FTC Order to Prohibit MLM Company and its Operators From Deceiving Consumers about Potential Earnings

On April 14, 2026, the FTC accounced that the operators of a multilevel marketing (MLM) company will be permanently prohibited from making deceptive earnings claims to resolve Federal Trade Commission allegations that the company deceived consumers into believing that they could earn profits from the venture when the vast majority of participants made little or no money.

In its complaint, the FTC alleged that the company, its CEO, and its President used deceptive earnings claims to attract new participants called “Forever Business Owners” (FBOs), most of whom allegedly made no money or even lost money.  The company and its operators purportedly claimed participants could make money by selling its health and wellness products either in person or online through the company’s website and by recruiting new participants who would do the same.

“Today’s complaint alleges that [the company] deceived prospective workers with false and unsubstantiated earnings claims. [The company] misled workers with promises of substantial income that, in reality, bore little to no resemblance to what participants actually earned,” said Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection. “Deceptive earnings claims do not just mislead workers—they divert workers away from genuine, income-generating jobs. The FTC will not hesitate to take action against companies that deceive workers with claims of false earnings that they know few, if any, will achieve.”

Through in-person meetings and conferences, internet and social media posts and videos, and print materials, the company used images of luxury cars and giant checks, and claims of profits ranging from extra income to replacing a full-time job to tout the potential earnings from selling its products or recruiting new FBOs, the FTC alleged.  For example, in an online marketing video the President allegedly told viewers, “We will be paying millions in bonuses next year. The only question is, whose name goes on that check?”

The FTC alleged that most FBOs did not make any money and many lost money after factoring in expenses such as the cost of shipping products.  In fact, according to company data, in each of the last five years at least 77% of FBOs who purchased, sold or recruited during the year did not receive any compensation.  Even after two full years as FBOs, more than 89% of new participants had allegedly not received enough income to recoup their initial $300-plus start-up cost.

According to an FTC CID attorney, the FTC also alleged that, for years, the company’s public income disclosure statements falsely implied that everyone who had chosen to pursue the MLM income opportunity was making money, and that others who “joined” only wished to purchase products “at a discounted price” and had “elected not to participate in [the] Marketing Plan.”  Allegedly, the comapny knew that nearly 90% of FBOs had received no income, and it had no basis for suggesting they were not trying to make money.

The FTC further alleged the company’s training materials encourage FBOs to tout the company as a flexible way to earn extra money in order to recruit new participants.  For example, in one training video, FBOs were purportedly told to show pictures of cars they may have received from the incentive program or destination events they attended and to tout that “this is a business where you can earn a lot of income.”  Allegedly, the company also misled FBOs with claims that they are likely to earn money based on purchases or sales made by FBOs they recruit, known as their “downline,” when the company’s data purportedly shows that less than 7% of FBOs received income from the sales and purchases made by their downline FBOs, according to the complaint.

Under the proposed order settling the FTC’s allegations, the comapny and the two principals:

• Must have substantiation for any earnings claims and must provide substantiation for any earnings claim they make if a U.S. consumer requests it;
• Must not misrepresent that participants have made, will or are likely to make or receive earnings (or any particular amount of earnings);
• Must not misrepresent the reasons participants do not make money in the MLM, including claims that participants who do not make money aren’t trying to;
• Must not misrepresent that participants are likely to recruit others into their downline; and
• Must not misrepresent other facts about the MLM opportunity that would be important to consumers.

The Commission vote authorizing the staff to file the complaint and stipulated final order was 2-0.  The FTC filed the complaint and final order in the U.S. District Court for the District of Arizona.

Richard B. Newman is an FTC compliance and defense attorney at Hinch Newman LLP. 

Informational purposes only. Not legal advice. This article is not intended to and should not be construed as legal advice. May be considered attorney advertising.