Empower Network caught our attention a while back, mainly for its inane advertising. We were prompted to write “100% Commissions on Magical Mystical Manure!”
We were hoping that EN would just implode and go away like so many other slippery sidetracks and expensive irritants, but it seems to have some staying power, perhaps because of the mentality to which it appeals.
Our new favorite author is Oz over at BehindMLM.com. Oz does an amazingly thorough job of analyzing MLM companies old and new, scams fresh and fading, and just about anything that catches the attention and collects the money of the desperate and ill-informed.
You can read Oz’s full analysis of Empower Network by clicking here. We’ve picked out a few highlights below, with comments about the red flags raised that should warn us to run far and run fast from these schemes.
Red Flag 1: Company Location – Offshore?
Launched in November 2011 by David Wood and David Sharpe, the company has three addresses in Florida – a suite, a residential address and a virtual office. In the UK, they have an address to which they do not want mail sent.
“I also couldn’t help but notice the apparent ties to Costa Rica, where founder David Wood lives and company events and “retreats” are regularly held. Costa Rica has a flexible corporate regime and bank secrecy is enshrined in law. A high degree of corporate anonymity is possible; there is no legal requirement to reveal beneficial ownership of companies. Costa Rican companies pay no tax on income generated outside of the country. Make of that what you will.”
Red Flag 2: Company Owners – Integrity?
Beware of rags to riches stories that lead you to believe the founders have discovered some magical money making system. What they have really discovered is how to make themselves rich by holding out a dream while emptying your pockets.
The myths and legends in EN include a marketing genius living homeless in a van in Hawaii, and a former drug addict now earning “a bajillion dollars a month.”
Oz’s research reveals that both Davids were involved previously in several MLM ventures, including My Lead System Pro. You can do your own research on the reputation of that business.
Red Flag 3: Company Product – Value?
“Each blog published by its members is then slapped into the Empower Network recruitment theme. Little emphasis is placed on the content itself, with all of the “above the fold” real estate dedicated to advertising Empower Network itself (signing up new members). In this sense Empower Network functions as a content farm, with the idea being that the more information their members pump out onto the internet, the more exposure their recruitment theme gets which in turn translates into more signups to Empower Network itself.”
For an additional $100 per month, participants can also join ‘The Inner Circle’, an audio based training program, or buy an expensive 12 hour taping of a $3000 training retreat in Costa Rica.
This is typical of many companies like this, who cobble together a bunch of ebooks and overpriced training that can be found cheaply or free elsewhere and call it a product. How else could the company advertise 100% Commissions?
Red Flag 4: Compensation Plan – Fair?
Empower Network uses a strange variation of the Aussie 2-Up, a nasty plan where you are forced to pass your first two sales up to your sponsor and upline. Oz has labelled this version as a ‘Perpetual 1-Up.”
“In a traditional 1-up structure you sell something to someone and pass the first sale up to your upline and then earn commissions on all future sales. Empower Network continues to apply this idea on future sales, expanding it from the 2nd sale to include the 4th, 6th and every 5th sale thereafter … In this sense the 1-up system is perpetual.”
The 12 hour package costs $500 and pays out $500 in commissions when resold. If you are scratching your head at this one, you are not alone. A small amount of logic here will tell you that if you pay out everything in commissions, the product has a value of zero. You might also wonder if anyone would buy this product if there were no business opportunity attached. Our answer would be ‘no’.
“It’s entirely possible to join Empower Network, pay your $19 affiliate fee, $25 for blogging commissions and $100 for inner circle commissions – and earn money solely by signing recruited affiliates up to these two tiers. They pay their monthly fees and you continue to get paid. If they wish to earn anything then they have to recruit new affiliates and sign them on. Due to the 5th sales being passed up company wide, money then trickles its way up … As long as those at the bottom continue to recruit new affiliates … sales will continue to trickle up. For those who got in early with downlines in the thousands and the fact that everybody’s paying monthly membership fees, it’s then easy to work out where commissions of thousands of dollars are coming from.”
Red Flag 5: Company Management – Conflict of Interest?
We know first hand what happens in a company where the management are also distributors. The CEO (Crooked Evil Opportunist) of Treasure Traders International (later reinvented as Business In Motion) was Alan Kippax. Alan used a combination of emeralds, the Airplane Game and the Aussie Two Up to fleece thousands of people. Every time he would up the ante and create a new game (some as high as $5000 to enter), he would place himself at the top of each panel, and place ‘the company’ in the number two position. You can’t get in any earlier than that. Alan collected millions while well over 95% of participants lost hundreds of thousands of dollars trying to keep the pyramid going.
“Both affiliates in Empower Network, Sharpe and Wood are no doubt positioned #1 and #2 in the compensation plan and enjoy the eventual rollup of commissions company wide. Again, remember that every 5th sale is perpetually passed up by everyone.”
Oz goes on to describe a pyramid …
“If people participating in Empower Network as an income opportunity (affiliates) made up the majority of people paying monthly commissions … you’ve just got affiliates paying affiliates with no retail level to the company. What’s worse is those affiliates at the bottom have no possibility of earning anything unless they themselves go out and get more recruits. These new recruits will of course then inadvertently also become affiliates based on the fact it’s the opportunity that sells rather than the services attached.”
Red Flag 6: Company CEO – Shirt?
In every company we’ve analyzed, the attitudes and behavior in the field come from the top. The entire tone of the company and all its dealings is set by the owners, CEO, and management. Imagine the behavior you are promoting by chanting slogans like like …
- “Fight The Forces of Evil.”
- “Release Your Inner BadAss.”
- “100% Commissions!”
- “You’re Too Afraid To Jump In.”
- “No Wussies Allowed. Period.”
These belligerent approaches lead to a kind of bullying, unthinking fear of loss approach that intimidates rather than educates, frightens rather than invites. Alan Kippax referred to his distributors either as ‘Players From Heaven’ or ‘Lame and Lazy!’ You might want to think again if you find yourself insulting those who do not join you.
Oz refers to EN’s marketing material as nonsense, rubbish, and painfully cringeworthy crap. His final warning …
“As a prospective Empower Network member … I’d be making enquiries with my potential upline into exactly how many non-affiliate customers they have paying monthly membership fees … and if possible the numbers for their upline. Be careful about how this information is relayed back to you and ask to see some hard figures if possible … Remember that you’re trying to gauge whether or not you’re going to be making money recruiting affiliates or selling to actual end customers, so vague answers aren’t going to cut it. If your upline is hesitant about sharing this information with you or just flat-out refuses, then that’s probably a good indication that there’s more affiliates in their downline than customers.”
And if there are no sales outside the distributor base, that’s how we spell …
P Y R A M I D!
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Bob and Anna Bassett