Multilevel Marketing Industry Rife with Misleading Income Claims

MADISON, CONN., Dec. 19, 2017 -- A wide ranging investigation by ad watchdog group truthinadvertising.org (TINA.org) has found that more than 97 percent of Direct Selling Association (DSA) member companies have used – either directly or through their distributors –  false and unsubstantiated earnings claims to convince prospective distributors to join their multilevel marketing (MLM) networks. These deceptive claims not only violate Federal Trade Commission (FTC) law, they also breach the trade association’s often touted Code of Ethics.

TINA.org has amassed more than 3,000 examples of companies and/or their distributors making inappropriate earnings claims on their websites and social media platforms. These claims range from assurances of achieving financial freedom, to making unlimited income, to being able to quit your job and stay home with your children. 

“All too often, consumers with limited capital are induced to part with their money by MLM promises of unlimited wealth that will never come to fruition,” said TINA.org’s Executive Director Bonnie Patten. “It’s time that the DSA and its membership were held accountable for these unsubstantiated income claims.”

Use of such claims is widespread despite the fact that the vast majority of distributors will never achieve financial independence with their MLM business. The DSA itself acknowledged more than a decade ago that the majority of distributors made less than $10,000 per year from direct selling, with a median annual income of about $2,400, which amounts to $200 per month before expenses.

In October 2016, then FTC Chairwoman Edith Ramirez took the stage at a DSA conference and did not mince words when it came to the extensive use of inappropriate earnings claims as a means of recruitment in the MLM industry.

[M]ulti-level marketers should stop presenting business opportunities as a way for individuals to quit their jobs, earn thousands of dollars a month, make career-level income, or get rich because in reality, very few participants are likely to do that. Although it may be true that a very small percentage of participants do have success of this type, testimonials from these rare individuals are likely to be misleading because participants generally do not realize similar incomes.

More than a year later, it appears few if any of the DSA members in attendance that day took the warning to heart. As a result of these findings, TINA.org has notified the DSA, the DSA Code of Ethics Administrator, and each MLM company of the problematic claims.

Read more about TINA.org’s investigation of MLM income claims here: https://www.truthinadvertising.org/mlm-income-claims-investigation/

About TINA.org (truthinadvertising.org) 

TINA.org is a non-profit organization that uses investigative journalism, education, and advocacy to empower consumers to protect themselves against false advertising and deceptive marketing.

Attachments:

A photo accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/5a22649b-6975-4b41-9a74-2cdcbcaa474a

Shana Mueller
truthinadvertising.org
203-421-6210
[email protected]