Is Stream Energy Still In Business?

Stream Energy is a multi-level marketing energy company based in Dallas, Texas. The company started operations in 2005 and quickly grew to become one of the largest direct selling energy companies in the world. However, Stream has also been the subject of much controversy regarding its multi-level marketing business model and allegations of being a pyramid scheme. Questions have also been raised about the company’s tactics and whether it takes advantage of vulnerable populations.

Despite the criticism, Stream continued growing steadily for over a decade. But more recently, the company has faced new challenges that have raised doubts about its future viability. A confluence of factors including the COVID-19 pandemic, lawsuits, and regulatory changes have put significant strain on Stream’s operations.

In light of this uncertainty, many are wondering – is Stream Energy still in business today? This article will provide an overview of Stream’s history, business model, controversies, and current status to shed light on the company’s situation.

Background on Stream Energy

Stream Energy is a Dallas-based company that was founded in 2004 by Rob Snyder and Pierre Koshajki. It primarily operates in Texas, Georgia, Maryland, New Jersey, New York, Pennsylvania, Illinois and Washington D.C. as an energy company that offers connected life services and direct selling.

Stream Energy first started by selling energy services like wireless, protective, and home services. The company grew quickly in its early years, generating over $2 billion in revenue in its first 7 years of business. By 2008, Stream Energy expanded operations to multiple states on the East Coast.

Stream’s Multi-Level Marketing Model

Stream Energy utilizes a multi-level marketing model to sell its energy services. This is similar to companies like Amway or Herbalife that rely on independent distributors to sell products and recruit new distributors. Distributors for Stream Energy are called “Direct Sellers” and earn commissions both on their own sales of Stream’s services, as well as the sales of any recruits they bring in.

The compensation structure at Stream is based on a unilevel model, meaning Direct Sellers can only sponsor a limited number of front-line distributors, but earn commissions on multiple levels of recruits below them. There are requirements to reach certain sales volumes and recruit a number of new distributors to advance in rank. As rank increases, so does the percentage of commissions earned on downline sales.

While Stream claimsDirect Sellers only pay a small sign-up cost to get started, there are ongoing fees and requirements to remain active and qualify for commissions and rank advancement. Critics argue the system encourages aggressive recruiting over actual product sales. However, supporters tout the opportunity for motivated individuals to potentially earn higher incomes compared to other sales and retail jobs.

Rise in Popularity and Expansion

Founded in 2005, Stream Energy saw rapid growth in the early 2010s as the multi-level marketing model gained popularity. The company expanded aggressively across the United States, moving into new states and utility markets.

By 2011, Stream Energy was operating in Texas, Georgia, Pennsylvania, Maryland, New Jersey, and Washington D.C. The next year, they entered New York, and by 2013 had added Illinois and Michigan.

Stream Energy’s direct selling model and promise of residual income attracted thousands of new independent distributors every year. By 2014, they boasted over $8 billion in lifetime revenue, and ranked in the top 40 major multi-level marketing companies in the world.

This rapid expansion was fueled by an extensive marketing campaign across media channels. Stream recruited independent distributors through conventions, conferences, and networking events across the country. The company’s growth was further accelerated by distributors leveraging social media to share the business opportunity.

Controversy and Lawsuits

Stream Energy has faced a number of controversies and lawsuits over the years, many stemming from their multi-level marketing business model. In recent years, the company has been hit with multiple class action lawsuits alleging deceptive and illegal practices.

In 2018, a class action lawsuit was filed in the Northern District of Illinois alleging that Stream lured customers in with promises of cheap electricity rates but then overcharged them by manipulating the formula used to calculate variable rates. The lawsuit accused Stream of breach of contract and violating consumer fraud laws. Several other lawsuits with similar allegations were filed in Texas and other states.

Stream has also faced lawsuits and regulatory actions related to their multi-level marketing model. Regulators in Maryland issued a cease and desist order to Stream in 2019 for operating an illegal pyramid scheme. The state alleged that Stream focused more on recruiting distributors than actual energy sales. Massachusetts sued Stream the same year for violating MLM laws. The company also received a multi-million dollar fine in Texas for violating regulations around enrolling customers.

Additionally, Stream has been accused of overly aggressive and deceptive recruiting of new distributors, and misleading them about the potential income they can earn. There have been multiple lawsuits filed by former distributors alleging they lost money instead of making money as promised by the company.

Stream has denied any wrongdoing in legal filings and statements, but the repeated controversies and lawsuits have damaged the company’s reputation. They highlight the frequent issues with multi-level marketing companies and the energy market in general when it comes to transparency and fair business practices.

The COVID-19 Pandemic

The COVID-19 pandemic that began in early 2020 had a significant impact on Stream Energy’s operations and revenue. As the virus spread rapidly around the world, many cities and states issued stay-at-home orders and shutdown non-essential businesses. This greatly disrupted Stream’s multi-level marketing model which relies on in-person recruiting events, parties, and conventions to sign up new independent associates.

With lockdowns and social distancing restrictions in place, Stream associates could no longer gather groups for demonstrations and pitches. The lack of face-to-face marketing opportunities made it very difficult to recruit and onboard new associates. Stream tried pivoting to virtual sales events and online recruiting, but found it was not as effective as their traditional direct selling model that depended on establishing personal connections.

In addition, with rising unemployment and economic uncertainty, fewer people were willing to pay to become Stream associates and market their services. Discretionary income declined significantly for many households during the pandemic. Stream’s revenues and new associate sign-ups dropped steeply in 2020 due to the combination of health restrictions and financial hardships. While the company attempted to adapt through increased online marketing and promotions, the COVID-19 crisis clearly disrupted its established business practices.

Stream’s Current Status

In 2022, Stream Energy is still operating as an energy company and multi-level marketing business. However, the company has experienced a decline in recent years. Stream currently has operations in 7 states, down from its peak of 9 states a few years ago.

Stream’s revenue and customer base have also declined since 2018. In 2020, Stream reported $722 million in revenue, down from over $1 billion in previous years. The number of active energy customers has fallen to around 184,000, compared to over 500,000 at its height.

While Stream is still in business, it has faced numerous challenges in the past few years, including lawsuits, regulatory issues, the COVID-19 pandemic, and waning consumer interest. The company appears to be a shell of its former self, with a shrinking footprint across the U.S. Still, Stream continues to offer energy services and promote its multi-level marketing opportunity in select markets.

Recent Developments

In 2022, Stream Energy announced plans to expand into several new states including New Mexico, Arkansas, and Louisiana. The company sees growth opportunities in these markets, especially in rural areas. This expansion comes after Stream retreated from markets like New York in previous years due to regulatory issues.

Stream recently launched a new energy plan called “Stream Budget Plus” aimed at helping customers manage costs. The plan allows flexible payment options and gives customers rewards points that can be redeemed for bill credits. Early feedback on the new plan has been positive.

While Stream largely avoided controversies in 2021, some customers have complained about contract terms, renewal policies, and fluctuating rates. A class action lawsuit was filed in Texas in late 2021 claiming Stream overcharged customers, but the case has not yet been resolved.

Stream is still dealing with the aftermath of Winter Storm Uri in February 2021 which left many Texas customers with exceptionally high electric bills. Stream provided some bill relief but was criticized for not doing enough to protect customers. This remains an issue, especially after Texas regulators banned some electricity plan types Stream relied on.

Criticisms of Stream

Stream has faced significant criticism from regulators, consumer advocacy groups, and former distributors for a variety of issues and practices.

Common Complaints and Criticisms

One of the most common complaints against Stream is that the company operates like a pyramid scheme that heavily prioritizes recruitment of new distributors over actual energy sales. Distributors are required to pay fees and meet certain sales quotas in order to maintain their status and earn bonuses and commissions. There are allegations that the compensation structure incentivizes distributors to focus on signing up more people rather than acquiring legitimate long-term customers.

Many consumer advocates argue that Stream uses deceptive and predatory practices to recruit new distributors. They claim marketing materials over-emphasize the earning potential and play down the risks and costs associated with the multi-level marketing model. There are also complaints that incentives encourage distributors to target vulnerable communities, such as immigrant neighborhoods and college campuses.

Stream has faced regulatory actions in several states related to allegations of overcharging customers, violating direct marketing rules, and operating as an illegal pyramid scheme. Texas fined the company $1 million in 2016 and prohibited it from recruiting new distributors for a period of time.

Critics argue that the multi-level structure leads most distributors to lose money rather than earn income. High attrition rates, low retention of customers, and emphasis on recruitment over sales have led many to liken Stream to a pyramid scheme designed to benefit those at the top rather than provide value to energy customers.

Stream Energy’s operations are ongoing but the company faces several challenges going forward. While Stream continues to recruit new independent distributors and offer energy services in some states, the MLM model remains controversial and several legal issues persist. The COVID-19 pandemic also significantly disrupted business.

Conclusion

As of 2023, Stream Energy is still conducting business operations and recruiting new distributors, though on a smaller scale than at its peak. The company currently offers energy services in Illinois, Maryland, New Jersey, New York, Pennsylvania, Texas, and Washington D.C. However, Stream no longer operates in all states it previously served.

Stream continues facing criticism and legal action over its multi-level marketing model and allegations of operating like a pyramid scheme. Lawsuits, regulatory issues, and the impacts of COVID-19 have all contributed to Stream’s downsizing and restructuring. While still in business, Stream operates with a reduced footprint compared to its rapid growth in the 2010s.

The direct selling energy industry faces uncertainty going forward. Stream Energy persists for now but has declined from its former size and scale. While the company aims to regain lost ground, competitive and legal pressures continue mounting. Stream’s long-term future remains unsettled as it works to adapt to a changing business and regulatory landscape.