Is ACN a Pyramid Scam?
At the scam.com forum, there is considerable debate about whether ACN is a pyramid scam.
One poster cites, in support of his theory that ACN is an illegal pyramid scam, two Government announcements, one from Australia and the other from the Canadian Competition Bureau.
In the Australian Federal Court,
"On 15 November 2004 the ACCC instituted proceedings against Australian Communications Network Pty Ltd, a seller of telecommunications services, for alleged breaches of the pyramid selling scheme provisions of the Act.On 23 March 2005 Justice Selway found that ACN participated in, promoted and induced or attempted to induce persons to take part in a pyramid selling scheme in contravention of section 65AAC of the Act, and that Mr Martin Paech, an ACN director, aided and abetted and was knowingly concerned in those contraventions.
The court also found that Mr Keith Janke and Mr Jonathon Gibbs, two ACN Independent Representatives, were knowingly concerned in and aided and abetted the contraventions, and Gibbschade Pty Ltd participated in the pyramid selling scheme, and attempted to induce other persons to participate in the scheme, in contravention of the Act."
And according to the Competition Bureau,
"The Competition Bureau alleges that ACN Canada, as it is known, and its participants, through its web sites and at public meetings, recruited new participants by exaggerating income expectations without disclosing the income of a typical participant. Under the Competition Act, it is illegal to make reference to earnings in a multi-level marketing plan without disclosing a typical participant's income. In addition, operators of a multi-level marketing plan must ensure that any income representation made by a participant in the plan includes disclosure of a typical participant's income."
There is a significant problem with relying on these two cases: the Australian Federal Court's decision was overturned, and the Competition Bureau's case did not survive the preliminary hearing. For the latter, you would have had to gone to Corey Lewis's website, a Manitoba Lawyer, to find this information out as it does not appear on the Competition Bureau's website.
I think that these decisions are probably correct, the deception in most modern MLM's relate to the level of average compensation, the number of drop-outs, and the losses that those drop-outs on average have sustained, concepts related to earnings claims. The usual criminal definition of a pyramid should by applied to concepts like Skybiz.
Notwithstanding that these cases no longer can be relied upon, a number of independent consumer watch sites continue to rely upon these two cases to show that ACN is a pyramid scam. For example, over at mlmwatchdog.com there is a report purporting to show that ACN is a pyramid scam - but it has not been updated to reflect the status of these two competition cases.
Does this mean that I think ACN is not employing deceptive marketing practices? Well, this commentator certainly believes that ACN is employing deceptive marketing practices.
But, my own view is that a proper analysis of ACN's marketing practices should start with the proposed 26 new deceptive marketing practices, proposed by the FTC in April, 2006. Tell me what you think.
Comments
Hi Michael,
I am an Independent Representative with ACN, and I appreciate your article. You did a very thorough job and the links were outstanding.
All literature directly from ACN is correct as it explains the compensation plans, residual percentage, etc. The issue with the misleading falls on the individual representatives. ACN does its best to ensure integrity with the company, but not everyone is perfect.
As you well know, ACN does not pay a bonus for new recruits unless action is taken in acquiring customers. Not only that, but the new representative has a 30 day period to acquire the few customers before any compensation is paid. That new rep can get the points completely by themselves, or their upline can assist them. Since their upline gets paid for getting new recruits their customers, it is in their interest to help them. Not all reps are motivated enough to sit down with their prospects and help them acquire customers to help get their organization off the ground. That is where the trouble lies. However, With more people promoting and gaining significant leadership positions, this is becoming less of a problem. The key to success in ACN is personal motivation which most people don't realize.
Thanks again for your article, and I wish you the best.
Matt C.
Posted by: Matt C. | June 13, 2007 1:20 AM
What efforts does ACN make to rein in its various representatives, who are making deceptive pitches?
Posted by: Michael Webster | June 13, 2007 9:59 AM
hi
if i dont recruit in 30days..what happend then?
Cheers!!!
Posted by: kwaytiau | August 30, 2007 8:58 AM
What about their new viedo phone?
they have Mr. D. Trump backinging this, is this just a name droping thing to bring in people or what? Is ACN a good company yes or no?
Posted by: westbrook | September 24, 2007 7:20 AM
Don't be fool i was also involve with ACN. I should find out more about it before i join. The problem with ACN is the commission is too low. They do not tell you what the fine line of things for example you have to pay monthly chages to them and a yearly charge. that is why your business cant take the next step because i felt like i dont make enough as it is and they put me in the negative. dont get me wrong im not the lazy type i went out there and sold my ass off and still i got no where. I was the type in the selling business called a shark i hassle like no tomorrow and i did that with ACN. It worked but all your hard work is for pennies all your work is for the people on the higher levels. Please do not get mix in with this company unless you like to waste time and money. I want to thank you for spending time reading this and i hope i change your mind about joining them.
Posted by: Donald Person | November 12, 2007 7:23 PM
I took a look into the actual product and it ended up not saving money. So, I told this to the guy trying to recruit me, and he called me 'stupid and broke'. (along with some other slams) What kind of leadership is that? I think he was disappointed that after several calls from him and a friend of mine trying to pressure me in to dropping all my weekend plans to for an ACN convention in another state-I said I can't go. I changed my mind again and again. But finally realized that the chances of success are slim, and that you have to pester your friends and family(ruin your relationship).
If the product was so great-it should sell itself. Obviously the money only comes from recruiting; that's why the guy called me a name, he probably thought he had me.
www.mlmsurvivor.com
Posted by: Gerrit Millet | November 22, 2007 4:53 AM
People think ACN is a job... well they don't understand that MLM is a business that you build. Residual Income is what you build, compensation plan is what they put in place after years of effort to be able to give more to people. No jobs give you residual income. Please guys read books about economy such as 'The Next Millionaire' by Paul Zane Pilzer. Listen to Robert Kiyosaki, Donald Trump, the integrity of the co-founders, the 3 general attorney... It's for your interest to understand!
Posted by: Phil | December 10, 2007 12:05 AM
Hi, well after reading all this ACN i don't know, interesting concept so are others. But my question is how did Donald Trump get rich was it because of MLM or Bill Gates for that matter ? They all created a product that some one was will to buy not MLM.
Posted by: atif | December 13, 2007 1:16 PM
ACN is like all the other sleazy mlm companies. The only ones benefiting from all your hard work are the people at the top of the pyramid. How come you never see new people at the top of the leaders list? It is the same story with all mlm companies.
Posted by: ralph | December 14, 2007 3:28 AM
MY friend explained the whole thing to me.. Firstly.. it IS a scam.. its just HOW much of a scam which people to know about.
You work for people above you and they work for people above them (and so on).
At the end of it, you are needing thousands of customers to make your 'millions'.. all in all its not worth it if you have a great responsibiliy such as a family and marriage.
Do your homework!
I just found out tonight that my father signed up to this and because we as a family are hard of cash, we have not been able to pay the account. You get a late charge when you cant pay and as current, we are having to pay %800 more than the original bill.
If you want to make enemies out of your friends or dont care about your relationships, go for it.
If you are a Christian, dont let your friend pull the 'God card' on you because its just a money making sceme - at the end of the day..
Posted by: Corban | February 10, 2008 4:24 AM
you reallly have to be stupid to think that you'd be making millions with acn...do your homework...the only place on the internet that i found that was saying positive things about acn was on the acn's website, and the comments from the "newbies" who still feel "extremely" lucky that theyr'e going to get rich.......yea right!!!!!
my friend and her boyfriend joined like 2 weeks ago....now she planning on quitting her job because she's so sure that acn will make her a living...ma n her have been friends many years....but in 2 weeks she managed to loose me...they both got sooo annoying....none of our friends can stand them anymore...i keep them blocked off my msn, i dont answer when they call or anything....if u wanna keep ur friends and MONEY dont do it!!!!!!
oh and the donald trump thing....get real ppl, obviously he didnt get rich by ACN...he's jsut another celebrity that fit the profile for this job.....look at it this way..why was britney spears caught drinking coca cola, when she was clearly the spokesperson for pepsi....celebrities will do anything for the right amount of cash....
Posted by: Emma | February 11, 2008 12:17 AM
I am a manager of ADC and I am purchasing phones for my community to use. I am not concern about getting a profit from them I am more concern about if they work properly and the cheap long distance calls
Posted by: doug-ADC manager | February 11, 2008 4:03 PM
Many of my friends have signed onto this ACN Hype, but without doing the proper research. They have been trying to get me to sign up for weeks telling me that we will all be so rich beond our wildest dreams. I have done extensive research on this company and the only place i am able to find anything possative about ACN is on their own website (what a suprise). I tried showing my friends the information i came up with and they are so "brainwashed" at this point they only believe what these "CROOKS" are telling them. So far they have all been able to suck more friends and family into this scheme, but in the long run they are just going to loose a lot of resepect from friends and family because they are ripping them off. So this is to all you people selling to your friends any family is it really worth ripping of the people you love just to try and get rich quick, (which will never happen anyway).
Posted by: Joel Wrona | March 14, 2008 2:11 PM
I have multiple friends that have been brainwashed by this "company", and they have alienated all of their friends into thinking they are missing out if they dont by into ACN now. Most of my friends have signed up exect for a few of us who have actually researched this company. I have shown my friends who have signed up all the research i have come up with, but at this point they are so "brainwashed" they wont hear any of it. They are now in the process of ripping off all other family and friends. ACN reps tell you to sell to only friends and family that way you get the pitty sale, but in reality all you are doing is destroying your relationships. To any and all of you involved in this SCAM!! I hope its worth it!!!!!
Posted by: Joel Wrona | March 14, 2008 2:12 PM
I attended an info session last night for ACN. First off, hats off to these guys they're incredible at what they do. They'll hype you up with out telling you anything. I got slightly excited as unlike most MLMs the products seemed genuinely useful. Useful != profitable. The telecomm is a shell, it's not where ACN makes its money.
I'm a numbers guy. Show me the dollars and cents and where they're coming from. The group meeting I attended was ~350 and had a monthly billing revenue of about $25,000. ACN is a reseller, how much of that $25,000 do you think they keep? 10%? $2,500 in revenue a month for a team of 350? Do the math, there's nothing there.
Don't like numbers? Let's put it this way, the two men who started the team are at the "20 Customer Points" level, and according to ACN the average customer is worth 2 points. You think a cell phone reseller can eat on ten customers?
The money comes from the $499 recruits pay in to get started + the monthly fees. That's where the focus. The telecomm products (and energy/utilities) are just a distraction.
Is there money to be made? Yes, there is always money to be made in MLMs. They are, however, a zero sum game. You only make money by recruiting new team members who recruit more new team members and so on.
Posted by: Anthy | April 7, 2008 3:07 PM