The Document MLMs Are Required to Publish, and What It Usually Shows

What the Document Is and Why It Exists

An income disclosure statement — sometimes labelled an "annual income disclosure" or "earnings disclosure statement" — is a document that multi-level marketing companies produce to show the distribution of income across their active participants. The Federal Trade Commission's guidance on earnings claims has long made clear that any representation about what a person can make from a business opportunity must be accompanied by disclosures about what participants actually make. The income disclosure statement is the industry's primary mechanism for meeting that standard.

The documents are not identical across companies. There is no mandated template, no required table format, and no agreed definition of "active participant." What the FTC's Business Opportunity Rule requires is that sellers of business opportunities provide a standardised disclosure document before any money changes hands — but most MLMs are structured to fall outside the Rule's formal scope, relying instead on voluntary disclosure to demonstrate good-faith compliance with the FTC's broader guidance on earnings representations. The result is a category of document that is real, published, and often buried.

The practical content varies, but most income disclosure statements share a common architecture: participants are grouped by rank or title within the company's compensation plan, the average or median annual income for each rank is stated, and a percentage figure shows what share of all participants sits at each level. Footnotes typically define who counts as a "participant," sometimes excluding those who earned nothing at all, sometimes including them.

What the Numbers Show When You Read Them

The gap between the top ranks and the base is the most consistent feature of every income disclosure statement examined. Herbalife's published income disclosure statements, for instance, have historically shown that the majority of participants — those at the entry-level "Member" designation — have reported median annual earnings well below a thousand dollars, while the company's published figures for its senior President's Team tier have shown annual earnings in the hundreds of thousands. The distance between those two numbers is not unusual; it is structural.

Amway's published income disclosure statements have shown a similar shape. Amway reports that in recent years, the average annual gross income for the roughly 50 percent of its U.S. registered affiliates who were "active" — defined by Amway as having attempted to make a retail sale or recruit a new member during a twelve-month period — was in the low hundreds of dollars before business expenses. The document notes that "most" active Independent Business Owners do not make a profit, though the precise wording shifts across editions. Expenses — product purchases for personal use, marketing materials, event fees — are not deducted from the figures in the statement itself, meaning that gross income and net income can diverge substantially.

Nu Skin's income disclosure statements, published annually on its corporate website, use a similar rank-by-rank table. In recent editions, the figures show that participants at the foundational "Brand Affiliate" level — the largest group by population — had median monthly earnings listed in the range of a few hundred dollars or less, with the statement noting that figures represent "sales commissions and bonuses" and do not account for product costs or other business expenses. The document is explicit that only a small fraction of participants reach the higher titles where income is materially larger.

Mary Kay's approach differs slightly. The company publishes what it calls a "Consultant Income Disclosure Statement" that distinguishes between "active" and "inactive" consultants, with active defined as having submitted a minimum product order within a set period. Figures for the active group show median annual earnings in the low four figures for the majority of participants; the company's national sales director tier, which represents a fraction of a percent of the total salesforce, shows median earnings in a substantially higher range.

The structural point these documents collectively make — though none frames it this way — is that income in a multi-level compensation plan follows a sharply right-skewed distribution. A small number of participants at senior ranks earn the majority of the income paid out. The median and modal participant earns little. That is not an inference imposed on the data; it is what the data in the companies' own statements shows.

How the Statements Are Structured to Be Read

Income disclosure statements are almost always available on company websites, typically in the legal or compliance section rather than the recruitment materials. The contrast in placement is meaningful: a prospective recruit encountering a sponsored social post or a company presentation is unlikely to see the income disclosure statement unless they search for it.

The definitional choices embedded in these documents have significant effects on the figures they produce. When a company excludes from its active-participant count anyone who earned zero in the reference period, the resulting averages are higher than they would be if the full participant population were included. When income is reported as gross rather than net, the figures do not reflect what participants actually retained. When the time period is a calendar year rather than an earnings-weighted active month, part-year participants may lower averages at some ranks and raise them at others depending on how they are counted.

The FTC's October 2021 Notice of Penalty Offenses on money-making claims — sent to more than eleven hundred companies — addressed exactly this territory. The notice specified that representing income figures that are not typical of what participants actually earn, without clear disclosure of what typical participants earn, constitutes an unfair or deceptive act. Income disclosure statements are, in theory, the mechanism for providing that context. Whether the documents are prominent enough, specific enough, or consistently accurate enough to do that work is a different question — one the FTC has returned to repeatedly without resolving through rulemaking.

The income disclosure statement is, in the end, a document the companies write about themselves, published under guidance from a regulator that has not mandated a common format. Its value to a prospective participant depends entirely on whether they find it, read it carefully, and understand what the definitional footnotes do to the headline figures.