Ambit Energy: Opportunity or Pyramid Scheme?
September 30, 2017
Ambit Energy has been receiving several complaints in the past few months from individuals who think they were scammed. In this Ambit Energy Scam review, I’ll discuss the particulars of these allegations as well as give you an informative overview of the Ambit Energy business opportunity.
A key factor to know is that most of the scam reports about Ambit Energy are coming from individuals who have been consultants with Ambit. This is not uncommon in the network marketing industry and I will address it in this review.
If you’re considering signing up as an Ambit Energy consultant but want to research and confirm the company is not a scam then this article is for you. I’ll give you the truth about Ambit and also a “secret” marketing strategy that will help you grow a successful business.
So what are the Ambit Energy Scam reports?
I found many scam complaints about Ambit Energy on the internet. People were complaining about a wide variety of issues that I’d like to address at this time.
Henry writes: “Ambit Energy is a complete scam from top to bottom. I got a lower rate the first month. The 2nd month it doubled. The 3rd month it tripled.”
Obviously, Henry was an energy customer of Ambit Energy. He felt like he was taken advantage of by his rate increasing each month. Henry may not have realized he was on a month-to-month plan and was a victim of market fluctuations in energy prices. His complaint was posted online in late 2008 which was at a time that every retail electric provider had to increase their rates due to extreme volatility in the market. My only recommendation to anyone thinking about switching their energy provider to Ambit or anyone else is to read the terms and conditions. It is to your advantage to lock in a fixed rate to hedge against energy price volatility. If this claim is true (which I doubt it is) Ambit is legally allowed to raise rates on month-to-month customers.
Gabriel writes: “A former friend sponsored me as a consultant after promising me wealth and positive cash flow residual income with a minimal of effort. I gave my friend names to contact people and sponsor them on my behalf (as he suggested I do) and he insulted them and told them they weren’t motivated then they told him they didn’t want to join the business.”
Gabriel is mad because of the way his sponsor treated him and his friends. This complaint about Ambit Energy being a scam is actually a false claim because it sounds like Gabriel’s sponsor is the problem here. Ambit Energy consultants are independent and Ambit Energy is not held liable for wrong doings of consultants. These types of situations occur in all business types and its unfortunate it happened, however there is really no scam on Ambits part here.
Shawn writes: “I did a research project on Ambit and it seems to be nothing more than an old-fashioned pyramid scheme. It’s quite surprising that anyone would ever fall for this, but it’s like they say:A fool and their money were lucky to meet in the first place.”
First of all, a pyramid scheme is when you bring on new people below you to pay for the people already in. Then, in order for them to make money they have to sponsor new people below them. A pyramid scheme is fueled by new people paying for the people above them in the pyramid.
The Securities and Exchange Commission (SEC) has reported multi-level marketing companies like Ambit legal companies as long as the majority of their income comes from the sale of a product or service and not from fees or buy-ins to join the business.
Ambit has a real service they bring to the market in the form of energy. They currently operate in Texas, New York, Illinois, Pennsylvania and Maryland.
Ambit Energy consultants pay a $429 registration fee which makes them in the business, covers any training costs incurred by the company and includes a welcome kit. Some of the Ambit Energy scam reports I’ve read speak about how this $429 start-up fee is being used to pay the consultants above. This is information is not accurate. We will cover the compensation plan in more detail later in this article.
Ambit Energy Holdings, LLC was created in 2006 in Addison, Texas by co-founders Chris Chambless, Chief Marketing Officer and Jere W. Thompson, Jr., Chief Executive Officer.
Ambit Energy is a Retail Electric Provider (REP) in the state of Texas, but also markets electricity and/or natural gas in markets that are deregulated in New York, Illinois, Pennsylvania and Maryland.
In 2002, the state of Texas deregulated it’s energy market into 3 separate categories:the power generators, transmission and distribution and retailers. Ambit Energy purchases energy from the energy grid wholesale and sells it retail to the marketplace for a profit. There is nothing new to this business model but some people have a hard time understanding this at first.
Texas has now become the model for other states to follow which Ambit is now branching in to. There are plans for more states to deregulate their markets which would allow Ambit to expand into these states and increase their overall profits.
In 2010, Ambit Energy was named America’s “Fastest Growing Company” by the prestigious Inc 500.
Ambit’s Energy Service
As previously mentioned, Ambit Energy is a retail provider of energy currently in 5 states. Their goal in the market place is to provide quality billing, customer service and competitive rates.
There should never be a concern about the reliability of the service as this is handled by the transmission and distribution companies (not Ambit) previously mentioned.
Rates vary based on location and the length of contract (month-to-month, 6-month, and 12-month). Ambit also provides a “green” product which is 100% renewable energy. Usually, this rate is slightly higher than the other rates.
You can see rates for different service areas based on zip code on Ambit’s website.
Ambit’s Compensation Plan
There are three primary ways to earn an income as an Ambit Energy consultant:Immediate Income, Leadership Income and Residual Income.
Ambit knows how important it is for consultants to start making money immediately. You can actually earn two types of immediate income:Jump Start and Team Builder Bonuses are designed to reward new Consultants for taking action immediately. Ambit pays Jump Start Bonuses when you sign up new energy customers and Team Builder Bonuses when you help your personally sponsored Marketing Consultants do the same. Both bonuses are paid every Friday on accepted pending or energized energy customers.
There are five positions within the Ambit Energy compensation plan. As you promote to higher levels you are rewarded for each new consultant who joins your organization. You earn more as you grow your team and are promoted to a higher position. It’s important to point out that you don’t actually earn a bonus for recruiting other consultants. The new consultants must first qualify by signing up 4 customers within their first 30 days of business in order to activate the immediate or leadership bonuses.
The most important element in the Ambit Energy compensation plan is the residual income. This is long-term income generated when customers pay their monthly energy bills. Ambit pays consultants a residual commission for every customer in their organization up to 6 levels. In some instances, you can earn commissions on unlimited levels.
Commission amounts range based on energy consumption and the State but usually fall within $.25-$3.00 per customer per month.
I personally know consultants in Ambit who have over 15,000 customers on their team. If you use an average residual commission of $1.25 per customer this is over $18,750 a month or $225,000 annually.
My Concern About Ambit Energy
I hope this article helped shed some light on the Ambit Energy Scam allegations and want to be very clear that I DO NOT think Ambit is a scam. However, I do have some major concerns that I would like to address at this time.
It may be obvious by now that in order to make a large amount of money as an Ambit Energy consultant you need to be able to do two things: Enroll customers and Recruit consultants.
Although, Ambit provides great sales training and professional websites to help market the business this is not enough to automatically have success. It takes more than just sales skills and good looking websites!
Most Ambit consultants who join are able to enroll a few customers within their first 30 days. They are excited about earning the $100 jump start bonus and may even tell some of their friends and family about the business.
The problem is finding people to talk to once you’ve talked to all of your friends,family members and co-workers etc.
Some have gone so far as to jeopardize the relationships they have with their friends and family just because they won’t take “no” for an answer when attempting to recruit them into the business.
After a few months of struggling they eventually give up and quit the business.
The good news…
I struggled, like many in this industry, to enroll customers and recruit others into my business opportunity. I know the frustrations first hand and it destroys your spirit and vision necessary to have success.
The good news is I have found a way around this by using special marketing strategies most people have no clue even exist!
I teach people how to STOP chasing their friends, family and even strangers who are not interested in their business and create a system where people start chasing you.
The marketing philosophy I’m talking about is called Attraction Marketing and it really works!