ACN – American Communications Network – is a multi-level marketing (MLM) company dealing in telecommunications technology and plans, television, energy, and other services. As per Wikipedia,
Multi-level marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of the other salespeople that they recruit. This recruited sales force is referred to as the participant’s “downline”, and can provide multiple levels of compensation. Other terms for MLM include pyramid selling, network marketing, and referral marketing.
I have redded Pyramid as it is the concept by which this general sort of business model is best known. We’ve all heard of “pyramid schemes” and “pyramid scams”. The precise legality of MLMs and pyramid selling appears to be at least somewhat murky. The reasons for widespread skepticism regarding this sort of business structure, however, is crystal clear. From Wikipedia,
The U.S. Federal Trade Commission (FTC) states “Steer clear of multilevel marketing plans that pay commissions for recruiting new distributors. They’re actually illegal pyramid schemes. Why is pyramiding dangerous? Because plans that pay commissions for recruiting new distributors inevitably collapse when no new distributors can be recruited. And when a plan collapses, most people – except perhaps those at the very top of the pyramid – end up empty-handed.”
Not all pyramid selling organizations are the same. I’m not going to comment as to whether ACN has engaged in illegal activities. However, putting legality/illegality aside, I do think there is reason for caution.
Well, for starters, take a look at this Fox News piece on them (this is probably the first time I’ve ever covered something from Fox News in a sympathetic manner):