Glossary
Short definitions for terms that can appear in income-opportunity pitches, disclosures, and compensation plans.
MLM means multi-level marketing, a sales structure where participants may earn from their own activity and from activity by people connected beneath them in the compensation plan.
Why it matters: The label is less important than how compensation works, what participants must buy, and what typical participants keep after expenses.
An income disclosure is a company document or page that reports some information about participant earnings or compensation.
Why it matters: A useful disclosure should make clear who is included, who is excluded, whether expenses are subtracted, and what typical participants experience.
A compensation plan explains how a participant may qualify for commissions, bonuses, rank, or other payments.
Why it matters: The plan can show whether compensation depends on retail sales, participant purchases, team volume, recruiting, rank maintenance, or a mix.
A downline is the group of participants connected beneath someone in a multi-level compensation structure.
Why it matters: If compensation depends on downline activity, ask what the downline must buy, sell, or maintain for payments to continue.
An upline is the participant or group of participants above someone in a multi-level compensation structure.
Why it matters: A prospective participant should know whether the upline earns from their purchases, recruiting, volume, training, or event activity.
Personal volume usually means sales or purchase volume credited to an individual participant under a compensation plan.
Why it matters: If personal purchases count toward volume, a participant should understand whether purchases are driven by customer demand or qualification rules.
Group volume usually means sales or purchase volume credited to a participant group, team, or downline under a compensation plan.
Why it matters: Group volume can affect rank or compensation, so ask whether it reflects retail customer demand, participant purchases, or both.
Autoship usually means a recurring product order or subscription that continues until canceled under written rules.
Why it matters: Recurring charges can change the financial result, especially if income is irregular or product remains unsold.
A starter kit is an initial purchase, fee, or package that may be offered or required when someone joins an opportunity.
Why it matters: Before paying, ask what the kit includes, whether it is required, whether it is refundable, and whether more purchases are commonly expected.
Net income is what remains after subtracting expenses from money received.
Why it matters: A participant can receive compensation and still have little or no profit if expenses are high.
Gross income is money received before expenses are subtracted.
Why it matters: Income claims based on gross income should be compared with ordinary costs such as product, fees, tools, events, travel, taxes, and unsold inventory.
A buyback policy describes whether and how a company may repurchase eligible inventory or materials from a participant.
Why it matters: Deadlines, product condition rules, shipping costs, restocking limits, and exclusions can affect whether the participant recovers money after leaving.
A retail customer is someone who buys a product for their own use and is not participating in the business to earn from the compensation plan.
Why it matters: Sales to real retail customers outside the business are central to how regulator guidance evaluates an MLM, so ask how customer sales are tracked and verified.
Many compensation plans measure activity in volume points rather than dollars. Common labels include PV (personal volume), BV (business volume), and CV (commissionable volume).
Why it matters: Points can come from customer sales or from a participant’s own purchases, so ask what counts toward each measure and whether personal purchases are needed to qualify for pay.