The ACN Scam | Understand This!
15 April 2010
First of all, when we refer to the ACN Scam we are not trying to say that what ACN does is illegal in any way. ACN the corporation is not a scam. When we refer to ‘The ACN Scam’ we are referring to the practices of certain independent representatives. In our opinion (based on limited experience) it seems that many ACN members have been “scammed” into believing that making money in ACN is more realistic than it actually is.
This article has nothing but good things to say about ACN the corporation. They provide great services at a great price and have utilized a unique means of sales and advertising. The article seeks only to discuss the strategies and activities of some of the reps within ACN (which often times are likely not in accordance with what ACN the corporation encourages or condones.)
The Basics of the ACN Scam
The scam works by convincing people that they have are going to make a lot of money in the telecom industry by selling a few video phones, satellite TV subscriptions, cell phones, landlines, etc and encouraging a few of their friends to do the same. It’s a simple concept and in theory is quite easy. Anyone can sell 3 services and we would argue that anyone could also find a friend to do the same. The issue, in our opinion, comes when you actually try to do it. There is very limited data on the success rates of ACN Independent Representatives. Most people are told from the start that less than one in 100 are successful in the business. Additionally, a recent study (see references) has shown that approximately 0.5% (less than 1 in 200) even make their initial $500 investment back. The problem: certain representatives are so good at convincing you, that everyone believes they will be the 1 out of 200 who actually makes money! Why?
The Giveaways that Suggest ACN is a Scam
Here are a few things that should suggest why ACN is not worth your time or your reputation:
- All the money is in the sign-up fees! We know they claim that the sign-up fee goes to registering your personal business, getting you a license with the FCC/CRTC etc… You can’t blame them for charging some sort of fee – there is obviously some setup work required and if people could join and quit with no penalty, then they would do it constantly and cost the company a fortune. Our guess is that the set-up process for an individual rep probably costs the company around $20 (based on the assumption that all they really have to do is add you to a database and send you a glossy package). So why charge $500? We suspect the obvious, to pay the bonuses! ACN sells it as “the bonuses will start you off, and the residual income will sustain you later in your career.” This seems impossible - we challenge anyone considering the ACN opportunity to ask their recruiter if the bonuses make up the majority of their income. We suspect this is generally the case, but would recommend you check for yourself – the exception to this rule would be when the individual has not yet earned a bonus – in which case their minimal income would be a product of service commissions. It seems to us that the bulk of the payouts are in the sign-up fees. If this is true, this meets the definition of a pyramid scheme, we know they convince you that their products make the business legitimate, indeed some income must come from phone/TV bills, but is that enough? A scam is a scam and just because the company pays out some money in actual service-bill revenue does not make it legitimate in our opinion.
From the ACN Integrity Site:
- “As distinguished from the legitimate multilevel business opportunity advanced by ACN there are some companies who continue to engage in illegal pyramid sales. Simply defined, an illegal pyramid sales program occurs when persons are induced to purchase the right to sell a product by representations that they could regain their purchase price and also earn profits by subsequently selling the same right to sell to others. This certainly does not occur with the ACN Opportunity.”
- Are they kidding? Maybe a typo? by this definition ACN seems to us to clearly be a Pyramid Scheme
- The “Recruiting Process” is long, hard and strange. Sure a few people sign up on the spot, but the vast majority are fall under the “Some Wait” category. Once you are in, often times you become so wrapped up in things that you find it hard to imagine why anyone wouldn’t sign up – but think about it: If the opportunity were as good as you have convinced yourself it is, then most of your friends would sign up on the spot. This big disconnect between what you think of the opportunity and what the majority of the people you show it to think of it should make you nervous. We recommend everyone understand the concept of position marketing described here: Position Marketing
- If the statistics showed that most people make a lot of money in ACN, then the above point should not make you nervous – if it really was a good opportunity, then it wouldn’t matter if people took a little convincing before they saw the light. But the limited facts seem to suggest that almost nobody makes money in ACN. The average (mean) income of an ACN representative less than $2 a month (see references). The odds are HEAVILY in favor of you having to admit to all your friends that you were wrong in trying to convince them to join ACN.
- ACN has an entire website (ACN Integrity) devoted to proving that they are not a fraudulent company. The fact that this website even exists means the vast majority of people will probably assume that ACN is a scam. As I’m sure you’ve realized already, most people do assume it is a scam (at first glance.) This means that nearly everyone you attempt to recruit and almost every customer you seek to acquire is going to (at least initially) think that you are involved in an illegitimate business. This is not something you want to be associated with – not when the odds of you losing money are 100 times greater than the odds of you paying off your initial investment. Sure, maybe you can deal with people thinking you’re part of a scam, because deep down you ‘know’ you are going to get rich and ‘show them’. That seems to be what everyone thinks.. and yet so many are proven wrong.
- Obviously ACN is not illegal, or they would not exist! The strange part comes when they fall back on this proof of legality as an argument for why it is a good business. Why should the fact that it’s legal mean that it’s a good way for you to make money? Occasionally they seem to use the fact that it’s “almost illegal” as a way to convince you that there must be money in the business. They use quotes like “Direct TV is in on the Scam, Bell Canada is in on the Scam, in fact, you’re the only one who isn’t in on the Scam!” Does the fact that ACN might seem like a scam make it more likely you will get rich?
- To all those sold on the tax argument. No doubt your upline has told you that once you sign up for ACN everything will become a tax “write-off”. If all you’re in it for is the tax breaks, why don’t you register a business of your own for a tenth of the cost? Just because you’ll get a few tax deductions doesn’t mean you should spend $500. Legally you can only deduct expenses that were incurred as a result of the business. Therefore, the only way you are going to save money is by spending a lot more. The fact that tax deductions become available once you join ACN will only save you money if you plan to file a false tax return and deduct expenses that you already had prior to joining – not a good idea!
- Look at what you give up! Can anyone name an industry that requires you to be hated by so many people (see comments below) and still has such a low success rate? Success shouldn’t (and usually doesn’t) require you to hurt your personal relationships.
The Perceived Premise of ACN: Push the Favor – Trade your Dignity for Income
Even panhandlers can make a little money by begging on the streets to a bunch of random people who they have never met. If you were to elaborate on this concept and take a group of beggers who were more socially acceptable than bums, then have them beg to people they actually knew – not just for money, but for “a Favor” – you’re sure to see better results than the bums on the street. Even bums have documented success stories in which they have earned over $100,000 per year, yet none of us are running out to join that profession. As it turns out, the average (mean) panhandler makes over 400 times the annual salary of the ACN independent representative. Doesn’t this seem a little strange?
Honestly, ACN is a beautiful idea: It seems to us they have taken the collective ability of 1 million people to beg and pester their friends/family for a favor, and turned it into an enormous business. We admit, the begging power of this many independent representatives is huge – and hugely profitable. The issue is that none of the beggers make enough money – all of the cash floats to the top. It would appear the vast majority of independent reps have traded a portion of their dignity just to make their upline some money.
The Saddest Part of the ACN Scam
There are 2 parts to this: Firstly, the majority of reps don’t make money, and secondly, if you work hard enough at ACN you will indeed make money. This tricky situation allows ACN reps/recruiters to use terribly effective tactics to encourage their reps to keep on recruiting in order to make money. For example – say John tells Bob that all he has to do to be successful is keep on showing the business to more people and eventually he will be rich – the harder he works the more money he will make. Bob takes this recommendation to heart since he has been told the same thing most of his life – more work (hard or smart) equals more money. Bob shows the business to 300 people over the course of the year, 60 of them sign up, and 2 of them actually make their initial investment back. By this time Bob has earned a decent chunk of cash for himself along with some solid residual income. John was right – hard work actually paid off in ACN! Screw the haters, this is a legitimate business … but what about the 58 people who signed up and lost money? Is hard work still a reasonable justification for profits when you have caused 58 people to part with their money by promising them great returns and delivering them nothing? Oh wait – but it’s alright because you gave everyone fair warning that making money in this business means hard work and they new from the get-go what the odds were of making money. Ya.. maybe you did explain this, but 5 minutes after that talk you halled them off to a rah rah pep rally and subjected them to 3 hours of watching people who claim to be rich walk accross stage spouting how great ACN is. Don’t these 2 actions (telling recruits that ACN is nearly impossible, then flashing riches and success stories in front of them..) seem a little contradictory? In any event, it would appear that anyone who actually ”Made it” in ACN (through all that “hard work” promoted by the brain washed reps) only got there by screwing a sizable number of people out of their signup fee. ACN might make you rich if you work hard enough – but based on the data, it’s going to require that you make a lot of other people poor.
Jim Rohn probably said it best: Service to Many Leads to Greatness. We want to achieve greatness at the service to many – ACN seems to seek greatness at the expense of many.
If you’re about to spend $500 on ACN, at least think about your other alternatives and keep the statistics in mind. You can say with 99% confidence that you are more likely to make money putting the $500 into a savings account. But ACN, like all business ventures, is a risk – and the only way you make it big is by taking risks. We argue that there are better risks you can take. Think for a moment why you would say yes to ACN – probably not because of the odds, but because you know that you have all these people in your upline who are doing it already and are willing to help you. This is a highly emotional reason for starting a business, and you should probably put a little more emphasis on the facts.
Ask For Proof! Get some proof from your upline (at a level close to you, not proof from the top) that they are actually making money. A lot of independent reps pretend that ACN is making them rich, when really they are just as broke as everyone else. Be careful – find some proof that the people whose footsteps you’re about to follow in are actually doing what they claim to be. Too much of your time, money, and reputation are about to be put on the line for you to just take their word for it. Good Luck!
Leave us some comments below. We are open to and uncritical of what anybody has to say. Do you think what we have said is right? Do you have a contradiction to our arguments that shows ACN really is a good way to make money?
- Graser D. Panhandling for change in Canadian law. J Law Soc Policy 2000;15:45-91.
- ACN Integrity – http://www.acnintegrity.com/nopyramidscheme.html
- Stackhouse J. Seven days on the street [series]. Globe and Mail [Toronto] 1999 Dec 18,20,21.
- ACN Income study – http://bindone.org/acn-income-study
- MLM-TheTruth: Shocking MLM Stats – http://www.mlm-thetruth.com/ShockingMLMstats
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