FAQ About Multi-Level Marketing (MLMs)

Yes, MLMs (Multi-Level Marketing) are regulated by government agencies in many countries. The specific regulatory framework can vary depending on the jurisdiction. Here are some examples of government agencies and regulations related to MLM:

• Federal Trade Commission (FTC) - United States: The FTC is responsible for consumer protection and preventing deceptive and unfair business practices. In the United States, MLMs fall under the purview of the FTC, which enforces regulations related to advertising, sales practices, disclosure requirements, and pyramid scheme identification. The FTC has taken action against MLM companies that engage in deceptive practices or operate as pyramid schemes.
• Securities and Exchange Commission (SEC) - United States: The SEC regulates securities offerings and investment opportunities, including certain MLMs that offer investment contracts or securities. MLM companies that involve the sale of investment contracts or promise financial returns based on the efforts of others may be subject to SEC regulations.
• Competition Bureau - Canada: The Competition Bureau oversees competition and deceptive marketing practices in Canada. It investigates and takes action against deceptive or misleading conduct by businesses, including MLM companies.
• Direct Selling Associations (DSAs): Many countries have DSAs that serve as self-regulatory bodies for the direct selling industry, including MLMs. These associations often set guidelines, codes of ethics, and best practices for MLM companies and their distributors. They may provide support, education, and mediation services to address issues within the industry.
• Consumer Protection Agencies: Various consumer protection agencies at the national, state, or provincial levels in different countries have the mandate to protect consumers from unfair or deceptive business practices. These agencies may investigate complaints, enforce regulations, and take legal action against MLM companies that engage in fraudulent or deceptive practices.