Utility Warehouse and its Multi-Level Marketing Approach
Utility Warehouse (UW) is a UK-based utility provider offering a bundle of services including energy, broadband, mobile phone contracts, and home insurance. Operating under a multi-level marketing (MLM) model, Utility Warehouse invites individuals to become “Partners” by selling its services and recruiting others into the scheme.
This business structure has sparked discussions and controversies regarding its legitimacy. We decline attempts to promote this company several times each week - sometimes each day - in the Remote Work UK community, because our stated opinion and rules on MLMs and network marketing are completely clear. But so many insist that Utility Warehouse is somehow different or better than the other programmes out there,
In this article, we’ll examine the key aspects of Utility Warehouse, its MLM model, and whether it really delivers value to its customers and partners.
What is Utility Warehouse?
Utility Warehouse, run by Telecom Plus, bundles essential household services such as gas, electricity, broadband, mobile, and insurance into one package. The company promotes itself as a cost-saving option, claiming to simplify bill management and offer competitive rates for its services.
However, what sets Utility Warehouse apart from traditional utility providers is its business structure. Rather than relying on conventional marketing channels, it operates under a multi-level marketing (MLM) model, where partners—who are often customers themselves—earn commissions for selling the company’s services to others and recruiting more partners.
How Does the MLM Model Work?
The MLM system is the core of Utility Warehouse's business operations. Partners, once recruited, are incentivised to sign up new customers and bring in more partners under them, forming a network or "downline." They earn commissions based on the number of customers they personally bring in and those brought in by their downline. This has led to discussions comparing the model to a pyramid scheme, which is illegal in many countries, though Utility Warehouse insists it operates within legal boundaries.
Main Points of the MLM Model:
- Commission-based earnings: Partners earn money based on how many customers they sign up and whether they recruit others into the scheme.
- Recurring income: Once customers are signed up, partners continue to earn a percentage of their utility bills for as long as they remain customers.
- Recruitment focus: Partners are incentivised to recruit new partners, with commissions increasing based on the size of their downline.
This system creates a focus not only on selling services but also on recruiting new partners, and this is the ‘opportunity’ that we keep deleting from our social media channels.
Is Utility Warehouse a Pyramid Scheme?
The MLM business model, especially in the context of Utility Warehouse, has been the subject of much debate. Some argue that the structure heavily resembles a pyramid scheme, particularly because of its emphasis on recruitment. The MoneySavingExpert forum has several threads questioning whether UW’s business model is more about selling utilities or recruiting partners.
Here are some of the main issues that came up:
High reliance on recruitment: A significant portion of partner earnings is tied to recruiting others. While partners do earn commissions from customer sales, it is the recruitment of new partners and their ability to sign up customers that leads to greater financial rewards.
Low success rates for partners: Similar to many MLM schemes, only a small percentage of Utility Warehouse partners reportedly earn significant income. Many partners struggle to make substantial commissions, with some earning little to nothing despite their efforts.
Pressure on friends and family: Given the recruitment-driven nature of MLMs, partners often target their close social circle, leading to uncomfortable situations where friends and family members may feel pressured to sign up for services they do not need.
While Utility Warehouse claims to offer a legitimate business opportunity, critics argue that the majority of its partners are unlikely to earn a decent income, and for us, that means it’s not something we want to promote to our members.
Does Utility Warehouse Offer Good Value?
When assessing Utility Warehouse as an energy provider and utility bundler, you need to look past the MLM structure and examine the value it offers to customers. The company positions itself as a one-stop-shop for household utilities, claiming that bundling services together can lead to cost savings and simplified billing.
BUT reviews of UW’s utility services have been mixed, and many customers have raised concerns about whether the savings are as substantial as promised.
Customer Experiences with Utility Warehouse Services:
- Price Competitiveness: While Utility Warehouse claims to save customers money by bundling services, some users on forums like MoneySavingExpert and Mumsnet have questioned the actual savings. For many, the bundled approach did not offer better deals than going directly to individual utility providers.
- Hidden Fees and Tariff Confusion: Some customers have reported unexpected fees and confusion over tariffs. For example, some users noted that the savings were not as clear-cut as they had been led to believe during sign-up.
- Customer Service: UW has received both praise and complaints regarding its customer service. While some customers report helpful and responsive service, others have encountered issues with billing disputes or difficulties in cancelling services.
Potential Benefits of Utility Warehouse:
Convenience: One of the main advantages touted by UW is the convenience of managing multiple services under one account. Customers can receive a single bill for all their utilities, simplifying payment and management.
Cashback Card: UW offers a cashback card that allows customers to earn cashback on their everyday spending, which can be applied to their utility bills. This feature has been popular among some users who are disciplined in their spending.
Legal and Regulatory Considerations
Utility Warehouse is regulated by Ofgem, the UK’s energy regulator, which ensures that its energy services comply with industry standards. The company is also bound by the rules of the Financial Conduct Authority (FCA) concerning the sale of insurance products.
However, this does not shield the MLM business model from scrutiny. Regulators typically examine MLM schemes to ensure they do not cross the line into illegal pyramid scheme territory. While UW is not officially classified as a pyramid scheme, its structure and partner earnings potential are closely monitored by watchdogs, including consumer rights organisations.
Is Utility Warehouse Worth It?
Utility Warehouse markets itself as a money-saving solution for household utilities, with the added bonus of offering an income opportunity through its MLM model. However, this proposition may not be as appealing as it seems for many potential partners or customers.
From an MLM perspective, it’s essential to consider that the earning potential for most partners is low, and success heavily depends on recruitment rather than just service sales. For customers, the idea of bundled services may be convenient, but the actual savings are debatable, with many people finding better deals by shopping around for individual services.
Utility Warehouse may suit individuals looking for convenience and the chance to earn a little extra money on the side, but it’s important to enter both as a customer and a partner with realistic expectations. It’s probably best to take the advice of Martin Lewis on this, than your mate who just signed up with them.
The Remote Work Europe Verdict:
We maintain our lack of confidence in the overall MLM model, and our big issues with the deceptive and disingenous business communications the sector encourages. We want to help people find REAL remote work opportunities, that can support their lifestyle and expenses, and that includes growing their OWN businesses rather than somebody else’s.
You can read more about our thoughts on the wider issue here.
None of the UW posts we decline from our social media mention recruiting others, they just talk about the amazing savings to be made - while the facts are that if you don’t yourself recruit, you’re not going to make any money, and if you sign your utilities over to them you frankly may or may not be getting a good deal. The best rates for all these services vary all the time, and if you really want to save, then you need to listen to the experts. Small differences in costs for gas and electricity in particular can make a big impact for those working from home, who might have higher utility bills than many who are out all day.
So our advice is
1. use professional expert comparison sites to get the best value on your household bills
2. either get a job which pays you a living hourly rate, or start your OWN business as an entrepreneur, to create a sustainable remote work career.
