Most MLM income disclosure statements appear to report what the company paid its participants, not what those participants kept. In a 2024 report on 70 of these statements, US Federal Trade Commission (FTC) staff found that none gave income figures that took all of participants’ expenses into account.¹ The statement is still the closest thing a recruit gets to hard data, so it is worth reading the way a careful buyer reads a contract. Five checks do most of the work, each explained below:

1. Find out who the table leaves out.
2. Check whether “earnings” means before or after costs.
3. Look at who fills the rows.
4. Ask how monthly figures were calculated.
5. Look for the share of people paid nothing.

Why an MLM publishes the statement, and who it is for

A multi-level marketing company (MLM) sells through participants who are usually independent contractors, not employees, and who can earn from retail sales and from commissions tied to purchases by their “downline”, the network of their recruits and their recruits’ recruits, according to the FTC’s 2024 staff report. The income disclosure statement does two jobs at once, which is why it needs careful reading: it informs, and it recruits, since FTC staff found that some MLMs tell participants to show it whenever pay is discussed with a prospect.¹

In everyday terms, it might arrive at the end of a friendly pitch, as a screenshot of a rank table on a friend’s phone. Many recruits never see one at all, as the participant survey later in this article shows. Anyone weighing an MLM as a way to earn extra income alongside a main job can start with one habit: ask for the full statement before signing anything, and treat a company that cannot produce one with caution.

In the FTC staff review, most participants were paid little or nothing

The FTC staff’s 2024 report, the most detailed public look at MLM income disclosure statements we found, concluded that in many of the MLMs reviewed, most participants had little or no reported income from the company. Staff also found that most statements leave out people who earned little or nothing, do not account for expenses, give the most space to a small group of high earners, and present figures in potentially confusing ways. Only a minority of the hundreds of MLMs known to staff posted a statement at all, and the report gives staff views, not necessarily those of the Commission. Averages are one reason a statement can look better than the reality, because a handful of large payments pull an average up. The report gives its own example: if 99 people make nothing and 1 makes US$10,000, the average is US$100, which describes nobody.¹

The study

Moderate evidence

Seventy statements, read line by line: the FTC staff review

Across the statements whose data allowed the calculation, staff concluded that many participants received no payments from the MLM and the vast majority received US$1,000 or less a year, which is less than US$84 a month on average, before expenses. In 17 of the 27 statements that gave or implied the share of participants with no income at all, that share was more than half.¹

These are gross payments from the company, so once fees, samples and travel are subtracted, the picture can only stay the same or get worse. One limit applies throughout: the figures describe only the companies that chose to publish a statement, as reported by those companies, so they may not describe every MLM.

When a statement offers an average, look for a median, the figure for the person in the middle, or work out what share of people sit in the lowest row.

How to read an MLM income disclosure statement

The five checks from the top of this article cover most of what FTC staff found easy to miss in these documents. None needs more than the statement itself and a calculator.¹ Together they turn a page of payouts into a rough answer to the question that matters: what would a typical participant have kept?

1. The heading: it usually says "earnings" or "income"; check whether the figures are before expenses
2. The rows: most rows describe a small share of people at high ranks; find the row that holds most participants
3. The fine print: definitions of "active", how monthly figures were calculated, and the disclaimer often sit here
4. The missing row: people who received no payments, or were labelled inactive, may not appear in the table at all

1. Find out who the table leaves out

Most statements in the FTC review showed a distribution that excluded some participants: many left out everyone who earned no commissions, and many others left out people the company deemed “inactive”. Definitions of “active” varied from company to company, and some statements never defined it. A worked example from the report shows how to recover the missing row. One statement gave average income of US$1,434 for active participants and US$834 across everyone, and implied that inactive participants were paid nothing. Dividing the second figure by the first gives about 58 percent active, so roughly 42 percent received nothing.¹

The FTC’s guidance says omitting people who earned nothing, or counting only “active” participants, paints a misleading picture, and that participants should be excluded only if they affirmatively opted out of trying to earn.²

2. Check whether “earnings” means before or after costs

Headings such as “Average Annual Earnings” usually describe what the company paid out, not profit. FTC staff found that only a handful of statements explained the missing expenses as prominently as the dollar figures.¹ The FTC’s guidance says participants’ spending on products, conferences, tools and training has to be subtracted to know whether they made or lost money.²

Claims about earnings should take into account both what participants earn and what they spend.

In practice, add up what joining would cost you over a year: any sign-up or monthly fee, the minimum purchase needed to stay eligible, and events. Then compare that total with the payment shown for the row where most people sit.

3. Look at who fills the rows

Most statements broke income out by rank, and in nearly all of those, most participants sat in the two or three lowest ranks, or were missing from the table, while most of the table described a tiny share at the top. In one table the report shows, every row except the lowest together covered fewer than one in ten participants.¹ The layout works like a shop window: the eye goes to the top ranks because they take up the space. Start at the lowest row instead, and weigh each row by the share of people in it, not by its dollar figure.

4. Ask how monthly figures were calculated

Some statements built “monthly” pay only from pay periods in which a participant was paid. In one example the report describes, a single US$100 weekly check would be counted as a US$433 month.¹ If the fine print mentions “periods with earned commissions” or multiplying weekly figures, the monthly number overstates a typical month.

5. Look for the share of people paid nothing

Fewer than half of the statements gave, or let staff calculate, the share of participants with no payments, and most that stated it outright made it less prominent than the income figures.¹ If the statement does not show it, the AARP study’s authors suggest asking the company for it, along with turnover figures.³

WiserHours

Questions to answer from an income disclosure statement

• Who is left out: people paid nothing, "inactive" members, or anyone else?
• Are the figures before or after expenses, and which expenses?
• What share of participants is in the lowest row, and what did that row receive?
• Is there a median, or only averages?
• Were monthly figures built only from months with a payment?
• What would a year of fees and minimum purchases cost me?

Find this checklist online:
https://wiserhours.com/side-hustles/mlm-income-disclosures/#checklist-mlm-income-disclosures-reading

Nearly half of surveyed participants said they lost money

Participants’ own accounts match what the company documents suggest. In a 2017 survey by the AARP Foundation of 601 current and former US MLM participants, nearly half said they had lost money over their time in the business, about a quarter broke even and a quarter made a profit. Fewer than half said they had received a copy of the company’s income disclosure statement. The survey drew on a nationally representativenationally representative: Describes a sample drawn by random selection from a country's whole population and weighted so its results stand for that population. The label describes how people were picked, not how many of them agreed to take part.Full entry in the glossary online panel of US adults, so it reflects a broad cross-section of people who had ever joined, not only one company’s members. Its limits: profit and loss are self-reportedself-report: A measure in which people describe their own behavior, feelings or circumstances, usually by answering a questionnaire. When the same person supplies both of the things being compared, shared habits of answering can make the link between them look stronger than it is.Full entry in the glossary and cover each person’s whole time in the MLM, the cumulative response rate was 3.9 percent, and the study was sponsored by the AARP Foundation, a charity affiliated with AARP, not by the industry.³

One finding bears on a common belief, that effort decides results. Hours worked were linked to bigger profits, and just as strongly to bigger losses, which the authors took to suggest that working harder or investing more did not by itself separate success from failure.³

A practical reading: before joining, ask how much time you could give it, then ask what the typical member in the lowest rank received for similar hours. If the company cannot say, you are being asked to take the outcome on trust.

Further reading

• Selling the Dream: The Billion-Dollar Industry Bankrupting Americans

  by Jane Marie

  A reporter's history of MLMs, from the recruiting pitch to the income claims and losses that the five checks in this article are meant to catch.

As an Amazon Associate WiserHours earns from qualifying purchases.

The industry’s counterpoint: part-timers and discount buyers

The direct selling industry’s own count explains why it reads these statements differently: the Direct Selling Association (DSA)’s 2025 fact sheet counts 5.2 million US direct sellers building a business, most of them part-time, plus 6.4 million “discount buyers” who signed seller agreements but chose not to build one. The fact sheet also says direct sellers averaged US$6,577 in retail sales in 2025. That figure is sales divided by sellers, not what a seller kept: it is a mean, and it comes before product costs, fees and expenses.⁴

A 2024 paper by two economic consultants, published by the Direct Selling Education Foundation, makes the industry’s case: it says every direct selling company has some participants who signed up only for a discount, and that counting them deflates typical earnings, argues that leaving them out of a statement is “not necessarily a form of deception”, and notes that companies usually do not track retail profit, which statements therefore often omit.⁵ The FTC’s view differs: its guidance says participants should be left out only with evidence that they opted out of the income opportunity.²

Both sides agree that statements often leave out retail profit and costs. Ask the company how it decided who counts as a discount buyer, and whether the figures include what members spent.

What the FTC’s 2016 Herbalife order required

Herbalife, a nutrition and personal-care MLM, agreed in 2016 to restructure its US business and pay US$200 million in consumer redress to settle FTC charges. The FTC had charged that the company deceived consumers about how much they could earn, with materials suggesting people could quit their jobs or earn thousands a month while most distributors earned little or nothing, and that its pay structure rewarded recruiting over actual retail demand.⁶ Herbalife neither admitted nor denied the allegations, and the case was resolved by an agreed court order, not a trial.⁷ In its own statement on the settlement, Herbalife said it believed many of the FTC’s allegations were factually incorrect but settled to avoid the cost and distraction of long litigation, and that the terms did not change its business model.⁸

Under the order, as the FTC’s press release describes it, at least two-thirds of rewards had to be based on tracked and verified retail sales, discount buyers could not earn rewards, an independent auditor would monitor compliance for seven years, and claims that members could “quit their job” were banned.⁶

The order applies to Herbalife alone, but the question behind it travels: ask how much of any company’s sales go to customers outside the network, and whether it can verify them.

If you think you were misled, or the costs turned into debt

Thoughts of self-harm need help at once; a suspected fraud or a debt you cannot repay needs attention soon; a decision to join can wait for a second opinion. The steps below follow that order.

• Now, if money trouble comes with thoughts of suicide or self-harm: in the US, call or text the 988 Suicide & Crisis Lifeline on 988, or call 911 if a life is in danger.⁹ In the UK, call 999 or go straight to A&E if someone’s life is in danger, and for urgent mental health help call NHS 111 and choose its mental health option.¹⁰ Anywhere else, the local emergency number applies.
• Soon, if you believe you were misled or have lost money: in the US, the FTC takes reports at ReportFraud.ftc.gov.² UK readers can use Report Fraud online or phone 0300 123 2040, and in Scotland, Police Scotland takes reports on 101.¹¹ In other countries, try your national consumer protection agency.
• Soon, if fees or unsold stock have become debt you struggle to repay: the US Consumer Financial Protection Bureau says most credit counselingcredit counseling: Help with budgeting and debts from a trained counselor, which in the US usually comes from a non-profit organization and may include a debt management plan. Not every provider is non-profit or free, and some have defrauded people, so check fees and credentials first.Full entry in the glossary agencies are non-profits and can be a source of free or low-cost advice, but cautions that some services carry fees and that the FTC has found some debt-plan providers defrauding people.¹² In the UK, a GOV.UK page on dealing with debts points readers to MoneyHelper’s free debt advice.¹³ Elsewhere, ask whether a free non-profit or public debt service operates where you live.
• Before you sign: the FTC’s consumer advice is to have the company’s materials and earnings claims reviewed by an accountant, a lawyer or another trusted person with no tie to the company, and, in the US, to check with your state attorney general for complaints.¹⁴

The bottom line

Treat an MLM income disclosure statement as a record of what the company paid out, often to only some of its participants and before anyone’s costs, rather than as a guide to what you would keep. Start from the lowest row, find the share of people paid nothing, and add a year of fees and required purchases before comparing it with anything you would call income. If the statement cannot answer those questions, the gap is itself information.