|Classic Pyramid Scheme|
BusinessWeek did an exposé on Market America, calling it “the latest and most sophisticated incarnation of multilevel marketing, that controversial business model.” In the article's comments, one reader (second from the top) put it succinctly: “So, it says in 2006, $79 million was paid out to UnFranchise Owners, (more or less) correct? So, taking the conservative 100K owners, that is $79,000,000/100,000 = $790 per owner? Is my math correct, Dave? Even being really generous, saying there is only 50K owners, that puts the payout at: $1,580 per owner, correct?”
That reader is correct. MA is a 21st century incarnation of the traveling medicine show, with more sophisticated names for their varieties of snake oil, like "Isotonix."
I won’t keep you in suspense: those grifters extracted $12,900.00* from my wife before I found out, and went ballistic. Her “sponsor” and the rest are nothing more than white-collar criminals. They are adept at reading a person’s personality, and tailor their pitch to exploit “the get-rich-quick dreams of every red-blooded American,” as BusinessWeek plainly put it. Additionally, she went to numerous “training sessions,” for which she was charged $200 per session plus materials. She would come home and pour over their pamphlets and the rest, as if she was studying for the GMAT.
*It finally reached $27,000 before she gave up.
BusinessWeek explains that Market America “products, the most popular and profitable of which are the Isotonix line of nutritional supplements that sell for about $70 per 10-ounce bottle, are almost interchangeable with what you could find in your local CVS or Duane Reade for half the price.” Moreover, many can be bought at Costco for a fraction of the price. Here’s one example: MA sells fish oil capsules for $59.95 for 60. That bottle costs the distributor $44.00. Costco sells fish oil capsules at $8.00 for 400; that’s 2 ¢ per capsule, instead of $1.00.
MA’s most popular nostrum is OPC – 3. It sells for $29.95 for a 3.5 ounce bottle. Its primary ingredient is bicarbonate. Oral bicarbonate powder can be purchased through Google shopping: a 4-ounce bottle for $4.13.
MA sells multivitamins for $51.95 for a 90-day supply. Costco sells multivitamins for $15.49 for a 500-day supply, which includes shipping and handling for those who want it mailed. MA sells a calcium supplement, at $18.50 for a 90-day supply. Costco sells a calcium supplement, at $10.59 for a 250-day supply, including shipping and handling.
Those are just three representative examples. The only one who makes a living from a pyramid scheme, is the person who sits at the top. Additionally, MA is a cult. Anyone who questions their “sponsor,” or anyone else above them, is told of dire consequences, with the pitch tailored to the mark. This past Thanksgiving, my wife took me to see her "sponsor," and the sponsor's husband and daughter. They shook their hands and arms at me, and shouted and harangued me. I felt physically threatened.
Remember, few products today are sold door-to-door.