tmcnet:

Curious about this, I did some investigating and lo and behold, I found
a fairly good amount of information online. It seems that the
“representatives” who are involved in these alleged schemes – typically
teenagers or college students working on behalf of the companies– are
presenting themselves as legitimate businessmen offering other
unsuspecting young people an “opportunity” to make fast money and
change their lives forever.

Interestingly, one of the companies mentioned is ACN – a legitimate
multi-level marketing (MLM) company that supposedly helped launchComcast ( NewsAlert)
years ago. Founded in 1993 and based in Farmington Hills, Michigan, ACN
reportedly offers local calling, long distance, Internet, wireless and
digital phone services to consumers and small businesses in the US,
Canada, Europe and Asia Pacific. It reportedly launched operations in
Europe in 1999 and in the Asia-Pacific in 2004 – and also has offices
in The Netherlands, Sweden, Australia and Poland. It is also reportedly
a member of the Direct Selling Associations in North America and Europe.

According to what I’ve read, ACN has been under scrutiny for a while
now because most of its revenues are derived not from selling
telecommunications services (i.e. VoIP), but rather from the fees
collected from new and incoming “representatives.” The company
apparently ran into some legal problems in Australia in 2004 due to its
questionable business practices – and was subsequently investigated by
the Australian Competition and Consumer Commission (ACCC) for alleged
breaches of the Trade Practices Act 1974 (particularly with regard to
provisions in the act relating to pyramid schemes). In 2005 an
Australia court reportedly ruled that ACN was operating an illegal
pyramid scheme – however the company appealed the ruling and it was
reversed after an appeals court determined that the alleged
“recruitment payments” did not fall under the definitions of the law.

Another company which is allegedly engaging a “VoIP pyramid scheme” is
Grouphone. Once again it is entirely arguable whether the company’s
activities are illegal – and, to be fair, there is no mention of this
company having any legal troubles stemming from its business practices
anywhere online. The alleged scheme they’re running sounds very much
the same as the one previously mentioned. Basically, unsuspecting
parties are led to believe that they’ll make millions – but then the
company takes your money and you learn the ugly truth that it is really
only paying you to find new “representatives” to re-sell its services.
You ultimately come to learn that you can only make really big money
once you reach the top of the pyramid – which is almost impossible to
achieve (in fact, it is reported that more than 95 percent of all the
“sales reps” hired for these schemes drop out of the program after just
a few weeks). Once again the scheme is modeled after the multi-level
marketing approach used by companies like Amway (Quixtar) – so, in that
sense it is difficult to point a finger and say with certainty that the
whole thing is a scam.