The 1999 Texas Electric Choice Act, which went into full effect in January 2002, changed the electricity and power industry. In 2005 Rob Snyder committed $1.5 million of his own equity and after clearing a few hurdles with the Texas Public Utilities Commission, Stream Energy had a REP license and company to sell energy to its customers. They began switching customers over to their new energy plan with 40,000 customers by June. In August of that same year, Katrina hit, devastating the area and threatened to do the same with this new emerging MLM.

Even after so many hurdles, Stream made it through its first number of years and today is flying high. If you’ve never heard of Stream Energy, they’re a retail electricity and gas provider in Texas and Georgia. Stream is now the 29th largest private company in the Dallas/Fort Worth area based on revenues of more than $800 million in 2008. Stream’s marketing division, Ignite, has fueled Stream’s growth through what the company calls a “multilevel marketing program.”

There they are…those three little words…”multilevel marketing program” also known by three letters: “MLM”. One would think it was four letters based on the reactions of some extremely overzealous critics. Because YTB is also a “multilevel marketing program”, you’re well aware of how it brings out some real nut cases who for whatever reason feel they need to save everyone from themselves. Some of us have mothers who use to be in in charge of protecting us as children. Apparently mom needs help now that we are grown adults as some try to warn us of the danger surrounding Multilevel Marketing. (I actually asked someone last week if they were my mother.)

Attorneys from Houston’s The Clearman Law Firm have announced a federal class action lawsuit filed last week under the Racketeer Influenced Corrupt Organizations Act against Dallas-based Stream Gas & Electric, Ltd., Ignite Holdings, Ltd., their related companies and several affiliated individuals. The press release issued by Clearman looks to be a simple copy and paste from the pages of Wikipedia or Scam.com.

“Some of the individuals at the top of the Stream and Ignite pyramid earn millions of dollar a year, while most of those that are now joining the scheme will likely never recover their investment,” says Scott Clearman of The Clearman Law Firm, lead counsel for the plaintiffs. “Stream promises recruits that they can make vast sums of money, but the fact is that most will lose their money.”

Nothing new there. It’s the same line we’ve heard for years from a select few who are too stupid or too lazy to figure out that companies like Avon, Mary Kay, Tupperware, Fuller Brush, Amway, NuSkin, Primerica, and Pre-Paid Legal have been operating as an MLM for far longer than this myth about running out of people has been pitched. None of the listed companies have hit this invisible bottom few claim to be inevitable.

I absolutely LOVED the response from Rob Snyder that I found which points directly to the ignorance we find surrounding the MLM model.

The fact that the Texas Attorney General’s office has previously confirmed the legitimacy of Stream Energy’s network marketing effort speaks volumes to the veracity of Mr. Clearman’s assertions. Moreover, the further reality that Stream Energy serves as a Provider of Last Resort as requested by the Public Utilities Commission of Texas also attests as to Stream Energy’s standing and repute within the state’s deregulated retail electricity market.

Simply put, the direct selling models used by firms such as Mary Kay and Stream Energy have been repeatedly found to be unquestionably legal. And, unfortunately, it seems these days that any clown with a bow tie can file a lawsuit on behalf of a purported class of injured parties.

We look forward to seeing Mr. Clearman in court.

While I’ve yet fully investigated this situation I suspect there are a few Reps with Ignite who were unsuccessful in obtaining customers in the first couple of weeks. Instead of improving themselves with knowledge, sales skills, or self-confidence, it was easier to find an Attorney who could file a law suit on their behalf so they could play the role of victim.

I actually know a couple of people who are with Ignite and have been asked to become a Rep and/or a customer of the company. While I did take a look, both the program and product didn’t tickle me the way a cruise would. Energy, like phones, cable (or satellite), and internet service are commodities that most everyone uses and I’m sure there is money to be made in all of these areas. Personally, I’ve always gone after things that I have a passion for. (Trust me, it helps in the sales process.) Entrepreneurship however, does solve a problem with a solution. The timing was right back in 2005 for Ignite to capitalize on a market shift after the deregulation of power and many made money with this MLM.

The lawsuit filed in the U.S. District Court for the Southern District of Texas in Houston alleges that Stream and Ignite induced the plaintiffs and others to invest in the “Ignite Services Program” at a cost of $329 and purchase an “Ignite Homesite” web page for a charge of $29 per month. The lawsuit claims that a large portion of the $329 is paid to those higher in the pyramid.

I found another article while researching and invite you to read what it took to start Stream Energy. (Found in the middle of the article in Arial font.) The millions of dollars invested to start and maintain a power company makes $329 and $29 per month literally chump change. We’re not even talking about the monthly overhead and lapse in time between being charged for the power used and when the customer actually pays (if they pay) their bill. But because the company uses “multilevel marketing” with thousands of independent representatives who now have a legitimate power company they can invest in and sell power through, (which in turn generates revenue for the investor), it’s a raw deal.

The way I see it the raw deal here are the idiots who think they need to save you from yourself instead of educating and training you to become self-sufficient. Like I said, I’m not a part of Ignite or Stream Energy, but I would place very good odds that this company’s focus is empowerment (pun intended) not some bogus pitch that you don’t have what it takes.

It will be interesting to see how all this unfolds. But like we’ve seen with YTB over the last year, we know that these types of allegations (and that’s all they are at this point) take time to reveal the truth. However, I can’t predict the future for Ignite or Stream. My hope is however, it will serve as a notice to others who can’t get past their own fears and self-imposed limitations that multilevel marketing is not only here to stay, but a legitimate business model.

All the best to Mr. Snyder, the Corporate Heads of the company, the independent representatives of Ignite and the customers of Stream Energy.

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