Another Network Marketing Company Declared a Pyramid Scheme

Well at least in the state of Montana. ACN (which stands for American Communications Network) is a telecommunications based network marketing company. It has run into trouble in Montana; the Securities Commissioner has stated:

The Commissioner's Office found an overwhelming portion of revenues earned by ACN representatives was derived from participants who must personally buy a telephone service that does not work in many parts of Montana to become managers or recruit new participants into the program. In 2009, ACN recruited over 300 Montana participants who paid approximately $234,813.02 to be a part of the program. ACN's records indicate a mere $896.86 was paid out in compensation to these participants.

Network marketing companies frequently run into trouble with state governments (if not the federal government) due to lopsided cash payout reports like that. And while other things may be big in Montana, the numbers are small in that relatively sparsely populated state. Part of the problem might be telecom service availability in Montana but it doesn't sound like there are many active dealers.

This is not to say that all network marketing (NM) companies have such low payouts as this one, however you should do your research first before joining one. NM companies can avoid the kind of problem above by dropping inactive or barely active representatives and some of them do this. Inactive reps simply pay the monthly fee and never sell the product or recruit anyone else. Why they would do this I have no idea, but apparently many of them simply are not serious about starting a home based business.

If you are looking at network marketing for a home based business, be sure to turn over every stone in your search for information about the company. Make sure you understand how they work and how they pay out. The last thing you want is to build a business and have the state shut it down - although it sounds like there won't be much loss for Montana reps of that company. Below is a link to the Montana Securities Commissioner press release.

ACN Cease and Desist Order