Market America

From Wikipedia, the free encyclopedia
Jump to navigation Jump to search
Market America
Private
Founded1992
FounderJames Howard Ridinger
Loren Ridinger
HeadquartersGreensboro, North Carolina, United States
Area served
Worldwide
Key people
James Howard Ridinger (President and CEO)
RevenueUSD 791.1 million (2016)[1]
Total assetsUSD 146.1 million (2010)[2]
Number of employees
800 (as of 2016)[1]
Websitemarketamerica.com

Market America is a multi-level marketing company[3][4] founded in 1992 by JR and Loren Ridinger. Headquartered in Greensboro, North Carolina, the company employed around 800 people as of 2016.[1] The services offered by the company include household cleaning supplies, jewelry, personal care products, auto care, cosmetics, dietary supplements, custom websites, water purifiers, and weight management products. A 2017 lawsuit accused the company of being an illegal pyramid scheme.[3]

History[edit]

Market America was founded in 1992 by former Amway distributor James Howard Ridinger and his wife Loren Ridinger .[3][4] The company is headquartered in Greensboro, North Carolina and employed over 800 employees as of 2016.[1] Over the years, the company has sold items such as auto care, electronics, apparel, water filtration systems, flowers, coffee, and oral hygiene through affiliations with outside companies that advertise and offer these items on the firm's site.

In late 2010, the company bought shopping comparison firm Shop.com for an undisclosed amount.[5][6]

Products and services[edit]

Market America's product categories include health and nutrition (Isotonix), home and garden care (Snap), pet care (Pet Health), automotive care (Autoworks), weight management (TLS), personal care (Royal Spa, Fixx, Skintelligence), cosmetics (Motives by Loren Ridinger), jewelry (Loren Jewels, Yours by Loren Ridinger), and water filter systems (Pure H20). Services include personal financial management (maCapital Resources) and Internet marketing services for small to medium-sized businesses (maWebCenters).

The firm's Isotonix line of dietary supplements was introduced in 1993, and came to include more than 20 products.[7] Its Prime line consists of 12 supplement formulations.[8] In 2004, the Transitions Lifestyle System (TLS) weight management program was introduced.[9]

Business model[edit]

According to Market America, all of its products are manufactured by other firms and are exclusively marketed by Market America. The company refers to individual persons and business entities as independent distributors or "UnFranchise Business Owners" who may also operate online retail websites called "Partner Stores".[10] Individual distributors pay startup and monthly fees, and are expected to recruit others.[11]

Market America distributors are eligible to earn money from product sales commissions and recruiting new members to their sales team. In June 2017, the startup fee to become a Market America distributor was reportedly $399 plus additional monthly payments of $129.[3] Market America representatives operate as independent contractors, but are required to spend between $130 and $300 on Market America products and attend seminars and training events that are estimated to cost between $20 and $200 each.[3]

Market America has been criticized as an "incarnation of multilevel marketing" whose products are "almost interchangeable with what you could find in your local CVS or Duane Reade for half the price" and as a business driven by "distributors finding customers, introducing them to Market America products, and then explaining to them that by selling this product, they can become as wealthy as, well, JR Ridinger."[4]

In 2004, consumer awareness group president Robert FitzPatrick commented that based on available figures, the company's growth "could not go on forever" and disputed the claim that "distributors can achieve financial independence".[12]

In 2010, Market America began acquisition of Shop.com, a shopping comparison site on the Internet.[13] The acquisition combined shop.com's database technology with Market America's Cashback program and network of independent distributors ("Independent Shop Consultants"). Market America was to remain in Greensboro, N.C. and the previous shop.com staff were to remain in Monterey, California and London, UK. In September 2011, the two-step integration process was half-complete.[14]

In 2011, Consumer Awareness Institute president Jon M. Taylor ascribed Market America's success to a "stage" typical of multilevel marketing companies, saying, "What happens in these companies, because of the endless chain of recruitment, they get into a momentum phase where they grow rapidly, and to avoid leveling off, they set up new products and go to new countries." According to Taylor, a study of similar multilevel marketing businesses showed that "99.6 percent of people who sign up as distributors wind up losing money."[4]

Legal actions and lawsuits[edit]

In 1999, the United States Securities and Exchange Commission charged Ridlinger, Market America, and some associates with securities fraud. The SEC stated Ridlinger had taken the company public in 1994 using through a shell company created in 1989 as a special-purpose acquisition company. The companies had "with no appreciable assets" and misleading registration statements. Ridlinger and associates settled with the SEC, without admitting or denying any allegations, for over $2 million in disgorgement and penalties. The company's CEO agreed to refrain from future violations of the federal securities laws.[15][16][3][17][18][19]

The company was then taken private when all outstanding shares were purchased by Ridlinger in 2001.[20]

On 3 March 2006, Steve Sawyer sued Market America in Guilford County, North Carolina claiming breach of contract and violation of the North Carolina Wage and Hour Act with respect to certain Internet consulting services he was providing to the company. Sawyer alleged that Market America failed to pay him for $8,333.34 in monthly services and a $25,000 bonus.[citation needed]

In 2007, the court granted Market America's Summary Judgment motion with respect to Sawyer's claim that Market America had violated the North Carolina Wage and Hour Act. Sawyer appealed the decision to the North Carolina Court of Appeals, which affirmed the trial court's decision in favor of Market America in June 2008.[21] Sawyer appealed to the North Carolina Supreme Court, which denied review on 11 December 2008.[22] On December 26, 2008, Sawyer filed a lawsuit against Market America in Multnomah County, Oregon, based on the same facts as the North Carolina lawsuit. In 2009, Market America sought to bring the North Carolina lawsuit to trial. Sawyer filed a motion to stay the North Carolina lawsuit, which was granted.[citation needed]

Later in 2009, Market America filed a motion to stay the Oregon lawsuit, which was granted. Sawyer appealed the decision to stay the Oregon lawsuit to the Oregon Supreme Court, which denied review in January 2010.[23]

In a 2017 federal lawsuit, two distributors accused the company of violating the Racketeering Influenced and Corrupt Organizations Act and California state law. The lawsuit calls Market America a pyramid scheme, noting Market America's claim that "the only way to fail under MarketAmerica’s business model is to quit." The suit claims the company targets Chinese-American immigrants to sell products to friends and relatives in Asia. The lawsuit characterizes Market America's business practice as "racketeering" and says that "while the executives tell distributors they can earn more than $560,000, only those at the top make that kind of money. Ninety percent of sellers do not receive a penny". In April 2019 the California case was transferred to a court in North Carolina and consolidated with another suit.[24] [3][25]

References[edit]

  1. ^ a b c d "The Inc 5000 Market America profile". 2016. Retrieved 14 March 2018.
  2. ^ "Market America Worldwide, Inc. and Affiliates Consolidated Balance Sheet" (PDF). 31 December 2010. Archived from the original (PDF) on 18 October 2011. Retrieved 17 August 2011.
  3. ^ a b c d e f g Berr, Jonathan. "Market America faces federal racketeering suit". CBS News. CBS. Retrieved 10 June 2017.
  4. ^ a b c d "Market America's American Dream Machine". June 23, 2011. Bloomberg Businessweek. Archived from the original on 28 May 2014. Retrieved 1 May 2014.
  5. ^ "Archived copy". Archived from the original on 2016-05-05. Retrieved 2016-04-21.CS1 maint: archived copy as title (link)
  6. ^ "Shop.com finds a buyer". Archived from the original on 17 December 2010. Retrieved 26 March 2012.
  7. ^ "Isotonix Delivery System". Retrieved 26 March 2012.
  8. ^ "Prime Anti Aging Nutraceuticals". Archived from the original on 20 September 2010. Retrieved 29 September 2011.
  9. ^ "Market America 2010 International Convention: Looks to Social Media, Celebrity Partnerships & Technology Enhancements, Scottie Pippen & Kim Kardashian Partner with Market America" (Press release). 11 August 2010. Retrieved 1 August 2011.
  10. ^ "Partner Stores". Archived from the original on 23 August 2011. Retrieved 23 August 2011.
  11. ^ Steven Gaines (27 January 2009). Fool's Paradise: Players, Poseurs, and the Culture of Excess in South Beach. Crown/Archetype. pp. 6–. ISBN 978-0-307-45221-4.
  12. ^ Hoag, Christina (16 February 2004). "Direct Sales Company Allows Miami-Area Founders to Enjoy Extravagant Lifestyle". The Miami Herald Knight Ridder/Tribune Business News. via HighBeam (subscription required). Archived from the original on 11 June 2014. Retrieved 2014-05-02.
  13. ^ "Market America to buy Shop.com". 15 December 2010. Retrieved March 26, 2012.
  14. ^ "Market America completes the heavy lifting of integrating Shop.com". September 26, 2011. Archived from the original on September 23, 2011. Retrieved March 26, 2012.
  15. ^ "Company Overview of Market America, Inc". Retrieved March 26, 2012.
  16. ^ "Litigation Release No. 16131A: SEC Charges Gilbert A> Zwetsch and James H. Ridinger With Illegal Sales of Market America Stock; Cease-and-Desist Order Issued Against Market America and Richard D. Hall Jr". sec.gov. 4 May 1999. Retrieved 19 November 2020.
  17. ^ "SEC Administrative Proceeding 3-9889 In the Matter of Market America, Inc. and Richard D. Hall Jr., Respondents". sec.gov. 4 May 1999. Retrieved 19 November 2020.
  18. ^ "Claims Fund: Gilbert A. Zwetsch and James H. Ridinger (Market America, Inc.)". sec.gov. Retrieved 19 November 2020.
  19. ^ "Zwetsch claim form" (PDF). sec.gov. Retrieved 19 November 2020.
  20. ^ "Market America CEO looks to take company private". Retrieved 26 March 2012.
  21. ^ Steve Sawyer v. Market America, Inc., COA07-1257 (North Carolina Court of Appeals 3 June 2008).
  22. ^ "Supreme Court of North Carolina Petitions 11 December 2008". 11 December 2008. Archived from the original on 27 September 2011. Retrieved 17 August 2011.
  23. ^ Steve Sawyer v. Market America, Inc., 7 (Oregon Supreme Court 21 January 2010). Text
  24. ^ "MarketAmerica". Truth In Advertising. 2019-05-09. Retrieved 2020-05-16.
  25. ^ Reynolds, Matt. "Class Accuses Market America of Racketeering". Courthouse News. Courthouse News Service. Retrieved 10 June 2017.

External links[edit]