Market America Class Action Alleges Illegal Pyramid Scheme

A class action lawsuit alleges that Market America Inc. misleads consumers into believing that it offers “a business opportunity ‘unlike any seen in history before’” when in actuality it’s an illegal pyramid scheme.

The complaint contends that hundreds of thousands of people have signed up as distributors, but none of them made any money from the business program.

“Plaintiffs and those similarly situated failed even though they were committed and put in the time and effort,” the class action asserts.

The complaint continues, “[t]hey failed because they were doomed from the start by a MarketAmerica marketing plan that systematically rewards recruiting Distributors over the sale of products.”

The Market America illegal pyramid scheme class action lawsuit states that the program targets Chinese-American immigrants, and encourages them to sell Market America’s “wonder products” to their relatives in China. Market America promises that anyone can make money using its “two-year blueprint” for success, and that “the only way to fail under [its] business model is to quit,” according to the class action.

On the contrary, the lawsuit claims that “[o]ver 90% of MarketAmerica Distributors average net losses.” To become a distributor for the company, consumers have to pay a $399 enrollment fee, and another $129 every month. The complaint asserts that very few distributors receive any benefit from these payments.

Since Market America is a pyramid scheme, only the top level individuals make any money. The class action lists several of those top people as additional defendants: James Howard Ridinger, the founder and CEO of Market America; Loren Ridinger, senior executive vice president in the company; and Marc Ashley, the president and CFO of Market America.

Plaintiffs Chuanjie Yang and Ollie Lan both state that they paid the start-up fee and became distributors in Market America. Lan joined in 2015, and paid the distributor fee for three months. Yang was a distributor from 2010 through 2016, and all told believes he paid more than $35,000 to Market America.

The complaint includes a detailed description of Market America’s compensation plan for its distributors. Distributors are reimbursed by the company for sale of products, and for recruiting more distributors in their “down line.” The complaint alleges that since the products are purchased wholesale from other manufacturers, distributors (and Market America itself) only makes money from recruiting new participants.

The class action cites federal case law that a program where rewards are “primarily earned for recruitment, as opposed to merchandise sales to consumers, constitutes a fraudulent business model,” or an illegal pyramid scheme.

The Market America lawsuit requests certification of a nationwide Class of all “persons who paid start-up fees, monthly fees, annual fees, seminar ticket fees, any other fees imposed by Market America, and/or purchased products from MarketAmerica between March 9, 2010, to the present date, who lost money from their participation in the MarketAmerica scheme.”

The class action seeks a return of all money paid to the company by participants, as well as restitution and damages.  The lawsuit also asks for an injunction stopping Market America from operating its pyramid scheme.

Yang and Lan are represented by Blake J. Lindemann of the Lindemann Law Firm, and Daren M. Schlecter of the Law Offices of Daren M. Schlecter APC.

The Market America Illegal Pyramid Scheme Class Action Lawsuit is Chuanjie Yang, et al. v. Market America Inc., et al., Case No. 2:17-cv-04012, in the U.S. District Court for the Central District of California, Western Division.