With income disclosures, the FTC is very clear with their requirements. Whenever an income claim is made, regulators assume that the claim is deceptive unless the proper substantiation is provided. Their rationale is simple: when representing non-average earnings i.e. big money that is only realized by few people, it’s important to provide the prospects with average earnings so they can make informed decisions. It’s not exactly fair because the average earnings are skewed downwards due to the low cost of entry and a complete lack of activity from most participants.
Whenever income is referenced, in whatever format, an IDS needs to be provided to the prospect. There are two key reasons referenced in nearly every complaint filed by regulators against MLMs: the main reason is lack of external sales. The other reason is grossly exaggerated income claims made by field leaders without proper substantiation. When a company creates discipline in its leaders to properly use income disclosure statements, it’s a great hedge against a serious risk factor.
The IDS needs to be provided when income claims are made. Express income claims are claims occur when various scenarios are provided i.e. “put in 50 people in your business, earn X dollars.” Implied income claims are usually the most common and occur when speakers reference lavish lifestyles, nice homes, cars and any form of success that can be achieved by way of the business. Whenever an income claim is made, a disclaimer needs to be provided in the same font or format as the statement that triggered it. As an example, if I say “Buy the home you’ve always wanted” in bold, larger than normal font, the disclaimer technically needs to be made in the exact same format. This is an unusual requirement passed by the FTC to apply pressure on companies to keep their income claims less conspicuous.
to the MOBE Income Disclosure – click here: http://www.mttbsystem.com/income-disclaimer