Question

What is an MLM compensation plan?

Last reviewed: 2026-06-14

Why this matters

The plan should be read alongside the income disclosure because rules for earning money are not the same as typical participant outcomes.

Look for customer sales, participant purchases, team volume, recruiting, rank maintenance, and monthly qualification requirements.

Questions to ask before joining

• What activity actually creates compensation?
• What must I do each month to stay qualified?
• Does the plan reward retail sales, participant purchases, recruiting, team volume, or a mix?

Related recruiting phrases

• residual income
• personal volume
• rank advancement

Helpful next pages

• Someone pitched me an MLM. What should I do?
• Before You Join an MLM
• Before You Pay

Sources

• Multi-level Marketing Businesses and Pyramid Schemes, Federal Trade Commission . Accessed 2026-06-14. Support type: Regulator guidance.
• Business Guidance Concerning Multi-Level Marketing, Federal Trade Commission , 2024 . Accessed 2026-06-14. Support type: Regulator guidance.