Stream Review: $375 affiliate fee & 3rd party utilities
Stream launched in 2005, with the company today claiming to be
the largest direct selling energy company in the world, with over $7 billion in revenue in just six states.
Based out of Texas in the US, Stream is headed up by President and CEO, Mark Schiro (right).
As per Schiro’s Stream corporate bio, he
previously served as president of his personal investment firm, STI Investments Ltd., and STI Masonry LLC, an architectural paving products manufacturer.
Steam appears to be Schiro’s first MLM venture as an executive.
As to the company itself, in 2009 two class action lawsuits were filed against Stream. Both lawsuits alleged Stream operated ‘as a pyramid scheme which is substantially more active in recruiting sales associates than in recruiting new customers‘.
The lawsuit in Georgia was dismissed on procedural grounds, with litigation in Texas ongoing.
October 2015 saw a class of plaintiffs in the case decertified, leaving two plaintiffs standing.
The two remaining plaintiffs have requested a rehearing with the full Fifth Circuit.
The case will be reheard only if a majority of the 15 active justices now sitting on the Fifth Circuit agree to do so.
Update 10th October 2016 – On September 30th the Texas Fifth Circuit Appeals Court upheld RICO class-certification. /end update
Earlier this Solavei filed its own lawsuit against Stream, alleging breach of contract and theft of trade secrets.
Back in June the case was dismissed via summary judgement, with the court finding ‘Solavei had no evidence whatsoever to support its groundless allegations‘.
A press-release published on June 25th by Stream claimed
Stream will pursue its own counterclaims against Solavei and two of its corporate officers – CEO Ryan Wuerch and General Counsel Rick White – for charges of defamation and tortious interference with Stream’s business.
As at the time of publication I wasn’t able to find anything further. Ryan Wuerch meanwhile announced yesterday that Solavei has collapsed.
Stream has also had run ins with state regulators, with Texas fining
Stream nearly $100,000 in 2011 and 2012 for violating customer protection rules.
Read on for a full review of the Stream MLM business opportunity.
The Stream Product Line
Stream market three core services, energy, cell phone and protective services.
Energy services listed on the Stream website include electricity, gas and clean energy. Rates are available on the Stream website, subject to the location of the customer (US only).
Stream’s cell phone service is provided through ‘two major 4G LTE nationwide networks.‘
Plans start from $30 a month for 1GB of data.
Protection services offered through Stream include identity protection, credit monitoring and tech support.
When you use Stream Identity Protection, you’ll be alerted immediately if any suspicious activity occurs.
Stream Credit Monitoring allows you to review your past credit history, check your current score, and plan for the future.
Keep your computers running smoothly with Stream Tech Support and automatic data backup services.
These services are available individually for $14.95 a month, two bundled services for $24.95 a month or all three bundled for $29.95 a month.
The Stream Compensation Plan
The Stream compensation plan sees affiliates paid to sign customers up on Stream’s offered services.
Residual commissions are paid out through a unilevel, with performance-based bonuses also available.
Stream Service Points
Much of the Stream compensation plan revolves around points.
Each Stream service offered has its own allocated point value as follows:
- electricity account = 1 point
- Georgia gas account = 1 point
- individual 3GB data cell plan = 1 point
- individual 5GB data cell plan = 1 point
- individual unlimited data cell plan = 1 point
- Protective Services Platinum (three services bundle) = 1 point
- Northeast gas account = 0.5 points
- individual 1GB or 2GB data cell plan = 0.5 points
- family cell plan (per line) = 0.5 points
- family 5GB data cell plan = 0.5 points
- Protective Services Silver or Gold = 0.5 points
- renewable energy certificate = 0.5 points
- commercial accounts (see commercial residual commissions) = 2 points
An affiliate’s own service purchases generate points, as do purchases made by recruited affiliates and retail customers.
Stream Affiliate Ranks
There are seven affiliate ranks within the Stream compensation plan.
Along with their respective qualification criteria, they are as follows:
- Director – pay $375
- Qualified Director – personally generate 5 points (only 1 point can come from Protective Services or Renewable Energy Certificates)
- Regional Director – maintain Qualified Director rank and personally recruit two Qualified Directors
- Managing Director – generate and maintain 10 monthly points (max 2 points from Protective Services or Renewable Energy Certificates), recruit and maintain two Directors and maintain two Regional Director or higher ranked affiliates in your downline
- Senior Director – generate and maintain 15 monthly points (max 3 points from Protective Services or Renewable Energy Certificates), recruit and maintain four Directors and have two Managing Director or higher ranked affiliates in your downline
- Executive Director – generate and maintain 20 monthly points (max 3 points from Protective Services or Renewable Energy Certificates) and have five Senior Directors in your downline
- National Director – generate and maintain 20 monthly points (15 must be premium service points and max 3 points from Protective Services or Renewable Energy Certificates), maintain five Executive Directors in your downline and have at least 5000 customers in your unilevel team
Quick Start Bonuses
Quick Start Bonuses are cash bonuses awarded if an affiliate meets point quotas within a set number of days from joining the company.
- Quick Start 5 (generate 5 points within 30 days of signing up as an affiliate) = $100
- Quick Start 10 (generate 10 points within 60 days of signing up as an affiliate) = $100
- Quick Start 20 (generate 20 points within 90 days of signing up as an affiliate) = $200
A residual Quick Start Bonus of $100 is also paid if a personally recruited affiliate qualifies for the Quick Start 5 bonus.
Note that an affiliate’s own service purchases qualify towards these bonuses. Stream affiliate membership also counts for ‘two Non-Premium Stream Service points‘ (1 point?).
At least two points out of the required five for Quick Start 5 cannot be an affiliate’s own service purchases.
Also note that commercial accounts only count as 1 point towards Quick Start bonus qualification.
Residual commissions in Stream are paid out via a unilevel compensation structure.
A unilevel compensation structure places an affiliate at the top of a unilevel team, with every personally recruited affiliate placed directly under them (level 1):
If any level 1 affiliates recruit new affiliates, they are placed on level 2 of the original affiliate’s unilevel team.
If any level 2 affiliates recruit new affiliates,they are placed on level 3 and so on and so forth down a theoretical infinite number of levels.
Stream cap payable unilevel levels at six, with commissions paid out monthly per active customer account as follows:
- Director – 50 cents per personally generated customer account and 25 cents on level 2
- Regional Director or higher – 50 cents per personally generated customer account, 25 cents on level 2, 50 cents on level 3, 75 cents on level 4, $1 on level 5 and $2 on level 6
Note that after an affiliate has generated 20 customer accounts, they are then paid $4 per customer (must generate 1 point a month minimum).
$1 is also paid out on the 21st customer onwards generated by personally recruited affiliates (again must be customers who generate 1 point a month minimum).
Also note that the initial six payable unilevel levels can be extended to an infinite depth.
This occurs when personally recruited affiliates reach the rank of Regional Director or higher, with the following bonus monthly commission then paid out:
- Regional Director – 10 cents per customer account
- Managing Director – 15 cents per customer account
- Senior Director – 50 cents per customer account
- Executive Director – 75 cents per customer account
- National Director – 50 cents per customer account
Commercial Residual Commissions
Commercial service accounts are paid out using the same unilevel structure as non-commercial customer accounts, however how much is paid out is determined by usage of the service:
- Texas Electricity (20,001 to 60,000 kWh) – 50 cents on level 1, 25 cents on level 2, 50 cents on level 3, 75 cents on level 4, $1 on level 5 and $2 on level 6
- Texas Electricity (60,001 to 150,000 kWh) – $10 on level 1, $2 on level 2, 50 cents on level 3, 75 cents on level 4, $1 on level 5 and $2 on level 6
- Texas Electricity (150,001 to 300,000 kWh) – $15 on level 1, $2 on level 2, 50 cents on level 3, 75 cents on level 4, $1 on level 5 and $2 on level 6
- Texas Electricity (300,000 or more kWh) – $20 on level 1, $2 on level 2, 50 cents on level 3, 75 cents on level 4, $1 on level 5 and $2 on level 6
- Northeast Electricity (20,001 to 60,000 kWh) – 50 cents on level 1, 25 cents on level 2, 50 cents on level 3, 75 cents on level 4, $1 on level 5 and $2 on level 6
- Northeast Electricity (60,001 to 150,000 kWh) – $6 on level 1, $1 on level 2, 50 cents on level 3, 75 cents on level 4, $1 on levels 5 and 6
- Northeast Electricity (150,001 to 300,000 kWh) – $10 on level 1, $2 on level 2, 50 cents on level 3, 75 cents on level 4, $1 on levels 5 and 6
- Northeast Electricity (300,000 or more kWh) – $18 on level 1, $2 on level 2, 50 cents on level 3, 75 cents on level 4, $1 on levels 5 and 6
- Natural Gas (300 to 1499 Therms) – 50 cents on level 1, 25 cents on level 2, 50 cents on level 3, 75 cents on level 4, $1 on level 5 and $2 on level 6
- Natural Gas (1500 to 4999 Therms) – $6 on level 1, $1 on level 2, 50 cents on level 3, 75 cents on level 4, $1 on levels 5 and 6
- Natural Gas (5000 to 9999 Therms) – $10 on level 1, $2 on level 2, 50 cents on level 3, 75 cents on level 4, $1 on levels 5 and 6
- Natural Gas (10,000 to 36,000 Therms) – $18 on level 1, $2 on level 2, 50 cents on level 3, 75 cents on level 4, $1 on levels 5 and 6
Infinite depth commissions paid out on commercial services are as follows:
- Regional Director – 10 cents
- Managing Director – 15 cents
- Senior Director – 50 cents
- Executive Director – 75 cents
Note that infinite depth commissions are paid out the same, irrespective of commercial customer usage.
Leadership Income starts at the Regional Director rank, with affiliates earning a bonus when recruited affiliates in their downline generate five points within 30 days of joining the company.
How much is paid out when the above qualification is met is based on a Stream affiliate’s rank:
- Regional Director (must generate a minimum monthly five points, max 1 point from Protective Services or Renewable Energy Certificates) – $25 bonus
- Managing Director (must generate a minimum monthly ten points, max 2 points from Protective Services or Renewable Energy Certificates) – $75 bonus
- Senior Director (must generate a minimum monthly fifteen points, max 3 points from Protective Services or Renewable Energy Certificates) – $100 bonus
- Executive and National Director (must generate a minimum monthly twenty points, max 3 points from Protective Services or Renewable Energy Certificates) – $50 bonus
The above bonuses are paid out each time a recruited affiliate meets the five points within their first 30 days criteria, regardless of who recruited them (so long as the recruited affiliate is in the unilevel team, they count).
Affiliate membership with Stream is $375.
The one thing I don’t get in Stream is why affiliate’s are slugged a $375 fee.
Stream resell third-party services, offer no products or services directly themselves and therefore likely have next to no operating expenses.
Why on Earth then are affiliate slugged with a $375 fee when they sign up? Where does this money go???
If it’s being used to fund the compensation plan (eg. Fast Start bonuses), then that’s worrying. By all means charge affiliates $375 if you’re providing them something of value in return, but otherwise charge them what initial Stream affiliate membership is worth.
On the compensation plan things Stream is pretty straight-forward, at least as far as utility MLM companies go (they are notorious for complicated compensation plans).
Once you get your head around the whole points thing, you’re basically paid to sign customers up.
One potential issue is if the majority of Stream’s customers are affiliates, however the $375 affiliate fee likely goes a way to prevent that (is that why it’s so high?).
I’d still be checking with a potential upline as to how many non-affiliate customers they have generating points each month.
If the bulk of their personal monthly points are from their own services and/or that of personally recruited affiliates, you could be looking at chain-recruitment.
As to the third-party utilities marketed, value and competitiveness is going to be highly subjective based on where you live and what’s comparatively available.
Stream’s offered rates are available on their website, so doing some legwork comparisons should be pretty straight forward.
Do remember that even if you yourself don’t sign up, you’ll still need an idea of what the going rate is in your area. Undoubtedly this is one of the first questions potential service customers are going to ask you about.
One other thing to keep in mind is that Stream is a pretty established company, and utilities is obviously also a well-established market.
That’s not to say there isn’t room for competition, just that everyone in the utility niche (MLM or otherwise) is competing for a limited number of service contracts.
Think about this in respect to their being other active Stream affiliates in your area.
I also imagine that lends itself to some pretty cut-throat profit margins, which might impact your bottom-line as an affiliate in the long run.
It’s interesting that they have a 40% rule, hmmm? (2 out of 5 points cannot be self-purchase, i.e. must be “retail”)
according to the order of the fifth circuit court of appeals denying class certification of stream affiliates, stream’s MLM marketing arm which is called ‘ignite’ also had an autoship component:
so stream/ignite has a joining fee and recruitment commissions along with a [purportedly non compulsory] autoship plan.
in MLM when we see a combination of recruitment commissions and autoship it often points to a pyramid scheme.
the fifth circuit appeals order further notes that top recruiters of ignite exhorted affiliates to ‘recruit’ saying stuff to the effect of [not exact quotes] ; getting customers wont make you money, recruiting will, and, i dont care if stream is a octagon or a rectangle as long as i get a check etc.
the fifth circuit order also acknowledges that the data shows that the majority of affiliates lost money in the ignite program.
also, how does stream/ignite pay infinity level commissions? are margins in third party energy products so rich that commissions can be paid any number of levels deep?
i would ‘suspect’ such infinity level commissions are sourced from monthly autoship payments.
this decertification of the ‘class’ in the affiliates suit against stream for being a pyramid scheme, has set a strange new precedent in the fifth circuit courts.
basically, claiming you were ‘injured’ by ‘misrepresentations’ in a ‘pyramid scheme’ will no longer certify you as a class in the fifth circuit.
this is because there are many ‘representations’ made to affilaites by the company, its top reps and other media sources. to say that All affiliates received the Same ‘misrepresentation’ would be incorrect and cannot form a common cause for class certification.
further, if there were some affiliates who received a ‘representation’ that stream/ignite was possibly a pyramid scheme and nonetheless chose to join the opportunity, then they could not claim ‘injury’ as they had essentially taken a gamble.
so, since it was ‘possible’ that some affiliates joined stream ‘knowing’ it was a pyramid a common ‘class’ cannot be ‘certified’ on the basis of injury.
a judge on the fifth circuit panel has written a dissenting opinion to this order saying:
MLM attorney kevin thompson has also recorded his dismay at the order of the fifth circuit decertifying the ‘class’:
kevin thompsons article:
fifth circuit appeals order:
truth in advertising [TINA] a non profit organisation which works to protect consumers from false and deceptive marketing, has filed an amicus brief with the fifth circuit court of appeals requesting them to revise their ruling which decertified the class action against stream energy.
basically TINA says that people are psychologically motivated to join pyramid schemes and most investors are untrained to recognize pyramid schemes especially under the barrage of deceptive marketing by such schemes.
i feel the ruling of the fifth circuit was based on ‘technicality’ rather than ‘underlying realities’, but as law is technical i wonder if the court will reconsider.
anyway good on TINA for trying:
On September 30, 2016, TheFifth Circuit, in an en banc decision, affirmed the certification of the plaintiffs’ class. Here is an opinion issued by the Fifth Circuit:
Scott M. Clearman
Thanks for the update Scott. Still digesting the decision…
the fifth circuit has revised it’s own decision and affirmed the class certification awarded to stream/ignite affiliates by the district court.
basically the appeals court says that since pyramid schemes are inherently fraudulent and misrepresent that a participant will make money, it is not necessary to show any ‘particular’ misrepresentation by stream/ignite which was common to all participants.
if stream/ignite is a pyramid then that is a common misrepresentation to all participants because of the inherent fraudulence of pyramid schemes.
the court also found that even though it was possible that some participants participated in stream ‘knowing’ it was a pyramid, the overwhelming majority would not have known this, as pyramid schemes are inherently fraudulent and deceptive and it is difficult to tell pyramid schemes from legit MLM.
the defense did not provide proof of even a single affiliate who participated with the knowledge that stream may be a pyramid scheme, and even if a few such participants existed, it was not reason enough to deny class certification.
the previous decision of the fifth circuit overturning the district courts class certification, was technical rather than logical. this review is more common sense in its approach.