Plain-English explainer
Average vs median income in MLM disclosures
Short answer: Average income can be pulled upward by a small number of high earners. Median income shows the middle participant result.
Why the average can look larger
If a few participants receive much higher payments than most others, the average can be higher than the result a typical participant sees.
That does not make the average useless, but it means the median, percentiles, and no-earnings counts are important.
What to look for
Look for the median, the share of participants who received no compensation, and the share who received less than common expenses.
If a disclosure only shows average income for people who reached a rank, ask how many people joined but never reached that rank.
Questions to ask in writing
- What is the median participant income, not just the average?
- How many participants received nothing?
- How many people reached the rank or category used in this example?
Related pages
Sources
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Regulator guidance
Multi-level Marketing Businesses and Pyramid Schemes
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Regulator guidance
Business Guidance Concerning Multi-Level Marketing