FTC’s Proposed Earnings Claim Rule for MLM: What It Would Change

Federal Trade Commission FTC clarifies focus on Earnings Claims in MLM

• The FTC proposed a new rule targeting deceptive earnings claims in MLM.
• It would require written substantiation, recordkeeping, and providing proof upon request (in the language used for the claim).
• If finalized, it raises the operational bar for “the field,” not just corporate marketing.

What the FTC is proposing
On January 13, 2025, the FTC proposed a new “Earnings Claim Rule Regarding Multi-Level Marketing” alongside related changes to the Business Opportunity Rule framework. The core target is simple: false or misleading earnings claims used to recruit participants.

The practical changes (if adopted)
The proposal is less about “banning” claims and more about forcing an evidence-backed standard:

1. Substantiation becomes non-negotiable
   If a seller makes an earnings claim, the MLM seller would need written substantiation to back it up.
2. “Show your work” to consumers
   The proposal would require providing substantiation to anyone who requests it, and importantly, in the language used to make the earnings claim (this matters for multilingual recruitment funnels).
3. Recordkeeping becomes part of compliance operations
   The NPRM describes maintaining records of substantiation for a defined period and producing them to the Commission upon request.
4. Recruitment materials become higher risk
   The proposed rule would prohibit providing participants with recruitment marketing materials that contain deceptive earnings claims.

What this means for MLM companies
If you run a direct selling company, this is a shift from “guidance” to enforceable operational discipline:

• Field content can’t be unmanaged. If distributors post income screenshots, “quit your job” claims, or lifestyle bait, the compliance program must actually prevent, detect, and remediate it.
• Typical results and context matter more. Expect less tolerance for cherry-picked top-earner stories without careful framing and substantiation.
• Translations and cross-border recruiting get harder. The “language of the claim” requirement punishes sloppy localization.

What to watch next
This is still proposed rulemaking, not a final rule. But the direction is clear: the FTC is trying to make “earnings claim discipline” a baseline capability for the industry.