Brattle Principal Dr. Branko Jovanovic has coauthored an article in Direct Selling News outlining some strategies that can help a company create an income disclosure statement (IDS) that effectively captures the earnings opportunities available while guarding against representations that could be construed as misleading.

For most direct sales companies, income disclosure statements (IDSs) are their most prominent – and public – presentation of the earnings opportunity available to prospective and current distributors. In late 2021, the Federal Trade Commission (FTC) sent letters to more than 1,100 companies, including virtually every major direct selling company and various other types of “gig economy” businesses, warning of the possible penalties for IDS misrepresentations – which could amount to significant costs. Ensuring that IDSs reliably and accurately reflect the actual experience of a typical distributor, as confirmed in the company’s business intelligence data, should be a top priority for every direct seller.

The full article, “Prioritize Your Income Statement: Here Are the Best Practices to Ensure Yours Is Effective, Accurate, and Truthful,” coauthored with a team from Winston Strawn, is available below.

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