Montana Now issues Cease and Desist order against ACN

by louabbott on August 14, 2010

Montana seems to be on the warpath against network marketing companies claiming that some are operating more like pyramid schemes.

On August 3rd, according to KTVQ.com in Montana, Monica Lindeen, the Montana Commissioner of Securities & Insurance, has issued a cease and desist order and notice of proposed agency action against ACN, Inc., of North Carolina, for allegedly operating a “pyramid scheme.”

The whole Consent Agreement and Final Order can be found here.

Here are the key allegations of the regulatory action (emphasis mine) as quoted in the KTVQ article.  :

Lindeen charges that ACN enticed hundreds of Montanan residents to sign up with the company through deceptive claims that members could earn large sums of money through the recruitment of new participants and through the sale of phone services …

The actions also allege that the only way an ACN participant can earn compensation is the recruitment of new participants to sell a phone service that is largely not available for use in Montana.

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 allegedly does not work in many parts of Montana in order to become managers or recruit new participants into the program.

Interestingly but illogically, the allegation seems to imply that because the vast majority of participants lost money, the business model must be illegal.

According to Lindeen’s office, in 2008, ACN recruited 91 Montana participants who paid approximately $61,741 to be a part of the program.  Only two of the participants made any money, with one participant making $696 and the other making $700.  In 2009, ACN recruited over 300 Montana participants who paid approximately $234,813 to be a part of the program.  ACN’s records indicate a mere $896.86 was paid out in compensation to these participants.  ACN’s records indicate participants are located throughout Montana.

There are lots of businesses where the majority of participants quit and/or lost money.  That, by itself, does not make the model illegal.  It is good information to know, however, if you are doing your due diligence as to whether to participate.

Back in March, 2010, Montana took a similar action against Fortune Hi-Tech Marketing that was settled in May which required substantial changes to FHTM’s business model In order to remain in business in Montana.

Note this warning also in the article . . .

Individuals and companies promoting a pyramid promotional scheme in Montana can be fined as much as $10,000 per violation.

I think this is probably the least important reason a person should understand whether the companies they are looking at joining or promoting are legal and make good business sense.  Rarely are individuals fined or prosecuted, though it has happened – one FHTM distributor was fined $5000 in the FHTM settlement.

Far more frequently, poorly informed participants in MLM who choose companies with poor business fundamentals or that are vulnerable to regulatory scrutiny pay a far bigger price in lost time, money, relationships with friends and family, their reputations and even their hopes and dreams.  [Consider seriously the Special Report and Course by this author.]

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{ 5 comments… read them below or add one }

Niel November 13, 2010 at 2:11 pm Thumb up 1 Thumb down 1

Johnnie, your maths is bad and your perception even worse. $1200 per year is very reasonable for the service that you receive. I do not live in a country where ACN is available, but I wish they were here. I pay the equivalent of $600 to $800 per month for the privilege of a phone, not near by a video phone. So even if he does not sell a single phone, he still get the service at a bargain and so does his family.
Stop wining and get off your chair, it might just be the opportunity that could set you free.

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johnnie October 18, 2010 at 7:21 am Thumb up 1 Thumb down 3

ACN is not that viable, for $500 plus a $250 videophone( you need 1 if your going to sell them) and a few other services to get “quailfied” each rep becomes a $1200 customer base for the company. this now allows you to recruit others into ACN. its pure genious , they see the 500 the 250 but not the $2400 over the next 2 years each rep =$3150 to ACN and next to nothing for the rep. keep working it works if you can get enough people on board. its a great way to screw everyone you know over. i signed up a friend he put 3 other family members in and doesnt even know the company is taking his family for $11000

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JR September 14, 2010 at 6:09 pm Thumb up 1 Thumb down 1

I am an Indepedent Rep for ACN, and just received this letter from the company. I have been involved in ACN 6 years. Its ok that some people don’t like MLM, or network marketing. That is their choice. But to suggest what ACN does it illegal is silly. ACN has a 17 year track record in the United States and does business in 21 countries. Montana was mistaken with their original assessment of ACN. And ACN, unlike some other MLMs in Montana, did not have to pay any fines whatsoever. They didn’t do anything against the law! What’s sad is the media and others on websites like this jump to conclusions without giving ACN any right to defend themselves first. Again, you may or may not like our business model, but that does not make it against the law or unethical just because you don’t like it!!!

Dear Montana ACN Representative,

Thank you for your continued support and patience as ACN worked tirelessly to resolve the issue with the Montana Securities and Insurance Commissioner’s Office. We had full confidence that these misunderstandings would reach a favorable resolution, and we are happy to report that on Monday, September 13, 2010, the cease and desist order against ACN was lifted. As a result, you may now resume business as usual.

At ACN, our integrity is at the forefront of every decision we make, and our reputation of being a premier direct seller is based on that company-wide commitment to integrity. It’s a reputation we don’t take lightly, and one we will always fight vigilantly to protect. We certainly appreciate your patience during this time and wish you all the best as you continue building your ACN business.

Sincerely,

Greg Provenzano
ACN President and Co-Founder

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Josh September 3, 2010 at 5:50 pm Thumb up 3 Thumb down 2

I live in Montana and was contacted by the Attorney and Account Securities for my involvement in ACN as an independent Rep.

What I was asked:

1: Do you have to recruit other Reps. in order to make money in ACN?
A: No. You do not, you can get an income off of your personal customer base.

2: Do you have to buy goods or services for yourself in order to be an Independent Rep?
A: No.

3: Do you have to subscribe to the business building website that you can get thru ACN?
A: No.

Basically what I learned after more conversation with them is that what is happening in Montana is that the reason they cracked down on FHTM is because people in Billings that were not involved with the FHTM were calling the State of Montana and complaining that there were tired of being pithced by everyone that they know and wanted it to stop. So the state stepped in and said: “Oh, look how much money we can make if we shut this program down and fine the company, in order to let them to continue to do business in our state.”

So in the end I think that all they are looking for is the big dollar to do business in their state.

Well there is a saying here: “This is a Good-Ol-Boy State.” You can see that by the way they do business and shut people down and charge them big money to operate in their state. “It’s their way or the highway.”

It’ll be over soon, and I will continue on my merry way.

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Julie September 1, 2010 at 1:48 pm Thumb up 3 Thumb down 1

Sounds like the state of Montana is on a witch hunt to me. And sometimes that is the case….someone complains because they didn’t make any money (did anyone investigate whether they actually did any “work”?)….reports it to the press, and the press blows it out proportion. Sounds like someone in Montana has an ax to grind against this industry. Too bad. ACN’s success and integrity speak for itself 🙂

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