MLM Income Disclosure Statements: What They Really Show

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Every network marketing company that wants to be taken seriously publishes an income disclosure statement. It is the document that is supposed to tell you what distributors actually earn.

Here is the problem. After being inside 8+ network marketing companies, I can tell you that almost nobody reads these documents, and the few who do usually walk away with the wrong impression. That is not an accident. Most income disclosures are written to be technically accurate and practically misleading at the same time.

So let's fix that. In this post I'll show you what an income disclosure statement actually is, what the Federal Trade Commission found when it studied 70 of them, and how to read one so the numbers tell you the truth instead of the sales pitch.

What Is an MLM Income Disclosure Statement?

An income disclosure statement (people also call it an IDS) is a report a network marketing company publishes showing how much its distributors earned over a given year. Most companies break it down by rank, so you can see what a typical person at each level made.

In theory it is a transparency tool. It exists so that before you join, you can look at real earnings data instead of trusting the screenshots of commission checks people post on social media.

In practice, the quality of these documents is all over the map. Some are reasonably honest. Many are designed to make the opportunity look far better than it is. And a few are so confusing that you would need a finance degree to figure out what they are actually saying.

The good news is that you do not need a finance degree. You just need to know what the company is hoping you will skim past.

What the FTC Found When It Studied 70 of Them

In September 2024, the Federal Trade Commission published a staff report that analyzed 70 publicly available income disclosure statements from a wide range of multi-level marketing companies. This is the most comprehensive look at these documents we have, and the findings are worth sitting with.

According to the FTC report, the vast majority of participants received $1,000 or less per year. That works out to less than about $84 a month, on average, before you subtract a single dollar of expenses.

It gets starker. More than 80 percent of the companies' distributors made $1,000 or less for the year, which is under $20 a week. And in at least 17 of the MLMs the FTC looked at, most participants did not make any money at all.

For half of the companies in the study, on average, more than 60 percent of distributors made no money at all.

Read that one more time. Not "made a little." Made nothing.

This is not BehindMLM or some anti-MLM blog spinning the numbers. This is the FTC summarizing the companies' own published disclosures. The data comes straight from the documents the companies put out themselves.

The Numbers Most Disclosures Don't Want You to See

The headline finding from the FTC report is simple. The typical person in a network marketing company is not earning meaningful supplemental income. They are earning a few hundred dollars a year at most, and a large share earn nothing.

Here is what the FTC specifically flagged across those 70 statements:

• The vast majority of participants made $1,000 or less for the year.
• In at least 17 companies, most participants made no money at all.
• For half the companies, more than 60 percent of distributors made nothing on average.
• Not one of the 70 disclosures accounted for the expenses participants paid.

That last point is the one almost everyone misses, so let's give it the attention it deserves.

None of the 70 income disclosure statements the FTC reviewed subtracted business expenses. That means the already small earnings numbers are gross, not net. They do not account for the product you have to buy to stay active, the event tickets, the samples, the marketing tools, the replicated website fee, or the gas to drive to meetings.

When you factor those costs in, a lot of people who show up as making "a few hundred dollars" on the disclosure actually lost money for the year. The document just is not built to show you that.

Five Ways Income Disclosures Make Things Look Better Than They Are

The FTC did not just count the numbers. It also looked at how the data gets presented, and it found a consistent set of tricks. Once you know them, you cannot unsee them.

1. They spotlight the people at the top. Most disclosures lead with the big dollar figures earned by the small number of people at the highest ranks. Your eye goes to the $250,000 next to "Diamond" and skips the reality that a fraction of a percent of distributors ever reach it.

2. They bury or omit the people who made nothing. Instead of clearly stating what percentage of participants earned zero, many disclosures leave that number out, footnote it, or word it so it is easy to miss.

3. They use vague, undefined terms. Words like "income," "earnings," and "average" often go undefined or get used inconsistently. An "average" that includes only active distributors looks very different from one that includes everyone who signed up.

4. They ignore expenses entirely. As the FTC found, none of the 70 statements accounted for what participants spent. Gross earnings without expenses is not your take-home pay. It is a ceiling, and a low one.

5. They quietly exclude inactive participants. Many companies calculate their averages using only "active" distributors, which conveniently removes the large group of people who joined, bought a starter kit, made nothing, and quit. Cut those people out and the averages climb, even though the real odds got worse.

None of these moves are illegal. That is exactly why they are so common. The document can be accurate and still leave you with a completely wrong picture of your odds.

How to Actually Read One

So how do you read an income disclosure statement without getting played? Here is the approach I walk people through when they show me their company's numbers.

Start at the bottom, not the top. Ignore the Diamond and Crown Ambassador ranks for a second. Look at the largest group of people, which is almost always the entry level. That bottom row is the realistic picture of where you are going to start, and statistically where you are most likely to stay.

Find the percentage who earn nothing. If the document tells you what share of distributors made zero, that is your single most honest data point. If it does not tell you, that absence is the answer. A company that is proud of its numbers does not hide the zero.

Ask whether expenses are included. They almost never are. So whatever earnings figure you are looking at, mentally subtract the monthly product order and tools you would have to buy to qualify for commissions. For a lot of plans, that alone wipes out the bottom several ranks.

Check who is in the math. Look for the words "active" or "qualified." If the averages only count active distributors, remember that everyone who gave up is missing from the calculation, which makes the opportunity look easier than it is.

Compare it to the pitch. Hold the disclosure next to whatever you were told in the presentation. If someone said "most people make a few hundred a month part time" and the disclosure shows most people make a few hundred a year before expenses, you have learned something important about who you are dealing with.

What I Tell People Who Show Me Their Company's Disclosure

I am not anti network marketing. I have been in companies with products I genuinely liked, and some people do build real income. You can see my honest, company-by-company breakdowns in the company reviews hub, where the income disclosure is part of every analysis. The Amway review and the Herbalife review are good examples, since both companies have a long paper trail with the FTC.

But I will tell you the same thing I tell everyone. The income disclosure is not the reason people fail or succeed. It is a mirror. It reflects what happens when a lot of people try to build a business using outdated methods like chasing friends and family, and most of them never learn how to actually market.

The people in the top rows of those disclosures are almost never there because they got in early or because the products sold themselves. They are there because they learned how to put their offer in front of people who were already looking for it. That is a skill, and it is the one thing most upline training completely skips.

So when someone asks me whether the numbers in their disclosure are good or bad, my honest answer is that the numbers are mostly a reflection of the method. Change the method and you change which row you end up in.

The Bottom Line

An income disclosure statement is the most honest document a network marketing company publishes, and it is still designed to flatter the opportunity. When the FTC analyzed 70 of them, the pattern was unmistakable. Most participants make $1,000 or less a year, a huge share make nothing, and not one of those statements even subtracts expenses.

That does not automatically make a company a scam. Plenty of legitimate businesses are hard, and plenty of people who try them do not make money. But it does mean you should treat the disclosure as a floor-level reality check, read it from the bottom up, and never let a screenshot of someone's commission check stand in for the actual data.

If you want the products a company sells, just buy the products. If you want to build a real business, the disclosure is not the thing standing in your way. The method is. I put together a free starting point that breaks down the modern, marketing-first approach I recommend instead of the old chase-everyone playbook. You can grab it on the getting started page.

Either way, read the disclosure. It is telling you the truth, even when the presentation is not.

FAQ

Are MLM companies required to publish an income disclosure statement?

There is no single federal law that forces every MLM to publish one, but the FTC has made clear that companies making earnings claims need to be able to back them up with real data, and the Direct Selling Self-Regulatory Council pushes member companies to disclose. As a practical matter, most reputable companies publish an income disclosure. If a company you are considering does not have one at all, treat that as a red flag.

What does it mean if a company's disclosure does not show expenses?

It means the earnings numbers you are looking at are gross, not net. According to the FTC's 2024 staff report, none of the 70 disclosures it reviewed accounted for participant expenses. So you have to subtract the cost of staying active, tools, samples, and events yourself. For the lower ranks, those costs often exceed the earnings, which means a real loss for the year.

What percentage of MLM distributors actually make money?

It varies by company, but the FTC's analysis found that more than 80 percent of distributors made $1,000 or less for the year before expenses, and in at least 17 of the companies studied, most participants made no money at all. For half the companies, more than 60 percent of distributors on average made nothing. So in many companies, making any profit at all puts you in a minority.

Is a low income disclosure proof that a company is a pyramid scheme?

No. A low disclosure mostly reflects how hard the business is and how few people learn to market properly. Whether a company is a pyramid scheme is a separate legal question that turns on whether revenue comes from real product sales to customers or mainly from recruiting. You can read how I weigh that question in the individual company reviews.

How do I find a company's income disclosure statement?

Search the company name plus "income disclosure statement," and look for the version hosted on the company's own official site so you know it is current. Be careful with figures floating around on distributor blogs, since those are sometimes outdated or cherry-picked. Always check the date on the document, because companies update them and an old one may not reflect the current plan.