The Sponsoring System

Income Disclaimer

Effective Date: March 22, 2026

Last Updated: March 22, 2026

IMPORTANT: PLEASE READ CAREFULLY

The Sponsoring System (operated by Scepter Marketing, LLC) publishes educational content about Multi-Level Marketing (MLM) companies, their compensation plans, and income potential. This disclaimer explains important limitations and disclosures about income claims, financial projections, and business opportunity representations.

1. NO GUARANTEE OF INCOME

1.1 No Income Guarantee

We do NOT guarantee that you will earn any income from joining an MLM company or pursuing any business opportunity we review or discuss.

Income from MLM companies varies dramatically and depends on many factors beyond the company’s control, including:
– Your level of effort and time commitment
– Your sales skills and ability to recruit
– Your personal network size and quality
– Your persistence and consistency
– Market conditions and product demand
– Competition from other distributors
– Your market location and demographics
– Your prior business experience
– Economic conditions
– Luck and timing

1.2 Past Performance Does Not Predict Future Results

  • Historical income figures from MLM companies do NOT guarantee your future earnings
  • Income levels may change year to year
  • Past high earners may not replicate results
  • New market conditions may affect earnings
  • Company leadership changes may affect compensation plans
  • Product trends may affect sales ability

1.3 Individual Variation is Extreme

Within any MLM company:
– Top earners may make six figures
– Average participants earn little
– Most earn less than minimum wage
– Many lose money
– Your earnings could fall anywhere on this spectrum

2. INCOME DISCLOSURE STATEMENTS

2.1 What Are Income Disclosures?

Income disclosure statements are reports published by MLM companies showing:
– How much distributors at each level typically earn
– What percentage of distributors are at each level
– Median, average, or percentile income figures
– Sometimes, cost data and net income after expenses

2.2 How We Use Income Disclosures

When we review an MLM company, we include their official income disclosure statement (when available) to show:
– The income potential the company claims
– How earnings are distributed across the sales force
– What percentage earn at various levels
– Reality-checks about typical earnings

2.3 Income Disclosures Are Not Guarantees

Income disclosure statements show:
– What some people HAVE earned in the past
– Not what you WILL earn
– Not what you CAN earn
– Not typical results for new people
– Not realistic expectations for most participants

2.4 Understanding Income Disclosure Data

Important Statistics from Typical MLM Income Disclosures:

  • 70-99% of distributors earn $0 or lose money: The vast majority of MLM participants never make sales or earn commission. They attend training, buy products for inventory, and quit without recouping their investment.

  • 0.1-1% reach top income levels: Only a tiny fraction of participants earn six-figure incomes. These are usually the founders, early distributors, or those who built very large downlines.

  • Income does not reflect effort: Top earners often downplay their recruiting abilities and early timing. They may have joined when competition was lower.

  • Expenses reduce income: Income disclosures often show gross income, not net income after expenses. Actual take-home may be 50-70% less after accounting for:

  • Product inventory purchases

  • Marketing and advertising costs

  • Training and materials

  • Travel and events

  • Meetings and hotel stays

  • Product demonstrations

  • Tools and supplies

  • Taxes

2.5 Survivorship Bias

Income disclosures typically include only active distributors, not:
– People who quit
– People who lost money
– People who earned less than their expenses
– Historical data may only show “successful” participants still active

3. NOT FINANCIAL OR BUSINESS ADVICE

3.1 Educational Content Only

Content on this Site about MLM income, compensation plans, and business opportunities is provided for educational and informational purposes only.

We do NOT provide:
– Financial advice
– Investment advice
– Business opportunity recommendations
– Income projections or guarantees
– Guidance on whether to join a specific company
– Recommendations based on your personal financial situation

3.2 Consult Financial Professionals

Before joining an MLM company or pursuing any business opportunity:
– Consult a financial advisor
– Consult a tax professional
– Consult a business consultant
– Consider consulting a lawyer
– Do independent research
– Talk to current and former distributors
– Request complete income disclosure statements
– Ask about refund policies

3.3 Your Financial Decision

Your decision to join an MLM or pursue a business opportunity is:
– Your sole responsibility
– Based on your research and circumstances
– Made at your own risk
– Not influenced by our Site unless you specifically rely on our recommendation

We are not responsible for your financial outcomes.

4. MLMCOMPANY COMPENSATION PLAN ANALYSIS

4.1 How MLM Compensation Plans Work

Most MLM companies compensate distributors through:
– Retail Sales Commission: Percentage of products sold to end consumers
– Wholesale/Personal Volume: Commissions on products purchased for personal use
– Recruitment/Downline Bonuses: Commissions on recruits’ sales (multi-level structure)
– Level Bonuses: Bonuses based on achieving sales volumes at certain levels
– Fast Start Bonuses: Commissions when recruits purchase starter kits or first orders

4.2 Our Analysis Methodology

When we analyze an MLM compensation plan:
– We examine the official compensation plan document
– We calculate how much someone would earn at different sales levels
– We identify what percentage of earnings come from recruitment vs. retail
– We estimate realistic effort required
– We compare to the company’s income disclosure statement
– We identify red flags (emphasis on recruitment, high startup costs, etc.)

4.3 Common MLM Red Flags

Compensation plans often have red flags:
– Recruitment-Heavy Earnings: If most income comes from recruitment rather than retail sales, this indicates a pyramid structure
– High Startup Costs: Expensive starter kits or required inventory purchases
– Mandatory Personal Volume: Requirements to buy products to stay active
– Emphasis on Recruitment: Income opportunities primarily through recruiting, not sales
– Complex Commission Structure: Confusing payouts make it hard to calculate earnings
– Low Retail Margins: Small commissions on actual retail sales (suggesting low-volume retail business)
– Unsustainable Growth: Math showing the company would need to recruit everyone to sustain growth

4.4 Income Potential Varies Widely

Our analysis shows:
– What top earners potentially make (often unrealistic for most people)
– What average earners make (usually quite low)
– What most people likely make (often negative after expenses)
– How much effort is required at each level
– How realistic goals are for different people

5. TESTIMONIALS & SUCCESS STORIES

5.1 Testimonials Are Not Typical

If we share testimonials or success stories from MLM participants:
– These represent individual experiences
– They do NOT represent typical results
– They may represent the exception, not the rule
– The person may have prior sales experience, large networks, or other advantages
– Results are not guaranteed to be replicable
– The person may not disclose all their expenses or effort

5.2 Testimonial Bias

Success stories often overrepresent:
– People who succeeded (not the 80-90% who failed or broke even)
– People with large existing networks or sales skills
– People who joined early when competition was lower
– People with significant time investment
– People with support from upline
– People who happened to be lucky (timing, market conditions, etc.)

5.3 Income Disclosure vs. Net Income

Testimonials may show:
– Gross sales volume
– Gross commission earned
– NOT expenses
– NOT taxes
– NOT net income (profit)

A distributor earning $5,000 per month may have $4,000 in monthly expenses, leaving only $1,000 net—and that’s before taxes.

5.4 Hidden Costs

Success stories often don’t mention:
– Monthly product orders to maintain status
– Travel costs to company events
– Training materials and seminars
– Marketing costs to find customers
– Time investment (often 40+ hours per week)
– Emotional cost of rejection and failed recruiting

6. REALISTIC EARNING EXPECTATIONS

6.1 Most MLM Participants Earn Little or Nothing

Research on MLM company income shows:
– 80-99% of participants earn $0 to $500 annually (gross, before expenses)
– Most earn far less than minimum wage when time is considered
– After expenses, most have negative net income (they lose money)
– Only 1-3% earn more than minimum wage
– Less than 0.1% earn six-figure incomes

6.2 Time Investment Reality

Even successful MLM distributors typically spend:
– 20-40+ hours per week on recruiting and sales
– Additional time on training, events, and administrative tasks
– This is equivalent to a full-time job
– Hourly earnings for average participants: $2-5/hour (far below minimum wage)

6.3 Startup Costs Are Real

Most MLM participants spend money on:
– Starter kit or initial inventory: $200-$5,000+
– Monthly product purchases to stay active: $50-$500+
– Training materials, seminars, events: $100-$1,000+
– Marketing materials: $50-$500+
– Total first-year cost: $500-$10,000+

Most participants never recoup these costs.

6.4 Comparison to Other Work

For comparison:
– Retail job: Federal minimum wage ($7.25/hour) = $15,080/year full-time
– Online freelance work: $15-50/hour realistic = $31,000-$104,000/year full-time
– Small business: Highly variable, but sustainable businesses average 10-15% profit margins
– MLM: 80-90% of participants earn $0-$500/year, average participant earns $200-500/year

7. FACTORS AFFECTING INCOME IN MLMS

7.1 Factors Within Your Control

  • Time and effort invested
  • Sales ability and persistence
  • Recruiting ability
  • Consistency in follow-up
  • Product knowledge
  • Networking and relationship building
  • Training and skill development

7.2 Factors Outside Your Control

  • Market saturation (how many competitors are in your area)
  • Company longevity and reputation
  • Product quality and demand
  • Compensation plan design
  • Company leadership and ethics
  • Economic conditions affecting consumer spending
  • Regional demographics and population
  • Trends in MLM industry
  • Changes to compensation plans

7.3 Why Even Effort Often Fails

Many hardworking people fail in MLMs because:
– Market saturation: Too many distributors competing for limited customers
– Recruitment exhaustion: Running out of people to recruit (you can’t recruit everyone)
– Low customer base: Most participants sell to other participants, not to real customers
– Product costs: Products often priced too high for retail customers to buy
– Compensation structure: System designed to reward recruitment over retail sales
– Churn rate: High percentage of people quit, requiring constant recruiting
– Poor product-market fit: Products don’t have enough demand outside the MLM structure

8. RED FLAGS FOR PREDATORY OR ILLEGAL MLMS

8.1 Warning Signs of Pyramid Schemes

Be extremely cautious if:
– Focus on recruitment: Primary income from recruiting, not retail sales
– High startup costs: Expensive starter kits or inventory requirements
– No retail sales: Participants buy products but don’t sell to real customers
– Unsustainable math: Would require recruiting everyone to make money
– Guaranteed income: Promises of specific income levels
– No refund policy: Can’t get your money back if you quit
– Income emphasis: More focus on money than products
– Pressure to buy inventory: Forced to stock product you won’t sell
– Discouragement of outside sales: Emphasis on internal market saturation

8.2 Illegality Indicators

Some MLM structures are illegal (pyramid schemes or illegal lotteries):
– If income primarily comes from recruiting rather than retail sales
– If participants must buy non-refundable inventory they can’t sell
– If the math requires continuous recruitment to be sustainable
– If the compensation structure creates an unsustainable recruitment environment

8.3 FTC & State Warnings

The FTC has warned against:
– “Endless chain schemes” (pyramid schemes)
– Companies that don’t require actual retail sales
– Companies that pay more for recruitment than retail sales
– Companies that make income guarantees
– Companies with unrealistic income claims

9. SPECIFIC MLMCOMPANY INCOME DISCLAIMERS

9.1 Generic Income Potential Language

When discussing income potential from specific MLM companies, we use language such as:
– “Some participants earn…” (acknowledges others don’t)
– “Top earners make…” (acknowledges it’s the exception)
– “Income potential ranges from $0 to…” (acknowledges zero is common)
– “Based on company income disclosure statement” (shows we’re using company’s own data)
– “Results vary widely” (acknowledges individual variation)

9.2 Company Income Disclosure Statements

We try to include the most recent official income disclosure statement for each company. These show:
– Actual data from company records
– Realistic range of earnings
– Percentage at each level
– Median vs. average (important distinction)
– Time periods covered

9.3 Our Analysis is Not Endorsement

Analyzing an MLM company’s income potential does NOT mean:
– We recommend joining the company
– We believe the income is realistic for most people
– We think the business opportunity is good
– We endorse the company’s practices
– We believe the income figures are typical

10. INCOME DISCLAIMER FOR CONTENT CREATORS & ENTREPRENEURS

10.1 Alternative Income Opportunities

If you are looking for income opportunities, there are often better alternatives to MLMs:
– E-commerce: Selling products through your own store
– Affiliate marketing: Earning commissions without inventory
– Content creation: YouTube, blogging, podcasting (our model)
– Freelancing: Selling services directly to clients
– Traditional employment: More stable and often better income
– Small business: Creating and selling your own products/services
– Real estate: Property investment and rental income
– Stock market: Long-term investing (with risk)

Many of these alternatives:
– Have better income potential for average people
– Have lower startup costs
– Have more predictable earnings
– Don’t require recruitment
– Don’t create ethical dilemmas
– Have lower failure rates

10.2 Our Income Model

For transparency: The Sponsoring System generates revenue through:
– Affiliate commissions: Earning money when readers purchase through our links
– Lead generation (future): Selling qualified leads to interested parties
– Display advertising (future): Showing ads to readers

This is NOT an MLM. We don’t earn money from recruiting others, and we don’t require people to buy products.

11. CONTACT US FOR MORE INFORMATION

11.1 Questions About Specific Companies

If you have questions about a specific MLM company’s income potential:
– Review their official income disclosure statement (our articles usually include this)
– Contact the company directly and request complete data
– Ask your upline for their personal income (they may not answer honestly)
– Research on sites like r/antiMLM or MLM-specific disclosure sites
– Contact our Site with specific questions

11.2 Resources for MLM Information

12. YOUR RESPONSIBILITY

12.1 Due Diligence

Before joining an MLM company:
– Request and review their complete income disclosure statement
– Research the company independently
– Talk to current and former distributors
– Calculate realistic income for your situation
– Assess whether you can afford to lose your startup investment
– Determine if you have the time to invest
– Consider whether you have a network to sell to and recruit from
– Consult with a financial advisor

12.2 Informed Consent

  • You are responsible for your decision to join
  • You are responsible for understanding the compensation plan
  • You are responsible for researching before investing
  • You are responsible for managing your own finances
  • We are not responsible for your financial outcomes

12.3 Protect Yourself

  • Don’t invest money you can’t afford to lose
  • Don’t rely solely on income projections
  • Don’t ignore red flags
  • Don’t make decisions under pressure
  • Don’t disclose sensitive financial information
  • Don’t sign contracts without understanding them

13. LIMITATION OF LIABILITY

To the fullest extent permitted by law, Scepter Marketing, LLC and The Sponsoring System shall not be liable for:
– Any financial losses from joining an MLM company
– Any income claims or projections that don’t materialize
– Your decision to join or not join a specific company
– Reliance on our income analysis or reviews
– Any other financial damage arising from our content

See our Terms of Service for complete liability limitations.

14. CHANGES TO THIS DISCLAIMER

We may update this Income Disclaimer to reflect new data, legal requirements, or changes in how companies disclose income. Updated versions will be posted with a new “Last Updated” date.

Your continued use of our Site after updates constitutes acceptance of the updated disclaimer.

15. CONTACT US

If you have questions about this Income Disclaimer or our MLM income analysis:

Email: legal@sceptermarketing.com
Phone: 855-352-4683
Mailing Address:
Scepter Marketing, LLC
2844 East Grand River Ave
East Lansing, MI 48823

APPENDIX: FREQUENTLY ASKED QUESTIONS

Q: Can I make good money in an MLM?

A: Some people do, but the vast majority don’t. Research shows 80-99% of MLM participants earn $0-$500 annually. Before joining, review the company’s income disclosure statement and calculate realistic income for your situation.

Q: Why do most people lose money?

A: Most MLM participants lose money because of startup costs, mandatory monthly product purchases, low retail margins, and high churn rates. Many never make a single retail sale.

Q: Are all MLMs illegal?

A: Not all MLMs are illegal, but many operate as illegal pyramid schemes. The key distinction is whether most income comes from retail sales (legal) or recruitment (illegal). Review the FTC guidance for more information.

Q: Should I join an MLM?

A: We can’t recommend whether you should join. Consider: (1) Are the income projections realistic for you? (2) Can you afford to lose your startup investment? (3) Do you have a large enough network? (4) Can you afford the monthly costs? (5) Are there better alternatives?

Q: How do I check if an MLM is legal?

A: Contact your state Attorney General’s office or the FTC. Look for indicators that recruitment is emphasized over sales. Review their income disclosure statement for data on how much income comes from retail sales vs. recruitment.

Q: What if I lose money, can I get a refund?

A: Some MLM companies offer refund policies; many don’t. Ask about the refund policy BEFORE joining. Get it in writing. Most people who leave MLMs lose their startup investment.

Last Updated: March 22, 2026