MLM merchant accounts and the compensation-plan question
MLM is underwritten on compensation structure and distributor conduct. What separates a placeable direct-sales business from one no acquirer will touch.
Why MLM & direct sales gets declined
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Compensation plans that reward recruitment over retail sales attract FTC attention, and the acquirer is exposed alongside the company.
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Distributor marketing is made by thousands of people you do not employ, and acquirers hold the company responsible for income and product claims made in its name.
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Autoship and starter-kit billing produce the same continuity dispute profile as nutraceuticals, often on the same products.
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High distributor churn generates refund and dispute volume that looks like consumer dissatisfaction to a risk system.
What underwriters actually look for
- A compensation plan you can explain in terms of retail sales to end customers rather than recruitment.
- A written distributor policy covering income and product claims, and evidence you enforce it with terminations.
- Clear autoship disclosure at enrolment, with an easy cancellation route.
- A documented refund policy including the buyback obligations several states impose.
- A dispute record below 1 percent, separated between retail customers and distributors.
Documents you will be asked for
Having these ready is the single biggest thing that shortens the timeline. The same list is emailed to you after you pre-qualify.
- Government-issued photo ID for each beneficial owner holding 25 percent or more
- Company registration documents and proof of business address
- Three to six months of business bank statements
- Three to six months of processing statements, plus any termination or MATCH notice
- Your compensation plan document
- Your distributor agreement and marketing policy, plus recent enforcement examples
- A sample income disclosure statement
The ratio underwriters are trying to establish
Every MLM application comes down to one question an underwriter is trying to answer from the outside: does money in this business come from products sold to people who are not distributors?
That is the same line the FTC draws between legitimate direct selling and a pyramid scheme, and acquirers apply it because it is the line their own regulatory exposure sits on.
Make it answerable. A compensation plan document plus a genuine retail-versus-internal volume breakdown does more for an application than any amount of description. Companies that cannot produce the breakdown are assumed to be avoiding the question.
Distributor claims are your exposure
You did not write it, you may never have seen it, and it is still attributed to you. Income screenshots, product claims, comparative health assertions — an underwriter searching your brand name finds distributor content long before they find yours.
A written policy is the floor. What moves an application is evidence of enforcement: a log of claims found, notices issued, and distributors actually terminated. Enforcement you can document reads as a company in control of its own brand.
Autoship is a continuity model
Whatever else the business is, if it bills on renewal it inherits the continuity problem: disclosure before purchase, affirmative consent, easy cancellation, recognisable descriptor, pre-renewal reminders. The 2026 VAMP threshold of 1.5 percent on card-not-present volume, combining fraud reports and disputes with no warning tier, applies here exactly as it does to nutraceuticals — once you are at or above the 1,500-events-a-month floor at which Visa enumerates a merchant at all.
What the rules actually say
- The FTC distinguishes legitimate multi-level marketing from pyramid schemes primarily by whether compensation derives from retail sales to end customers rather than from recruitment.
- Several states impose buyback obligations requiring repurchase of unsold inventory from departing distributors.
- Income claims are policed by the FTC, and claims made by distributors are attributed to the company.
Jurisdictions we cover
Where your company is established decides which acquiring rails are open to you, and it is one of the five questions we ask up front.
- United States
- United Kingdom
- European Union
- Canada
- Australia
Last reviewed
23 August 2026. Regulation in this area moves. Check the primary sources below before acting on anything here, and treat this page as orientation rather than legal advice.
- FTC - business guidance on multi-level marketing The distinction the FTC draws between MLM and pyramid schemes.
MLM & direct sales: questions merchants ask
Why do processors decline MLM businesses?
Because the acquirer carries regulatory exposure if the compensation plan is later characterised as a pyramid scheme, and because distributor marketing generates claims the company did not write. A retail-heavy plan with enforced distributor policies is a very different application from a recruitment-weighted one.
What makes a compensation plan acceptable to an underwriter?
Evidence that compensation flows from product sold to end customers who are not distributors. Underwriters look at the ratio of retail volume to internal consumption, and at whether advancement depends on recruiting. If you cannot demonstrate genuine retail sales, expect declines regardless of how the plan is described.
Are we responsible for what distributors claim?
In the eyes of both regulators and acquirers, effectively yes. A written policy is the baseline; what actually helps an application is evidence you enforce it, including examples of distributors you have terminated for non-compliant claims.
What does MLM processing cost?
Commonly 4 to 8 percent plus a per-transaction fee with a reserve of 10 to 15 percent held for 180 days. Autoship-heavy models sit at the top of the range because the dispute profile mirrors continuity nutraceuticals.
Does autoship hurt our application?
It complicates it. Autoship carries the same disclosure and cancellation requirements as any continuity billing, and the same dispute exposure. Clear enrolment disclosure and a one-click cancellation route are what make it survivable.
Where to go next
Find out what is realistic for mlm & direct sales
Five questions, no documents, and an honest answer about whether we can place you — including when the answer is no.