings.