How to Read an MLM Income Disclosure Statement

Direct Selling16 Oct 2026 · 7 min read

Someone shows you a slide. A car, a beach, a big cheque. “This could be you in two years.” Then you ask a simple question: what does a normal person in this company actually earn?

The honest answer is usually in one boring document: the income disclosure statement. Many direct selling and MLM companies publish one. Few people read it. Fewer understand it. This guide shows you how — in about ten minutes.

Nichod (short mein): Kisi bhi MLM ya direct selling company se judne se pehle uska “income disclosure statement” zaroor padho — wahi asli tasveer hai, stage par dikhai gaadi nahi. Dekho kaun gina gaya hai (sab log ya sirf “active”), average nahi median dekho, aur kharche (product, training, travel) khud ghatao. US ki FTC ne 70 aise statements dekhe: zyadatar logon ko saal mein $1,000 ya usse kam mila — aur kai companies mein zyadatar ko kuch bhi nahi.

What the FTC found in 70 statements

In September 2024 the US Federal Trade Commission (FTC) published a staff report on the income disclosure statements of 70 MLMs, collected in February 2023. Its main findings:

In those MLMs, the vast majority of participants received $1,000 or less per year — under about $84 a month. That is before any costs.
In at least 17 of the MLMs, most participants made no money at all from the company.
Most statements highlighted the high earnings of a few people, downplayed how many people earned nothing, or showed the data in confusing ways.
The statements generally did not account for expenses, which the FTC says can outstrip the income people make.

So the document can help you — but only if you read it like a detective, not like a fan.

The 6 questions to ask of any income disclosure

1. Who is counted?

Look for the small print. Does the table include everyone who signed up that year, or only “active”, “qualified” or “commission-earning” people? If people who earned nothing are left out, the numbers look much better than real life.

2. Median or average?

An average is pulled up by a few top earners. The median is the person in the middle. If only the average is shown, ask for the median. If the company can't give it, that is an answer too.

3. Gross or net?

“Earnings” almost always means money paid by the company — before your costs. The FTC's own guidance says costs such as product purchases, travel, tools and training must be subtracted to see if someone actually made a profit.

4. Per year or per month?

A number like “€1,200” sounds fine until you see it is per year. Turn everything into a monthly figure.

5. How many people are at the top?

Find the table of ranks. Look at the percentage of people in the top levels — often well under 1%. The car on the slide belongs to this group.

6. What about hours?

Income without hours means little. Ask people at the median level how many hours a week they work. Then divide.

A worked example (made-up numbers)

These numbers are invented to show the method. They describe no real company.

Step	Example
Median yearly payment from the company	€480
Minus your own monthly order to stay “active” (€60 × 12)	− €720
Minus starter kit, events, samples, phone	− €300
Result for the year	− €540

On paper, this person “earned €480”. In real life they paid €540 to take part. Try your own numbers in our direct selling income calculator — it subtracts costs and drop-out for you.

Red flags the FTC points to

Lifestyle pictures — houses, cars, holidays — used as a hint of what you can expect. The FTC says these are deceptive if participants generally don't get such results.
“Replace your job income” claims without data that typical people actually do it.
Buying to keep your rank. The FTC says buying products for your own real use is not a problem by itself — but buying mainly to qualify for bonuses or rank, or under pressure from your upline, is a warning sign.
Rewards for recruiting that are not tied to sales to real end customers.

The FTC also says there is no simple percentage test, and having retail customers alone does not prove a company is safe. You have to look at how it works in practice.

If there is no income disclosure at all

Ask for one in writing. If the company does not publish one, ask your sponsor to show you their own real yearly income and costs. If nobody will show numbers, decide as if the typical result is zero — because you have no proof it isn't.

Direct selling can work for some people who love a product and like selling it to real customers. This page is not against anyone's choice. It is about deciding with real numbers instead of a dream slide. Our list of 10 questions to ask before you join goes well with this one.

Questions people ask

What is an MLM income disclosure statement?

A document some multi-level marketing and direct selling companies publish to show how much their participants were paid in a year, often by rank. It usually shows payments from the company, not profit after costs.

How much do most MLM participants earn?

In an FTC staff review of 70 MLM income disclosures, the vast majority of participants received $1,000 or less per year, and in at least 17 of the MLMs most participants received nothing.

Should I look at the average or the median?

The median. A few very high earners push the average up. The median shows what the person in the middle actually got.

Do the earnings include my costs?

Usually not. The figures normally show money paid by the company. You must subtract product orders, starter kits, events, travel and tools yourself.

What if a company has no income disclosure?

Ask for one in writing, and ask your sponsor for their real income and costs. If no numbers are shared, plan as if the typical result is zero.

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Sources

Ye general jaankari hai, financial advice nahi. This page is general information, not financial, tax or legal advice. Rules and numbers can change — check the official source or a qualified adviser before you decide.