Someone you like wants you to join. Run these 15 checks first and know within an hour whether to walk away.
This in-depth guide covers everything you need to know about evaluate an mlm before you join: 15 checks. Based on verified income data and real-world case studies from our database of 138 side hustle tactics.
To evaluate an MLM before you join, read its income disclosure statement for the median income and the share of people who earned nothing, then check what you must buy each month, whether the plan pays for recruiting, how much is sold to real customers outside the network, and what the written buyback policy says. Search for regulatory actions and run your own expected costs through a profit calculator. If the company fails any of the deal-breaker checks below, walk away, however much you like the person who invited you.
The invitation
It came from someone you like. Maybe a cousin, maybe the mum from school pickup who always seems to have it together, maybe a colleague who says she finally quit her second job. She is excited, and she wants you in, and part of you wants to say yes before the feeling fades.
Here is the thing she probably did not tell you: you can check most of what matters in about an hour, before you spend a cent. The checks below use the company's own documents and public regulator records. You do not need a lawyer or an accountant. You need the income disclosure statement, the compensation plan, the policies and procedures document, and a quiet hour.
Question to sit with: if this company is as good as she says, why would it mind you reading its numbers first?
Is there a "best MLM to join"?
We do not rank MLMs, and you should be wary of anyone who does. The question that protects you is narrower: does this company, for this product, pass every check below? The best one for you sells something you would buy anyway, publishes honest numbers, does not make you buy to stay active, and will buy back your stock if you leave.
The 15 checks
Check 1: Does it publish an income disclosure statement?
In 2024, FTC staff looked at the websites of over 600 MLMs and found that only 79 had made an income disclosure statement publicly available. If the company publishes none, it is asking you to join without knowing what people earn. Treat that as a fail.
The average is pulled up by a handful of top earners. The median is what the person in the middle earned. Young Living's 2025 US statement, for example, shows an average of $778 and a median of $0 across all US Brand Partners. FTC staff found that 59 of the 70 statements they reviewed reported averages for groups instead of medians. If you cannot find a median, ask for one in writing.
Check 3: What share earned nothing?
Look for the percentage of participants who received no payments at all. Three examples from calendar 2025, all from the companies' own documents:
FTC staff found that in 17 of the 27 disclosures that gave this figure, more than half of participants had no income.
Check 4: Who is counted?
This is where numbers quietly improve. FTC staff found that only 11 of 70 statements clearly included all participants, 29 left out everyone who earned no commissions, and 24 more left out people the company called "inactive". The FTC's staff business guidance (revised April 2024) says "It is misleading for an MLM to exclude from its IDS information about participants who lost money or earned no money." Read the footnotes to find out who is in the table.
Check 5: Gross or net?
FTC staff found that none of the 70 statements accounted for all expenses. Assume every figure is before your costs unless the document says otherwise, then subtract your likely costs yourself. Our guide to reading an MLM income disclosure statement works through real examples.
Check 6: What must you buy each month?
Find the monthly "personal volume", "qualifying volume" or autoship requirement, and what happens if you miss it. The FTC guidance says MLMs that require "monthly or quarterly purchase quotas to maintain their eligibility" are "likely incentivizing inventory loading." In its 2019 case, the FTC said AdvoCare charged $59 to become a distributor, but that earning every form of pay typically meant spending $1,200 to $2,400 on products. AdvoCare agreed to pay $150 million and be banned from multi-level marketing to resolve FTC charges that it operated an illegal pyramid scheme.
Check 7: Is there pressure to stock up?
Ask your recruiter directly: "Do you recommend I buy a starter inventory or a bigger pack to reach a rank faster?" The Direct Selling Association's Code of Ethics says member companies must not "require or encourage" purchases that "unreasonably" exceed what you can resell or use. If the answer is yes, that is inventory loading, whatever it is called.
Check 8: What does the buyback policy say, in writing?
Find the clause in the policies and procedures. What you want to see:
A buyback is a safety net, nothing more. The FTC guidance says buybacks "do not shield an unlawful pyramid scheme from law enforcement", and that they do not cover "travel for conferences, tools or services, and training."
Check 9: Who actually buys the product?
Ask the company, in writing, what share of its sales goes to customers who are not participants. Regulators have used this kind of figure when settling cases. Herbalife's 2016 settlement required that at least 80% of its product sales go to legitimate end users. Vemma's 2016 order bars paying an affiliate unless a majority of that affiliate's revenue comes from real customers. The proposed 2026 order against Amway, World Wide Group and LTD would require IBOs to sell to others at least 70% of what they buy each month.
Those are settlement terms for particular companies, not a legal line. The FTC guidance says "There is no percentage-based test to determine whether an MLM is a pyramid scheme," and that "Having retail customers or even many retail customers is not a safe harbor." Use the figures as a sense of what regulators have demanded. A company that cannot tell you the share at all has told you something.
Check 10: Does the plan pay for recruiting?
Read the rank requirements. If a rank or a large bonus needs a set number of recruits or "legs", the FTC guidance says "the plan likely will incentivize recruiting." The FTC's consumer page says that in a pyramid scheme "your income would be based mostly on how many people you recruit, not how much product you sell." Our explainer on MLM vs pyramid scheme covers the legal test.
Check 11: What will it cost to join and stay?
Add up the starter kit, the annual renewal and the events. From the companies' own 2025 documents:
| Company | Joining | Ongoing fees and events |
|---|
| Herbalife | $54.95 business pack, "no other required purchase" | not stated |
| Arbonne | $65 registration | $65 annual renewal; 2025 conference $299 in person or $99 virtual, plus travel |
| MONAT | $99 starter kit | renewal fees, samples, shipping, training and travel listed as expenses |
| Amway | $0 in the first year | $55 a year renewal plus optional $16; average $651 a year for IBOs registered with an approved training provider |
Check 12: What are sellers saying about money?
Scroll the recruiter's posts and the company's social pages. The FTC guidance says an earnings claim should reflect what "the typical person" is likely to achieve, that images of "houses, automobiles, and luxury vacations" are "implied earnings claims", and that "A 'results not typical,' 'results are not guaranteed,' or similar disclosure is not enough." If the pitch to you leads with lifestyle, compare it with the median from Check 2.
Check 13: Has a regulator acted?
Search the company's name on ftc.gov and on your state attorney general's site. Read what the record actually says: many cases end in settlements without a court finding, and the FTC also loses cases. In 2023 a federal judge ruled that the FTC had not shown Neora was operating an illegal pyramid scheme.
In Malaysia, a direct sales company needs a licence under the Direct Sales and Anti-Pyramid Scheme Act 1993. Check the name on the Ministry of Domestic Trade and Cost of Living's list of licensed direct selling companies. For the rules in other countries, see MLM laws by country.
Check 14: Is it a DSA member, and does that matter?
Membership of the Direct Selling Association means the company signed its Code of Ethics, and the industry-funded Direct Selling Self-Regulatory Council reviews income and product claims. It does occasionally act: in January 2026 it referred one company's claims to the FTC and the Texas Attorney General. Treat membership as a small plus. The FTC guidance says "Belonging to a self-regulatory organization does not shield MLMs engaged in unfair or deceptive practices from FTC law enforcement action."
Check 15: Do your own numbers work?
Estimate what you would sell in a month to people outside the business, the product you would have to buy, and your other costs. Put them into the MLM profit calculator. If the honest estimate is below zero, or pays less per hour than a part-time job near you, the company's quality does not change the answer for you.
The checklist on one page
Print it or screenshot it. Mark each check Pass, Fail or Could not find. Treat "could not find" as a fail, because a company that wanted you to know would have made it easy.
| # | Check | Pass looks like | Deal-breaker? |
|---|
| 1 | Income disclosure published | Current year, on the company site | Yes |
| 2 | Median shown | Median for all participants | No |
| 3 | Share earning $0 shown | A clear percentage | No |
| 4 | Everyone counted | Includes inactive people and non-earners | No |
| 5 | Gross or net stated | Says plainly that expenses are excluded | No |
| 6 | Monthly purchase requirement | None needed to stay active or earn | Yes |
| 7 | No stock-up pressure | Recruiter advises buying only what you use | Yes |
| 8 | Written buyback | 90% within 12 months, or better | Yes |
| 9 | Sales to outside customers | Company states the share | No |
| 10 | Pay not tied to recruiting | Ranks based on customer sales | Yes |
| 11 | Costs to join and stay | Listed and small | No |
| 12 | Honest money talk | No lifestyle or income bragging | No |
| 13 | Regulatory record | Nothing unresolved, or licensed where required | No |
| 14 | Self-regulation | DSA member (small plus) | No |
| 15 | Your numbers | Profit above zero at a fair hourly rate | Yes |
Scoring rule. Walk away if any deal-breaker fails. Otherwise, walk away if three or more of the other checks fail. If everything passes, join as a customer first for a month, then decide.
If you already joined
The same checks work in reverse. If your company fails a deal-breaker, read how to leave an MLM for the buyback and refund steps, and act inside the time limits. If it passes and you want to stay, use direct sales done right to sell without pressure, and check the red flags every few months, because plans change.
For the rest of the series, start at the honest guide to MLM and direct sales, or go straight to is MLM worth it for the overall numbers. If you want income with fewer moving parts, a service such as house cleaning or online tutoring needs no monthly purchase at all.