MLM Companies Face Regulatory Scrutiny, Pivot to Affiliate Marketing in 2025

Multi-level marketing (MLM) companies are increasingly shifting toward affiliate marketing models as regulatory pressures mount and consumer skepticism grows, according to recent company transitions and FTC reports.

FTC Tightens Oversight of MLM Industry

The Federal Trade Commission (FTC) has intensified its scrutiny of MLM practices in recent years, culminating in a comprehensive staff report released in September 2024 that analyzed income disclosure statements from 70 MLM companies.

The report revealed concerning statistics about participant earnings in MLM structures. According to the FTC findings, “most participants made $1,000 or less per year—that’s less than $84 dollars per month” and “in at least 17 MLMs, most participants didn’t make any money at all.” The agency also found that most MLM income disclosure statements omitted crucial information about expenses faced by participants.

In its September 2024 press release, the FTC stated: “Specifically, the report notes that most of the reviewed statements do not include participants with low or no earnings in their display of earnings amounts and also don’t account for the expenses faced by participants, which can outstrip the income they make.” (Source: FTC News Release, September 4, 2024)

Major Brands Make the Switch

In response to these regulatory challenges, several established MLM companies have either transitioned entirely to affiliate marketing models or introduced affiliate programs alongside their traditional structures.

One of the most notable transitions came from Beachbody (now BODi), which abandoned its MLM structure in 2024. The company officially shut down its old partner network on January 1, 2025, replacing it with an affiliate program that offers up to 50% commission rates.

Carl Daikeler, BODi’s executive chairman, stated during the announcement: “The evolution to the affiliate model offers a simpler, more modern approach to customer acquisition and will directly reward the seller for their effort. The organizational challenges and complexity of the MLM approach has weighed on the company’s turnaround and the ability of partners to optimize their potential.”

Skincare giant Rodan + Fields made a similar move in September 2024, shifting from its complex consultant-based MLM structure to a streamlined affiliate model offering 30% commissions. Other companies that have made partial or complete transitions include Seint (formerly Maskcara Beauty), Origami Owl (now Think Goodness), Stella & Dot, and even long-established players like Avon.

Health and wellness company USANA launched an affiliate program on January 17, 2025, offering commissions ranging from 15% to 20% without requiring affiliates to purchase products or become associates, according to a post from a former USANA associate on WealthyAffiliate.com.

Affiliate Marketing: A More Sustainable Model?

The transition to affiliate marketing addresses several key pain points associated with traditional MLM structures. Unlike MLMs, which typically require participants to purchase starter kits, maintain minimum monthly orders, and focus heavily on recruitment, affiliate programs generally involve no upfront costs and compensate promoters solely based on their ability to generate sales.

According to data from the Performance Marketing Association, affiliate marketing investments reached $9.1 billion in 2021, contributing to $71 billion in e-commerce sales by 2022.

Legal Distinctions and Regulatory Benefits

The regulatory landscape also favors affiliate marketing over MLM structures. While MLMs often walk a fine line between legitimate direct selling and pyramid schemes, affiliate marketing’s straightforward compensation model—where commissions come exclusively from product sales, not recruitment—presents fewer legal risks.

The FTC’s April 2024 updated Business Guidance Concerning Multi-Level Marketing highlighted several requirements regarding what constitutes deceptive earnings claims, making compliance increasingly complex for MLM companies, as noted by the economic consulting firm Edgeworth Economics in their analysis of the FTC’s guidance.

The Future of Direct Selling

The transition represents a fundamental shift in how direct selling businesses engage with distributors and customers. As noted in an analysis by Growann.com, affiliate marketing maintains “a laser focus on product promotion and sales” where “success depends entirely on your ability to connect products with interested buyers,” in contrast to MLM which “splits focus between product sales and recruitment.” (Source: Growann.com)

For MLM participants considering their options, the transition offers an opportunity to leverage their direct selling skills in a more sustainable model. Affiliate marketing allows promoters to focus on authentic product recommendations without the pressure of recruitment or inventory requirements.

According to the industry veteran, Lee-Ann Johnston, affiliate marketing is “straightforward, transparent, and it’s without the complexities (and controversies) of Multi-Level Marketing.”

With affiliate marketing’s growing prominence and the continued regulatory challenges facing MLMs, 2025 may mark a turning point in the evolution of direct selling—moving away from complex multi-level structures toward more transparent, consumer-friendly business models.