Regulation & law

A plan rule that a participant must sell or use 70% of prior purchases before ordering again.

An FTC settlement in which AdvoCare paid $150 million and left multi-level marketing.

The FTC ruling that found Amway's plan was not a pyramid scheme, setting out the Amway safeguards.

A term in the participant agreement requiring disputes to go to private arbitration, not court.

A court decision upholding the FTC's finding that BurnLounge was a pyramid scheme.

An FTC rule requiring disclosures when selling certain business opportunities; most MLMs are exempt.

The company's commitment to repurchase unsold inventory from participants who leave.

The government licence required to sell directly in China, which prohibits multi-level compensation.

A lawsuit brought on behalf of a group, such as all participants who lost money.

The company function that polices participants' claims, marketing and conduct.

A window after signing up during which a new participant can cancel for a full refund.

The self-regulatory rules DSA member companies agree to, including buyback and earnings claims standards.

Any statement, explicit or implied, about how much a participant can make.

A legal term in some US states for a recruitment scheme that cannot sustain itself.

The Unfair Commercial Practices Directive bans pyramid promotional schemes across the EU.

The US consumer protection agency that enforces against deceptive earnings claims and pyramid schemes.

Persuading new participants to buy large product quantities up front.

The US law prohibiting unfair or deceptive acts or practices in commerce.

A September 2024 FTC staff analysis of 70 MLM income disclosure statements.

Statements that a product treats, cures or prevents a condition, regulated separately from earnings claims.

A $200 million settlement requiring Herbalife to restructure its US compensation around retail sales.

A company-published document describing payments to participants, typically by rank.

Buying product to qualify for rank or bonuses rather than to sell it.

The US legal test for a pyramid scheme, from the 1975 Koscot Interplanetary case.

A civil claim against a company, by regulators, participants, customers or shareholders.

Implied earnings claims made through images of travel, cars or free time rather than numbers.

A term barring participants from recruiting their downline into another company, during and after membership.

A fraud that pays existing investors with new investors' money, with no real recruiting structure.

A structure in which participants are paid primarily for recruiting others rather than for selling products to customers.

A formal step by an authority against a company: complaint, order, fine, settlement or ban.

A plan rule requiring sales to a minimum number of retail customers each month to earn on downline volume.

The company ending a participant's agreement, forfeiting their downline and future commissions.

An FTC action that halted Vemma's operations and led to a 2016 settlement banning pyramid practices.