What the FTC is looking at right now.
At the Direct Selling Association (DSA) Legal and Regulatory Conference held in Washington, DC from December 9–11, Lois Greisman, Associate Director of the Division of Marketing Practices at the Federal Trade Commission (FTC), delivered remarks that underscored a clear regulatory shift: the FTC’s growing focus on misleading income claims and inadequate disclosures rather than traditional structural pyramid scheme analysis alone. Greisman’s comments were delivered in an interview-style session conducted by John Villafranco, partner at Kelley Drye & Warren LLP, a law firm well known for its regulatory and compliance work in the direct selling and advertising space.
Greisman’s presentation provided insight into the FTC’s current enforcement priorities, ongoing investigations and expectations for companies operating in direct selling and business opportunity spaces. Central to her remarks was the FTC’s recent report on income disclosure statements (IDS), which she characterized as revealing widespread deficiencies across the industry.
FTC Findings on Income Disclosure Statements
Greisman explained that the FTC’s review and subsequent report of income disclosure statements found that most disclosures fail to include critical information necessary for consumers to understand actual earning potential. One of the most significant shortcomings identified was the lack of expense disclosure. According to Greisman, many income statements present earnings figures without accounting for known and recurring expenses that materially reduce income.
She emphasized that when income figures are presented, it is often unclear whether they reflect gross income or net income, leaving consumers unable to accurately assess profitability. This ambiguity, she suggested, can lead consumers to form unrealistic expectations about earnings.
Greisman’s position is that companies should disclose known expenses that “eat up” earnings, such as enrollment fees, required purchases, subscription costs, training fees and other ongoing expenses that participants are likely to incur. Failure to disclose such expenses may result in a misleading net impression, even if the income figures themselves are technically accurate.
The Importance of Data Collection and Substantiation
Greisman also highlighted the FTC’s expectation that companies collect and maintain data sufficient to substantiate any income claims made, whether those claims are explicit or implied. She noted that companies cannot rely on anecdotal success stories or selective examples without having broader data that reflects the actual experience of participants.
Importantly, she stated that this data should include information on participants who are inactive or who earn little to no income, not just those who achieve higher-than-average results. From the FTC’s perspective, excluding non-earners or inactive participants from income data creates a distorted picture that can mislead consumers.
Greisman made clear that the FTC expects companies to know and understand their own data. If income claims are made, the company should be able to explain how those claims were calculated; who was included in the data set; and why the data reasonably supports the claim being communicated.
Distinguishing Customers from Distributors
Another area of focus discussed by Greisman was the ability of companies to discern between customers and distributors. She noted that this distinction is increasingly important for regulatory analysis, particularly when evaluating claims related to income opportunity.
According to Greisman, companies should have systems in place that allow them to determine whether participants are primarily purchasing products for personal use or participating in the business opportunity. Without this clarity, it becomes more difficult to assess whether income claims or opportunity representations accurately reflect the consumer experience.
The FTC’s interest in this distinction reflects a broader concern about transparency and consumer understanding. If participants are effectively consumers rather than business operators, the claims made to them must be evaluated accordingly.
Business Opportunity Rulemaking Still Moving Forward
Greisman also addressed the FTC’s proposed rulemaking on the Business Opportunity Rule, noting that the agency continues to move forward. While she did not provide a specific timeline, her remarks indicated that the FTC remains committed to updating and strengthening its regulatory framework for business opportunities.
Increased State Partnership and Coordination
Another notable theme in Greisman’s remarks was the FTC’s intention to more actively seek partnerships with state regulators. She explained that collaboration with state attorneys general and consumer protection agencies allows for more effective enforcement and broader reach.
This increased coordination suggests that companies may face scrutiny not only at the federal level but also through parallel or joint state actions. Greisman’s comments indicated that the FTC views state partnerships as an important component of its enforcement strategy moving forward.
Current Investigations and Recent Cases
During her presentation, Greisman referenced ongoing and recent enforcement matters to illustrate the FTC’s priorities. She discussed the IM Markets Live investigation and case, noting it as an example of the Commission’s current work in this area.
She also referenced the Success by Health case, which was challenged on appeal but ultimately confirmed. Greisman highlighted this outcome as reinforcing the FTC’s position and authority.
Shift Toward Misleading Claims
One of the clearest takeaways from Greisman’s remarks was the FTC’s evolving enforcement lens. While pyramid schemes remain unlawful, she explained that the agency is increasingly focused on misleading income and product claims, deceptive marketing practices and the overall net impression created for consumers.
According to Greisman, if consumers are led to believe they can earn meaningful income when the data does not support that impression, enforcement action may be warranted.
Supplemental Income and Net Consumer Impression
Greisman also addressed the concept of “supplemental income,” a term frequently used in marketing materials. She cautioned that simply labeling income as “supplemental” does not automatically make a claim compliant.
From the FTC’s perspective, the key issue is the net impression on the consumer. If the overall message conveyed suggests that participants can earn significant or reliable income, the claim must be supported by data and appropriate disclosures, regardless of qualifiers.
She noted that what constitutes “supplemental” income is not defined solely by the company’s terminology but by how an average consumer would reasonably interpret the message. Descriptions, visuals, testimonials and context all contribute to that interpretation.
Implications for the Direct Selling Industry
Greisman’s remarks at the DSA conference sent a clear signal to companies operating in the direct selling and business opportunity space: misleading claims are under heightened scrutiny, and compliance requires more than technical accuracy.
Companies are expected to:
- Clearly disclose whether income figures are gross or net
- Include known and typical expenses
- Collect comprehensive income data
- Substantiate claims with reliable evidence
- Understand and disclose the distinction between customers and distributors
- Evaluate marketing materials based on net consumer impression
As the FTC continues rulemaking efforts, strengthens state partnerships and advances active investigations, Greisman’s message was unmistakable. Transparency, data integrity and consumer understanding are no longer optional, they are central to regulatory compliance.
Her presentation offered both a warning and a roadmap for companies willing to adapt to a regulatory environment increasingly focused on how income opportunities are represented and understood by consumers.
Known for developing innovative solutions to difficult digital challenges, Jonathan Gilliam is Founder & CEO at Momentum Factor, the leading AI-powered digital risk management firm specializing in compliance monitoring and education, brand protection and global online reputation management as well as the developers of the FieldWatch Compliance Management platform.
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