Stacie Bosley, professor of economics, recently published an opinion piece in Truth in Advertising on self-regulation in multilevel marketing (MLM).
In the article, “Will the MLM Industry Fix Its Earnings Claims Problem?,” Bosley summarized the findings of recently published research, which analyzed whether MLM companies were following the advice of their own self-regulators about earnings claims and disclaimers.
Bosley and colleagues Sarah Greenman, associate professor of criminology and criminal justice, Samantha Snyder Cakir, assistant professor of economics, and alumna Kiana Kotasek, ‘23, examined more than 2,000 MLM marketing items with one or more atypical earnings or lifestyle representations.
They found that most had no disclaimers about earnings, rewards, or lifestyle claims, and the disclaimers that did exist did not fully align with self-regulatory guidance.
This research included two additional studies that suggest that unclear or missing disclaimers lead consumers to have inflated expectations and a greater interest in MLM income opportunities.
Given the low or negative returns for many participants and the widespread use of earnings claims in the industry, Bosley concludes that self-regulations alone cannot address the problem.
Her article finds that state or federal regulation is necessary to address the consumer protection issues in the MLM industry.