Empower Network battles affiliates over compliance
On the eve of Empower Network’s Denver affiliate conference, an interesting feud has been brewing between Empower Network and some of its affiliates.
Firing the first shot on the 12th of July, Empower Network published the following ‘important announcement from Empower Network Compliance‘ on their website:
Empower Network Compliance is in the process of investigating Project A.W.O.L. and empowerville.com and its affiliated Empowerville Facebook page for violation of our Terms of Service and Affiliate Policies and Procedures.
It is very important for all affiliates and customers to understand that Empower Network is in NO WAY affiliated with either system or offer.
Empower Network does not endorse, sanction or otherwise condone this type of activity. Nor does Empower Network make any guarantees for income or success.
So you’re not affiliated with either “system or offer”, got it. But what exactly did Project A.W.O.L. and Empowerville do?
Project A.W.O.L, started by Empower Network affiliates Kameron George and Glenn Arcaro, seems to have been pulled offline since the Empower Network compliance announcement was made. The Project A.W.O.L. website today advises visitors that the site is “under construction”:
A bit more poking around however and I’m guessing it was probably a combination of Empower Network wanting to look like they’re doing something compliance-wise, and marketing spiels like this on Project A.W.O.L.’s website that caused it:
Over 99% of our affiliates also choose to also be a customer of one or more of our five products. The Basic Membership is $25/month and the Inner Circle is $100/month, but remember, you’ll get your investment back with only one sale following our simple step by step instructions as Empower pays you 100% commissions.
Empowerville on the other hand appear to be furious with Empower Network for selectively targeting them.
If you visit the Empowerville website, there’s not a lot you can do other than click an “Enter Here” button, which then warns you that Empowerville are trying to access your Facebook “public profile, email address and friend’s list”.
To what end isn’t made clear (spamspam?), however visitors are unable to proceed unless they click “continue”.
Further down the page there’s a tiny little text link though titled “compliance update”. Clicking on that reveals Empowerville’s side of the story:
On Friday, the 12th day of July, 2013, EN Compliance posted ‘Empowerville’ had violated terms within their compliance/affiliate agreement.
They did so without due-process, as no prior warning, nor contact was ever initiated.
For your review, we posted our response along with the compliance video (hosted on their website) in the ‘Forums’ section of our website.
The forums section of the Empowerville website, along with several other areas, have since been taken offline.
When you type “Empower Network” in Google, That article is on the first page (right along with empowernetworkproducts.com, who are BLANTANTLY non-compliant)…
Occasionally we will recommend a tool or course we think is worth checking out; products that will only help you in your business – products we use ourselves!
If you own the 15k Formula, then you already know many leaders recommend tools, websites, and other things to help you market your business. So, what we do is no different.
It would be VERY naive of you to believe that the leaders in this industry do not have an edge… Besides hard work, they have years of experience and knowledge… and they use secret tools, and opt into courses they are not readily sharing with you. In fact, some of them never will (even if you are ALL IN).
Even David Wood, posted this on his Facebook wall. In that post, he said that he spends over $1,000/month on courses and tools. (No disrespect… but that is not $1000/month on EN products, folks!)
In closing, we want everyone to know that unless Empower Network has amended new rules to suppress community and team building, we have not broken any of their terms, and remain 100% compliant.
And, if they ever decide to amend such rules in the future, then Empowerville will not be the only community in noncompliance. EVERY team, Facebook group, etc. will be noncompliant.
Folks, we all sometimes act in haste, and pass judgement prematurely… In this case, EN compliance went against their own policy.
Instead of issuing fair warning in advance, they chose to shoot first, and never bothered to ask any questions later. This is VERY unprofessional and unacceptable, and will not be tolerated!
May the record show that ‘Empowerville’ never received any official warning by EN compliance nor from their legal representation in regards to ‘Empowerville’ or the ‘Empowerville Facebook Page‘ prior to posting their erroneous claims on their compliance page.
NOTE: We are currently in the process of putting together a full list of non-compliant websites. It will soon be published in the members’ area of our website, so that all members can witness this horrific bias, and intolerable double-standard.)
How the claims of Empower Network’s seemingly selective targeting of affiliates “will not be tolerated” is not clarified. Meanwhile as far as I can tell, other than ruffle the feathers of the top teams already in place in Empower Network, and A.W.O.L. using the word “investment”, I can’t really see why these two teams have been targeted.
And that brings me to the subject of my next point. Really guys, two years of giant check waving, you’re a wussy if you don’t spend $5000+ with us marketing spiels and now you’re going to worry about compliance?
Given both Project A.W.O.L. and Empowerville share the common trait of being relatively small teams and new, it’s hard not to look at this as those already at the top of teams within Empower Network pulling up the ladder behind them.
“Yeah we know we made millions of dollars over the past two years doing what you’re trying to do now but that has to stop.”
Whether Empowerville make good on their revelation of “non-compliant” websites and if Empower Network act on any of the more established teams remains to be seen.
Also on the newly released Empower Network compliance section of their website is a twenty-five minute compliance video, featuring MLM attorney Kevin Thompson and Empower Network President, David Sharpe:
The video (viewable at the end of this article), runs through compliance issues for Empower Network affiliates with the section on “pyramid schemes” (starting around the [12:30] mark).
Referring to the compliance topic as being “humorous”, David Sharpe opens the segment by pretty much stating anybody who calls a company a pyramid scheme has no idea what they are talking about.
Kevin Thompson then takes over, reducing “everybody” to “90% of people”.
[13:45] The reality, the very simple boiled down version of what makes up a pyramid scheme is, “are you paying rewards based on recruitment?”
And so, if the pay plan is driven by product sales, that’s an indication of a good program. And in Empower Network, 100% of the commissions are driven by product sales.
But, product sales alone does not mean it’s a perfectly clean model. You have to sell something valuable. We could have a networking program where we’re selling $10,000 lemonade.
Yes, it’s a product sale and, yes, those sales are funding the commissions but clearly there’d be a problem.
So, how do regulators assess value? Well, number one they want to see some customer sales and, number two, they look at the emphasis of the culture. They look at the emphasis of the program.
If the field is emphasising heavily the financial opportunity and rarely discussing the value of the product, it’s indicative of a program that focuses mainly on recruitment.
Simplifying Thompson’s comments, basically we’re looking at a separation of product sales and affiliate membership, and value in the products being sold.
On the first count, Empower Network do separate affiliate membership from buying their “products”. That said, the purchase of said “products” does qualify an affiliate receive money from other recruits who decide to purchase said “products”.
Note that in Empower Network affiliates and retail customers pay the affiliate who “sold” them the “product” directly, with the company making no money from its “products”.
Now it is possible for an affiliate to market Empower Network’s “products” to a retail customer, which will also qualify them to receive money from other affiliates. However, as the 10,600 current Google search results for the sentence below inform the general public,
Over 99% of our affiliates also choose to also be a customer of one or more of our five products.
Given that buying into Empower Network’s product levels as an affiliate self-qualifies you to receive money from newly recruited affiliates who do the same, that’s obviously what is happening here.
As for value, as has been stated many times before WordPress is not owned by Empower Network and is free. So what do affiliates pay $25 a month for? Well, as above that’s also obvious – to qualify to receive $25 from other recruited affiliates each month.
Such is the nature of Empower Network’s “pass-up” compensation plan, with various numbered commissions mathematically passed up through the entire company, right up to the top where co-founders David Wood and David Sharpe have positioned themselves.
Same deal with the other “products”, which is basically marketing training with the ultimate goal of teaching you how to recruit new affiliates.
For all the talk of transparency and “cutting-edge” nature of Empower Network’s Income Disclosure Statement Thompson and Sharpe mention in the Empower Network compliance video, statistics wise Empower Network do not reveal the revenue percentage derived from affiliates versus that of retail customers.
CEO David Wood claims 37% of $25 sales within the company are retail, however this has no correlation to revenue generation. With Empower Network’s top-tier products costing thousands of dollars, it’s again obvious why these figures are not made public.
And again, on the subject of value, so too is it obvious why retail figures for Empower Network’s “inner-circle” ($100), video series ($500), “15K Formula” ($1000) and “master’s course” ($3500) are.
If I had to take a guess, and I’m being generous here, I’d be surprised to see anything above a 5% retail revenue ratio for retail sales on anything other than Empower Network’s $25 level. Take away the generosity and you could probably drop that to less than 1% on the 15k Formula and master’s course.
The simple fact of the matter is, without the “affiliates paying affiliates” scheme attached to Empower Network’s top-tier products, nobody would buy them. At least not in any significant proportion when compared to affiliates buying them in order to qualify to receive payments from newly recruited affiliates who do the same.
Yet these ironies seem lost on both Thompson and Sharpe, with none of it being addressed in the video. Instead, Sharpe proclaims that Empower Network is “going to be around for hundreds of years”.
For all the compliance targeting off affiliates Empower Network engages in, one simple truth cannot be ignored: you are not selling anything if your affiliates are paying eachother each month 100% of the money they are supposedly paying to purchase products.
Echoes of Zeek Rewards’ infamous “hamburger compliance” efforts come to mind. Zeek Rewards went attempted to implement compliance only after top earners in the company had recruited large downlines.
David Sharpe refers to affiliates out of compliance as “bad apples” poisoning the tree. However if the tree itself is way out of compliance, does affiliate compliance even matter?
It didn’t for Zeek Rewards. They two tried to cover up almost two years of rampant non-compliance by cracking down on affiliates, all the while ignoring their fundamentally flawed business model.
I’ll leave you with one final observation, that being the seeming abandoning of Empower Network’s “badass” marketing campaign. Here’s how Empower Network used to advertise themselves a week or so back:
And here’s how they market themselves today:
Spot the difference?
Perhaps not all ironies are lost on Empower Network and someone over there realised telling your affiliates to focus on your products made no sense when the company itself
-runs around telling people those who put in thousands of dollars are “badass”
-labels those who don’t “wussies” (who CEO David Wood “punches in the face”)
-holds regular affiliate conferences where top-earners parade about holding up giant novelty-sized income checks and urge everyone to “go all-in” (buy in at every level)
-and congratulates those that “make a decision” to “go all-in” by paying the affiliate that recruited them thousands of dollars, by hauling them up on stage to feel special and using them to set an example for others to follow