State Attorney General Actions Against MLMs: A Recent History
State attorney general actions against MLMs are a useful way to understand where consumer protection law is heading, because states often act alongside or ahead of federal regulators. Attorneys general can use state consumer protection acts, business opportunity laws and anti-pyramid statutes. This is a dated, source-checked look at recent cases, what they allege and what they mean for anyone evaluating a direct selling company. It is a news explainer, not legal advice, and every case below is an allegation or settlement described by the agency that announced it.
Key facts
- Sep 17, 2026: Amway and two affiliates agreed to pay $225 million to resolve FTC and Washington State allegations
- Mar 4, 2025: Paparazzi agreed to pay $1.9 million in Washington after an AG investigation
- Oct 15, 2025: Georgia AG announced a $2.19 million settlement with Beauty Supply Institute and its owner entity
- Takeaway: states enforce income-claim and recruiting rules too
Why State Attorneys General Matter
Most coverage of direct selling regulation focuses on the FTC, but state attorneys general have their own tools. They can enforce state consumer protection acts, anti-pyramid promotional scheme laws and business opportunity statutes, and they often act on complaints from residents. Their settlements can include refunds, business reforms and payments to the state. Because states enforce independently, a company can face different obligations in different places. For the federal picture, see our FTC guidance on multi-level marketing explainer and the direct selling industry news roundup.
Washington and the FTC: Amway, September 2026
On September 17, 2026, Washington State’s Attorney General’s office and the FTC announced that Amway Corp. and two affiliates, World Wide Group and Leadership Team Development, would pay $225 million to resolve allegations that they used unfair and deceptive tactics to recruit people to Amway’s direct selling program. The FTC described it as the largest monetary recovery in an FTC action against an MLM, and said nearly all of it is meant to provide relief to affected consumers. The companies resolved the allegations through a settlement; the agencies’ own announcements describe the terms. Read our summary of the Amway FTC settlement for details.
Washington and Paparazzi: March 2025
On March 4, 2025, the Washington Attorney General announced that the Utah-based jewelry company Paparazzi would pay $1.9 million and reform its business practices after an investigation into an alleged pyramid scheme. The office said it would send checks averaging about $180 to roughly 7,100 Washington residents who sold the jewelry, and that sellers could return unsold merchandise bought after January 2017 for a refund. The resolution was signed to avoid a lawsuit under the state’s Consumer Protection Act and Antipyramid Promotional Scheme Act, according to the announcement.
Georgia and Beauty Supply Institute: October 2025
On October 15, 2025, Georgia Attorney General Chris Carr announced a $2.19 million settlement with Derobis Enterprises, LLC and Beauty Supply Institute, LLC. The state alleged violations of Georgia’s Sale of Business Opportunities Act and Fair Business Practices Act. This case is a reminder that business opportunity laws, which often require disclosures before someone pays to start a venture, can apply to companies that pitch earning opportunities, not just those labeled as MLMs. Check the state’s announcement for what the settlement requires.
Patterns Across the Cases
Reading the announcements side by side shows consistent themes. Regulators focus on whether recruits were given accurate information about likely earnings, whether the real money came from recruiting or product sales to customers, and whether participants who lost money can get relief. Remedies commonly include refunds, restrictions on claims and monitoring. None of this means every direct selling company is acting improperly; the industry reports $34.2 billion in US retail sales for 2025 and millions of sellers, according to the DSA. It does mean claims get scrutinized. Our DSA updates and self-regulation post covers the industry’s own standards.
How to Use This When Evaluating a Company
Search the attorney general site in your state and the FTC’s press releases for the company’s name before you join. Ask for the company’s income disclosure statement and read the cost of starting, ongoing purchase requirements and the buyback policy. Be wary of anyone who emphasizes recruiting income over product demand. Our checklist for choosing a network marketing company turns these questions into a step-by-step review. If you already sell, review your own posts for income claims and remove anything you cannot support.
Where to Check for New Actions
Each state attorney general publishes a press release page, and the FTC lists actions in its press release archive. The Washington, Georgia and FTC pages used for this article are linked below. New announcements appear regularly, so check the current date on any article you read, including this one.
Key Takeaways
- States enforce consumer, anti-pyramid and business opportunity laws.
- Recent dated actions include Amway (Sep 2026), Paparazzi (Mar 2025) and Beauty Supply Institute (Oct 2025).
- Regulators focus on earnings claims and recruiting-driven income.
- Search your state AG and the FTC before joining a company.
- Settlements are agreements; read the agency’s own statement.
Frequently Asked Questions
Can a state sue an MLM on its own?
Yes. State attorneys general enforce state consumer protection and business opportunity laws independently of the FTC.
Does a settlement mean the company admitted wrongdoing?
Not necessarily. Settlements usually resolve allegations; read the agency announcement for the exact terms.
Are all MLMs illegal pyramid schemes?
No. The FTC says legitimate multi-level marketing exists, but it focuses on deceptive claims and recruiting-driven income.
Where can I check a company’s record?
Search your state attorney general’s press releases and the FTC press release archive.
Sources
- Washington State AG: WA, FTC reach $225M settlement with Amway
- Washington State AG: AG investigation ends alleged jewelry pyramid scheme
- Georgia AG: Carr Announces $2.19 Million Settlement with Beauty Supply Institute
- FTC: Historic action against multilevel marketing operator Amway
QastMe does not endorse any company. Information is for education only and is not financial or legal advice. Earnings in direct selling vary widely, and most participants earn little or no money. Review each company’s income disclosure statement before deciding.
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