What is an MLM Income Disclosure Statement?

An MLM Income Disclosure Statement or IDS is an earnings statement published by MLM companies that serves as an accurate and reliable prediction of the estimated income of its distributors. FTC mandates MLM companies to amend and publish their income disclosure statements every year to educate and protect consumers from falling prey to deceptive MLM practices.

Build your brand credibility with accurate and promising MLM income disclosure statements

MLM income disclosure statements speak for your brand—its transparency and values, out to your potential distributors. Hence, having a transparent income disclosure statement is a great way to attract distributors and build credibility for your MLM business.

MLM companies must make sure guidelines are followed, compliances are met and necessary precautions taken while drafting their income disclosure statement.

Federal Trade Commission has declared an MLM income disclosure statement crucial for ensuring consumer protection. FTC mandates MLM companies to declare an accurate earning statement of their distributors to help make their decision-making process of joining an MLM business easier.

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MLM income disclosure statements must include

Amount of time spent per day by distributors irrespective of their rank or levels.

Percentage of distributors who achieve average income at each rank.

Average earning of each distributor at each rank.

Highest and lowest earnings achieved by distributors on a weekly average.

Strict guidelines for distributors while making their earning claims publicly or otherwise.

In that case, MLM companies must mandatorily include a compliance training module on income disclosure statements for distributors.

Guidelines to follow while drafting an income disclosure statement

The disclosure should be clear and concise—in an easy-to-understand format for the target audience.
Strictly restrain from deceptive or unfair claims or practices.
All claims must have substantiation irrespective of their origin—either from distributors or from the company.
Analyze the reach of your income disclosure statement with a web analytics tool to make sure your customers are seeing them.
Claims that cannot be substantiated must not be published.
Streamline all your claims according to the FTC mandate to avoid penalizations in the future.
Regularly update your income disclosure statement in accordance with the regulatory guidelines.