Proposed New Rules to MLM’s and Money-Making Opportunities Announced by FTC

Proposed New Rules to MLM’s and Money-Making Opportunities Announced by FTC

On January 13, 2025, the Federal Trade Commission (“FTC”) introduced some proposed rule changes that could make a big difference for people involved in multi-level marketing (“MLM”) programs or similar business opportunities. The FTC said the new rules are designed to tackle misleading earnings claims, something that’s been a major problem in these industries, where people often get roped into paying big sums of money based on false promises of huge returns.

If you’re in an MLM or a related business, this could mean some big changes for how you operate. While misleading earnings claims have always been illegal, these proposed updates are aimed at giving the FTC more power to enforce those rules. This could include fines for businesses that don’t play by the new rules, and potentially even giving consumers a way to get some of their money back if they’ve been misled. Sam Levine, who runs the Bureau of Consumer Protection at the FTC, said these updates are needed because it’s all too easy for people to get tricked into spending thousands of dollars on promises of big rewards that never come.

The proposed changes focus on two key areas. First, the FTC wants to expand the Business Opportunity Rule to cover more types of money-making programs, like business coaching or investment schemes that promise financial freedom. If the rule passes, anyone selling these programs will have to prove that their earnings claims are based on real data, and they’ll need to share that information with consumers when asked. This would help make sure that people can’t be lured in by exaggerated promises that don’t have anything to back them up.

The second change is the introduction of a new Earnings Claim Rule aimed directly at MLM’s. The goal is to stop the misleading income claims that are all too common in these types of programs. If this rule passes, MLM businesses would need to provide proof for any earnings claims they make, especially for people who are thinking about joining or buying into the program. This means consumers would have access to honest, factual information about what they might actually expect to earn.

On top of this, the FTC is asking for public feedback on even more potential regulations that could help curb dishonest practices in MLM’s. Some of the questions being considered include whether MLM companies should be required to share earnings data with recruits or post it on their websites. They’re also thinking about whether there should be a waiting period before recruits pay any money or officially join, and if things like non-disclosure agreements that prevent participants from sharing negative experiences should be banned.

The FTC is accepting comments on these proposed changes for the next 60 days, so now is the time for businesses and consumers alike to share their thoughts on how these rules could help reduce deceptive practices. Your input could help shape the final regulations.

For businesses, this is a good opportunity to think about how these new rules might impact your operations. The changes will require more honesty and transparency when it comes to earnings claims, and you’ll need to make sure your marketing materials are in line with the new rules. Companies in MLM’s and similar fields should get ahead of this and make sure their practices are fully compliant with the FTC’s guidelines.

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This article is for information purposes only. It is not intended to be and should not be relied on as legal advice for any particular matter.