The Federal Trade Commission (FTC) found that most multi-level marketing (MLM) income disclosure statements are "confusing" and "ambiguous" after reviewing seventy examples. These statements frequently fail to provide a clear or accurate picture of the financial realities for the vast majority of participants.

Staff identified several key issues plaguing these disclosures. Many statements exclude participants who earn little or no income, a significant omission that skews the reported figures. Furthermore, these disclosures rarely account for the expenses participants incur, which can often exceed their earnings. The FTC also noted a tendency to highlight the substantial incomes earned by a small fraction of participants, creating a misleading impression of widespread financial success. Data is often presented in ways that are difficult to comprehend, with crucial information buried or presented inconspicuously. Claims made within these statements frequently lack clear supporting evidence.

The FTC’s executive summary detailed these problems. The review found that most MLMs present income data that omits those making minimal or no money, without clearly explaining this limitation. They also fail to account for participant expenses, even when those costs significantly eat into or surpass income. The emphasis on high earnings by a select few, coupled with the inconspicuous placement of data about the limited income most participants receive, creates a misleading narrative. The way income data is presented is often confusing or ambiguous, and importantly, none of the reviewed statements clearly define what data is being shared with consumers.

Terms like "income" and "earnings" are used without clear definitions, leaving consumers to guess what the figures represent. Are they gross amounts? Net of all expenses? Do they include all possible income streams or just a select few? This lack of clarity is compounded by the fact that different MLMs define these terms inconsistently, or not at all.

Analysis of the data within these statements, even information hidden in fine print, revealed that many participants receive no payments from their MLMs. The majority earn $1,000 or less annually, averaging less than $84 per month. The FTC’s full ninety-five-page report, including appendices, is available on the regulator’s website. These findings underscore the need for greater transparency and accuracy in MLM income disclosures to prevent potential consumer deception.