Multi-level marketing (MLM) opportunities are often promoted with polished income charts, impressive rank titles, and the message that meaningful earnings are within reach for anyone willing to “work hard.”
What is far less visible is what the income disclosures often reveal when you read them closely—and what those charts frequently leave out.
In September 2024, Federal Trade Commission (FTC) staff analyzed 70 MLM income disclosure statements to evaluate what they actually say about participant earnings. The takeaway is striking: many participants received no payments at all, and the vast majority earned $1,000 or less per year—before expenses.
Below is what that means in practical terms, and the most common ways MLM income disclosures can create a more optimistic impression than the underlying data supports.
Note: This is general information, not legal advice for your specific situation.
What is an MLM?
An MLM is a business model that sells products or services through a network of “independent distributors,” “brand partners,” “coaches,” “agents,” or similar titles. Participants typically do not receive a salary. Instead, earnings are generally tied to:
1. Selling products (often bought from the company at “wholesale” and resold), and
2. Recruiting other people, where participants build a “downline” and receive commissions or bonuses based on what people in their network buy and sell.
In theory, this can be framed as “building a business.” In practice, the compensation structure often concentrates the meaningful earnings among a small fraction of participants at the top.
The Reality: Most People Make Little or Nothing
Based on the FTC staff review, many participants received no payments from the MLM at all. For companies where the data could be calculated, the vast majority earned $1,000 or less in a year—again, before expenses.
Those expenses may include enrollment or annual fees, required product purchases, marketing materials, conferences, training, travel, website fees, and other costs. For many participants, low or zero income can translate into a net loss once these expenses are considered—particularly when monthly purchases are required to remain “active” or eligible for commissions.
So why do the charts and success stories often feel so convincing? Because the disclosures are frequently structured in ways that emphasize the highest earners and minimize (or exclude) the experience of everyone else.
4 Ways MLM Income Charts Mislead You
Here’s how MLMs can make their earnings data look way more attractive than the underlying reality, based on the FTC’s review.
1. Excluding people who earned $0
Most disclosure statements don’t show income for all participants.
Instead, they often only show people who got any commission check, or people the company labels as “active”, a term that usually excludes those who earned nothing or didn’t meet certain purchase or sales quotas.
In at least some companies, being “active” can require things like buying or selling a minimum amount of product, recruiting someone, or having received a commission.
If everyone who got $0 is quietly removed from the chart, the average income shoots up and suddenly looks impressive—without actually changing anyone’s real experience.
2. Reporting gross payouts, not profit
Income charts almost always reflect gross payments from the company, not profit after costs. The FTC found that none of the 70 reviewed disclosure statements provided income figures that accounted for all expenses.
This distinction matters. A chart may show “average earnings,” but if the typical participant is spending comparable amounts (or more) to stay eligible, the chart is not describing financial gain.
3. Highlighting elite ranks that represent a tiny minority
Many disclosures break earnings down by rank. The problem is that rank tables often devote significant visual attention to high ranks—even when those ranks represent a very small percentage of participants—while the lowest ranks contain the overwhelming majority and produce minimal income.
The result is a presentation that draws the reader’s attention to large top-end numbers rather than the broader distribution.
4. Using averages and “monthly” figures that can distort reality
Averages can be heavily skewed by a small number of high earners. For example, a few large payouts can raise an average even if most participants earn little or nothing.
Some disclosures also present “monthly” income calculations in ways that may not reflect consistent earnings—such as annualizing payments based only on months when someone received a check. This can make irregular or one-time payments appear like stable recurring income.
The “Hard Work” Narrative—and What It Leaves Out
Many disclosures emphasize that earnings depend on effort, skill, and persistence. While effort matters in most work, this framing can be misleading in MLM contexts because it often omits structural realities that effort cannot change, including:
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market saturation (too many sellers competing for the same buyers),
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limited product demand, and
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compensation plans that funnel outsized returns to the top of the network.
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When participants do not earn what they expected, these disclosures and recruiting messages can shift responsibility to the individual—rather than acknowledging that the model often produces predictable outcomes for most participants.
If You’re Considering Joining an MLM, Ask Yourself:
Before signing up—or staying in—sit with these questions:
1. If I earn $0 in commissions this year, what will I have spent?
Consider enrollment fees, customer leads, marketing materials, monthly orders, tools, events, gas, childcare, etc.
2. What percentage of participants in this company earn nothing or under $1,000 a year?
If the company cannot answer clearly, that is a concern.
3. Does the income chart include everyone, or only “active” or “paid” people?
4. Am I prepared to treat this as an activity or like a hobby that may cost money rather than generate income?
5. If I couldn’t recruit anyone, would the product still be worth buying at full price?
If not, recruitment—not product value—may be driving the economics.
Bottom Line
MLMs are often marketed as a path to flexibility and financial independence. But the FTC staff review of MLM income disclosure statements reflects a consistent pattern: many participants receive no payments from the company, and the vast majority who do are reported as earning $1,000 or less per year—before expenses.
This does not mean no one earns significant income. It does mean the odds reflected in the disclosures are heavily tilted against most participants.
If you are being pressured to join, it is worth asking why the opportunity depends on your enrollment—and whether the promised earnings are realistic given what the disclosures actually report.
Questions? Schedule a free consultation with the Lebe Law team today: https://lebelaw.com/contact.
Source: Multi-Level Marketing Income Disclosure Statements [Federal Trade Commission, Staff Report, Sept. 2024]
