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.
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