Ambit Energy Scam: Can an Electricity Provider be a Scam?

By | May 17, 2014

Warning Of FraudWhen it was founded in 2006, Ambit Energy had a grand idea: to change the way consumers have access to high-quality electric and natural gas services, and to enable their customers to build their own businesses at the same time.  Since then, Ambit Energy has experienced astronomical growth, bringing in hundreds of millions in profit every year and bringing in thousands of new customers and business builders.  Now Ambit Energy uses an MLM structure to maintain and grow its customer base, serving over 1 million customers in the continental US.

Why build a business around energy?

While selling energy might seem like an odd choice for an MLM business, there’s actually a very sound logic to it: unlike fancy juice drinks or magazine subscriptions, home energy is a necessity, not a commodity.  Very few people live completely free of electricity and gas, making it one of the first places people look to find a good deal and cut costs.  Because you’re dealing with something that people account for in their monthly bills, not a luxury paid for with disposable income, energy sales are much less affected by the economy, meaning that an energy sales business can remain stable and profitable at the same time that luxury items providers are seeing their sales plummet.  A customer getting a good deal on home energy is unlikely to switch or cancel service, no matter how tight money gets, because spending your evenings in the dark and cold just sucks.

How to make money with Ambit Energy

When you begin as a consultant with Ambit Energy, income is all about growing your business.  Initial fees are $300 – $429, depending on which market you are working in, and the quickest way to make that back is to enroll customers into an Ambit Energy plan, earning you a bonus for enrolling certain numbers of clients within a set space of time.  Those bonuses, however, are one-time: your monthly income comes from building a team of consultants beneath you who maintain a certain volume of clients between them.  As long as you keep your numbers up, you earn residual income for every client in your downline, as well as a bonus for every consultant beneath you who successfully recruits four clients.  The residuals are fairly small, but between enrolling clients, recruiting new consultants and maintaining your existing customer base, you can build your business up to a fairly profitable one over time.

The dreaded “P” word

Ambit Energy Scam

Ambit Energy Website

The line between MLM businesses and pyramid schemes can be pretty thin: while some MLM businesses offer very legitimate opportunities to make money via direct sales as well as recruitment, others avoid being illegal pyramid schemes only by a hair’s breadth, offering an inconsequential product only as a cover for the much more lucrative recruitment pyramid.  Ambit Energy does actually offer a legitimate product to its customers, but the profit margin for direct sales is alarmingly low; worse, Ambit had its name irrevocably tied to the dreaded “pyramid scheme” moniker with a 2011 lawsuit in which an Ambit Energy consultant sued the company for essentially being just that, claiming that Ambit harassed her to bring in new recruits and bottlenecked her direct sales business when she did not comply.  The lawsuit was eventually dismissed, but more have followed, all saying basically the same thing: that, for Ambit Energy, recruitment is the only thing that really matters.  It’s a fairly damning pattern, and one that could eventually lead to litigation that makes life much more difficult for MLM businesses – even ones that offer a respectable balance of direct sales and recruitment.

So is Ambit Energy a scam?

The short answer is no, absolutely not.  With over a million customers in the US relying on Ambit for their home energy needs, Ambit Energy really does supply a competitive product that meets a real consumer need.  Despite some questionable customer service and unpleasant fine print – like immediate termination of service for unpaid bills, and high disconnect/reconnect fees – Ambit Energy’s services are real, legitimate, and often a very good deal compared to other providers.  When it comes to earning money and running your own business through Ambit Energy, the answer is a little bit more complicated.  Yes, it is possible to make money through Ambit Energy, but the profits from direct sales are hopelessly slim, and even the MLM system is nowhere near as lucrative as other MLM businesses.  Ambit pushes its consultants hard to recruit new business owners at the cost of actually selling energy plans, and in some cases that pushing borders on harassment.  Add to that Ambit’s unfortunate history in court, and you have a business with more than a few dark corners to it.  If you’re experienced in running an MLM business, are sure about your market potential and are confident recruiting, then Ambit Energy offers a fast-growing, stable business opportunity in a market that is relatively recession-proof.  If, on the other hand, you are new to multilevel marketing, you might want to test your skills first in a business with a lower startup cost and a higher profit margin.

Ambit Energy Scam WA proof

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