Plain-English explainer
What expenses may be missing from MLM income disclosures?
Short answer: Many disclosures report money received before subtracting ordinary costs. Ask which expenses are required, optional, or commonly encouraged.
Common costs to ask about
Costs can include starter kits, product, samples, subscriptions, websites, shipping, training, events, travel, advertising, taxes, and unsold inventory.
A cost can be described as optional and still be common for people trying to build the opportunity.
Why this changes the decision
A person can receive payments from a company and still lose money after costs.
Before joining, compare the likely first-year costs with the typical participant outcome, not with a success story.
Questions to ask in writing
- Does the income figure subtract participant expenses?
- Which costs are required, optional, or commonly encouraged?
- What did typical new participants spend in their first year?
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