The legal landscape is shifting for direct sales companies—and the FTC is rewriting the rules.

In the latest column of Direct Selling News, Scheef & Stone Partner Brent Kugler breaks down three legal threats MLM businesses should prepare for in 2026.

One of the biggest changes is how the FTC is reviewing online enrollment processes. In recent cases, companies were cited for failing to clearly present contract terms, cancellation policies, and auto-renewal clauses before charging consumers. Brent explains that hyperlinking to policies or referencing terms elsewhere is no longer sufficient. Full documents must be presented and reviewed at the point of sign-up.

Brent also highlights the agency’s evolving approach to earnings claims. The FTC’s proposed Earnings Claim Rule and 2024 Staff Report requires companies to substantiate every income statement they share—and make that data publicly available. More than just publishing earnings averages, companies must include information on participant expenses, update IDS annually, and enforce compliance policies when misleading claims are made.

Finally, the FTC’s definition of a pyramid scheme is becoming increasingly subjective. Instead of focusing on actual behavior, the agency is evaluating what participants could earn based on how a compensation plan is structured. In FTC v. Neora, Brent notes, the FTC dismissed the company’s actual operations and focused instead on the theoretical rights participants had to receive payments—marking a major departure from prior legal standards.

This article offers practical guidance for companies navigating unclear waters—and Brent’s experience, both as former General Counsel and regulatory counsel, brings valuable clarity to an evolving space.

Read the full piece on here in DSN’s September/October issue.

Learn more Brent and his regulatory work here.