TINA.org Investigation Finds Pervasive Deceptive Earnings Claims in MLM Industry

The consumer advocacy organization truthinadvertising.org (TINA.org) has published the results of a yearlong investigation into the multilevel marketing (MLM) industry that found widespread use of deceptive income claims to promote their business opportunities. Of the 100 companies examined, 98 percent misrepresented the amount of money typical participants were likely to earn, in violation of the law.

TINA.org’s investigation probed the marketing practices of all members of the industry’s trade group, the Direct Selling Association, including Mary Kay, Herbalife, Amway, Young Living, USANA and more, as well as seven other large non-DSA member companies. In its report, the ad watchdog documented more than 2,000 deceptive income claims, ranging from the ability to earn extra or supplemental income, to making enough money to quit your job and achieve financial freedom – this, despite a growing body of evidence showing that the majority of MLM distributors lose money or make no money.

In addition, TINA.org examined all publicly available income disclosure statements and found that for those companies that provided enough information to calculate overall earnings, more than 80 percent of the companies’ distributors made $1,000 or less for the year (less than $20 a week) before deducting business expenses. For half the companies, on average, more than 60 percent of distributors made no money at all.

“Rather than providing accurate data about typical earnings potential, pivotal information for consumers when deciding whether or not to join an MLM, the vast majority of MLM companies and their distributors resort to hiding the truth in favour of deceptive marketing,” said Bonnie Patten, Executive Director of TINA.org.

TINA.org notified all companies making inappropriate earnings claims, as well as the DSA and the DSSRC, the industry’s self-regulatory program funded by the DSA, of its investigative findings.

These new data are a follow-up to a 2017 investigation in which TINA.org found that 97 percent of DSA members were making inappropriate income claims, demonstrating that the use of deceptive marketing to recruit consumers and convince low-level distributors to remain at MLM companies is a continuing and prevalent industry practice, which results in rampant consumer harm.