International Law

: Misleading Advertising Law

ACN MLM == Pyramid Scheme

Here is an interesting exchange between Kenneth Woodruff and a unnamed friend, with Kenneth drawing out his friend about ACN.

"(10:01:55 AM) kennethpwoodruff: dude

(10:01:57 AM) kennethpwoodruff: really?

(10:02:02 AM) kennethpwoodruff: who hooked you into this?

(10:02:48 AM) CloseFriend1: i have 2 neighbors that are already doing it
(10:02:53 AM) CloseFriend1: and making money

(10:03:25 AM) kennethpwoodruff: that still doesn't make it "not a pyramid scheme"

(10:03:50 AM) CloseFriend1: no doubt
(10:04:07 AM) CloseFriend1: it's just better than any one of them that I have seen before

(10:04:13 AM) kennethpwoodruff: you're going to have to make $23K / year just to break even

(10:04:29 AM) CloseFriend1: how do you figure?

(10:04:40 AM) kennethpwoodruff: There are cost of being ACN Rep. About 499 USD to begin, about 149 yearly - annual fee, monthly fees about six bucks and administrative fee of $1. It is about 230 USD yearly. At 1% commission, total billing would have to be over $23,000 or about $1940/mo. That's about 40 average customers. And this is to break even!"

And how does Kenneth do trying focus his friend on the unrealistic sales figures?

Well, he then ask about the products ACN is selling.

"(10:20:01 AM) kennethpwoodruff: personally, I would take that $700 and use it for online poker tournament entry fees. Think you stand to make a lot more that way

(10:20:20 AM) kennethpwoodruff: (10:18:56 AM) kennethpwoodruff: do you have to commit for a certain period of time?

(10:20:33 AM) CloseFriend1: sorry...was typing another message
(10:21:01 AM) CloseFriend1: it's the same ol' deal...you can do as little or a much as you want as a seller....

(10:21:24 AM) CloseFriend1: if you buy the product, the video phone is 2 years to get it for free like any cell phone
(10:21:44 AM) CloseFriend1: or $199 to cancel early....same ol' shit
(10:21:53 AM) kennethpwoodruff: what's the monthly rate?
(10:22:00 AM) CloseFriend1: 29 bucks

(10:22:03 AM) kennethpwoodruff: dude
(10:22:08 AM) kennethpwoodruff: I think you need to make a spreadsheet
(10:22:19 AM) kennethpwoodruff: I'm losing track of how much this is costing you
(10:22:59 AM) kennethpwoodruff: 696 for 2 years of phone service
(10:23:04 AM) kennethpwoodruff: 107 setup fee
(10:23:08 AM) kennethpwoodruff: 499 startup
(10:23:33 AM) kennethpwoodruff: 149 / year
(10:23:45 AM) kennethpwoodruff: monthly fees?

But his close friend has already "figured it out."

(10:24:21 AM) CloseFriend1: get 2 people going...and get 200 back....one more per person...get 600 back....so 4 people later....800 already back in your pocket just in the bonus.
(10:25:10 AM) CloseFriend1: 6 people....another grand"

So how does it end: cold, hard rational calculation meets networking inspired greed.

Who wins?  Read all of Ken's article on ACN and Pyramid schemes.

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Full post as published by Misleading Advertising Law on August 29, 2008 (boomark / email).