Several Hamline University faculty members recently published a new research in the Journal of Public & Policy Marketing examining how multi-level marketing (MLM) companies handle earnings claims and disclaimers. Their findings reveal widespread self-regulation gaps and suggest clear solutions to better protect consumers.
The study, “Earnings Claims and Disclaimers in Multi-Level Marketing: Testing the Impact of Self-Regulatory Guidance,” was conducted by Stacie Bosley, professor of economics; Samantha Snyder, assistant professor of quantitative analysis; and Sarah Greenman, associate professor of criminology and criminal justice; and Kiana Kotasek ‘23. Undergraduate students Tait Nelson ‘24, Matthew Maroney ‘25, and Trisha Wielenberg ‘27 provided research assistance.
Analyzing a large database of MLM marketing materials with earnings or lifestyle claims, the research team found that most firms either provide no disclaimers or rely on vague, non-prominent disclaimers.
Through two controlled experiments, the researchers tested how disclaimers influence consumer decisions. They found that the disclaimers currently used have no impact, while specific and prominent disclaimers alter consumer judgment and depress interest in MLM income opportunities.
These findings support the case for mandatory disclaimers, which could be required as part of the Federal Trade Commission's proposed Earnings Claims Rule. Clear disclaimers could help consumers make better-informed choices when choosing MLM opportunities.