Consumer Alert
What are multi-level marketing (MLM) disclosure statements really telling you?
Thinking about paying to join a multi-level marketer (MLM)? Have you been promised that you could make lots of extra money if you join? Think again. Most people who join MLMs make little or no money or lose money. How do we know? A new FTC staff report reviewed public data from dozens of MLMs and did the math for you.
For the MLMs reviewed, the report found that most participants made $1,000 or less per year — that’s less than $84 dollars per month — which may not account for expenses. In at least 17 MLMs, most participants didn’t make any money at all.
Agency staff also found that most of the publicly available MLM income disclosure statements used all the following tactics:
- Emphasizing the high dollar amounts made by a relatively small number of MLM participants.
- Leaving out or downplaying important facts, like the percentage of participants who made no money.
- Presenting income data in potentially confusing ways.
- Ignoring expenses incurred by participants — even though expenses can, and in some MLMs often do, outstrip income.
So, before joining any MLM company, do some research. Your time and money are too valuable not to. Here’s what to know and do:
- Any company that tries to pressure you to join — is one to avoid.
- Some MLMs are pyramid schemes. If the MLM is not a pyramid scheme, it will pay you based on your sales to retail customers, without having to recruit new participants.
- Consider what it will cost you to run the business and whether you want to be a salesperson.
- Before joining, research the company and check out the company’s products.
- Ask someone you trust — who is not affiliated with the company — to review the paperwork you will need to sign.
Read the FTC’s resources for evaluating business opportunities, including multi-level marketing business opportunities.
Image
Putting out this old trope?!?!?People who succeed 1. Are coachable, 2. Follow the systems, DO THE WORK. It.s call NetWORK Marketing for a reason. Lives have been dramatically changed by network marketers who are willing to do the work. Allwalks of life. Many people joing companies to SUPPLEMENT their social security ,not to become millionaires. It´s 2024 time for your organization to do research and not trot out old stories.
I usually share your information to all my connections. This one in the trash.
CH
Thanks for doing the math for us FTC team This information is really helpful. Will avoid.
In reply to Thanks for doing the math… by Maria
What the FTC did not address is the massive amounts of money being made by the Amway upline, and many other MLMs, from the training/motivation "tools."
The people that don’t make much, or any money in an MLM probably didn’t do anything to make money. You make a sale through hard work and you are rewarded with a commission, whatever that might be. If the MLM does not have a direct to consumer aspect(no recruiting others) DO NOT DO IT!
In reply to The people that don’t make… by Carolyn
Most MLMs are focused on recruiting because the products are overpriced and it's difficult to find customers. When the recruits buy products, which is NOT a retail sale, the upline makes money. With little to no retail sales the MLM is an illegal pyramid. Most MLMs have a direct-to-consumer aspect but the question is whether the consumer/customer sales are actually being made.
I was with Amway, and made little or nothing. I do have to say though, their products are really great. If you get into Amway just to get the products at a discount price, go for it, but hard to make a living at it.
In reply to I was with Amway, and made… by Carl J. Niedzwiecki
Most people lose money after they join Amway. When Amway's tool scam is factored in, people lose LOTS of money but the upline make LOTS of money. Some of the products are good, others are mediocre at best. Most are drastically overpriced, even at the discounted prices.
In reply to I was with Amway, and made… by Carl J. Niedzwiecki
100% love this article and think people need to remember it if they are contacted by Herbal Life or Legal Shield to buy in
In reply to 100% love this article and… by Angel
I def agree with you. I tried to do Amway years ago and my Mom tried years before I did. We felt the products in and of themselves are good but getting people to buy them was nearly impossible. People just didn't want to spend that moolah,😁
Several months later I stopped. I was okay though..the only thing I lost was time and energy. I did meet some wonderful folks and ventured into cities & neighborhoods I would not have normally. I won't try anything along that line again but glad I tried that once.
Discussing income disclosure statements while ignoring where the income comes from is akin to showing up at a knife stabbing incident with a victim bleeding out and being more interested in a plastic cup that appears to be tipped over.
One would think that MLMs would be interested in collecting retail sales information, but most aren't, and the ones that do are usually required to do so because of FTC settlements, such as the 2016 Vemma and Herbalife lawsuits. Collecting retail sales information would show how much money is being made by free market demand, but only if the retail sales were actually taking place. MLMs know their retail sales are very low, which allows them to have plausible deniability of operating an illegal pyramid.
The FTC needs to get their act together.
I will not do that. My money is dear to me