Glossary
Income Claim
An income claim is any statement a company or distributor makes about how much money a distributor can or does earn, including specific dollar figures, income examples, or lifestyle claims implying a certain earnings level. The Federal Trade Commission requires that income claims be truthful, substantiated, and not likely to mislead a reasonable prospect about typical earnings.
Also called: earnings claim, income representation, income disclosure
Regulated termWhy it matters
Because most distributors in most compensation plans earn modest amounts, an income claim based on a rare top earner, made without disclosure of typical results, can mislead a prospect into an unrealistic expectation. The Federal Trade Commission has taken enforcement action against direct selling companies over income claims it found were unsubstantiated or unrepresentative.
Example
A recruiting presentation states that a top distributor earned 500,000 dollars last year without disclosing that the median distributor earned far less, an income claim regulators would scrutinize for being unrepresentative.