FTC Cracks Down on MLM Claims Promising Big Profits
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WASHINGTON, D.C. — Federal regulators have taken action against two top participants in a multilevel marketing company, alleging they misled consumers with exaggerated income claims that did not reflect the reality for most participants.
What This Means for You
Promises of high earnings in MLM programs may be misleading or unsupported
Companies and promoters must back income claims with real data
New restrictions aim to prevent deceptive recruiting tactics
The Federal Trade Commission filed a complaint against Steven and Gina Merritt, alleging they used false or unsubstantiated claims to recruit people into LifeWave, a company that sells health and wellness products through a multilevel marketing structure.
A multilevel marketing, or MLM, company relies on participants to sell products and recruit others, often earning commissions based on both sales and the activity of those they bring into the business.
What the FTC Alleges
The FTC said the Merritts repeatedly promoted the opportunity as highly profitable, including claims that participants could earn tens of thousands of dollars per week.
In one recruiting event, Gina Merritt told attendees they would make “a buttload of money” and could reach earnings of $25,000 or more per week. Steven Merritt described income as continuous and automatic.
According to the complaint, those claims did not align with the company’s own data.
LifeWave’s 2024 income disclosure statement showed that 79% of active participants earned no commissions that year, and only a small fraction — about 0.035% — earned more than $25,000 per week.
“The Merritts used inflated earnings claims to entice potential participants,” said Christopher Mufarrige of the FTC’s Bureau of Consumer Protection.
Terms of the Settlement
Under a proposed settlement, the Merritts are prohibited from misrepresenting earnings or helping others do so.
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