$12.5B
FTC-reported fraud losses in 2024
FTC says consumers reported losing $12.5 billion to fraud in 2024.
CBD and hemp product MLM scheme
A company sells CBD or hemp products through an MLM structure, combining unverified health claims with aggressive recruitment, leaving most sellers with unsold inventory.
“pyramid scheme”
↓ 8%Key indicators
Usually targetsAdults
Often hitsSmall business owners
Common regionUnited States
Last updated2026-04-05
Estimated impact
$4.0K
median reported loss
Typical range$400 – $80K
Recovery rate~8%
Annual reports11,000
Scam breakdown
1
The company promotes CBD products with health claims that may not be FDA-approved.
2
Sellers purchase inventory and commit to monthly autoship orders.
3
The compensation plan rewards recruiting new sellers more than retail sales.
4
The CBD market is saturated, making it difficult for individual sellers to find customers willing to pay MLM premiums.
What to do first
Compare CBD product pricing and third-party lab testing to non-MLM brands available in stores.
Related terms
CBD MLM scamhemp oil pyramid schemeHempWorx scamcannabis MLMPonzi and pyramid schemesSocial mediaStableAdultsOlder adultsParentsSmall business ownersCreators and online sellersRemote workers and job seekersUnited StatesCanadaCBD MLM scamhemp oil pyramid scheme
Real-world example
How this scam plays out in practice
Based on reported patterns. Names and details are illustrative.
The setup
Jason, 35, a adults, encountered what appeared to be a legitimate ponzi and pyramid schemes situation while using Social media. The company promotes CBD products with health claims that may not be FDA-approved.
Step 2
What happened next was calculated: Sellers purchase inventory and commit to monthly autoship orders.
Step 3
The pressure escalated quickly: The compensation plan rewards recruiting new sellers more than retail sales.
Step 4
Then came the real trap: The CBD market is saturated, making it difficult for individual sellers to find customers willing to pay MLM premiums.
The outcome
Jason realized something was wrong when unverified health claims about cbd products curing or treating medical conditions. By that point, significant damage had already been done — money sent, personal information shared, or trust exploited.
The lesson
Compare CBD product pricing and third-party lab testing to non-MLM brands available in stores. Jason's experience shows why unverified health claims about cbd products curing or treating medical conditions and products are significantly more expensive than similar cbd products from retail brands are the clearest early warning signs.
How to identify it
- Unverified health claims about CBD products curing or treating medical conditions
- Products are significantly more expensive than similar CBD products from retail brands
- Emphasis on building a team rather than building a customer base
- Monthly autoship requirements to maintain active status
- Pause before paying, clicking, or sharing information. Scammers rely on speed.
- Verify the sender, company, or agency using a phone number or website you already know is legitimate.
What to do now
- ✓Compare CBD product pricing and third-party lab testing to non-MLM brands available in stores.
- ✓Report any claims that CBD products cure or treat medical conditions to the FDA.
- ✓Check the income disclosure statement — most CBD MLM sellers earn less than their autoship costs.
- ✓Consult a healthcare professional before using CBD products for medical purposes.
What to save before reporting
- ✓Save the message, profile, phone number, email, or URL that was used.
- ✓Keep payment confirmations, receipts, and account alerts before you dispute or delete anything.
- ✓Write down the timeline while the details are still fresh.
How big is this problem
You are not alone — this scam affects millions of people.
These numbers come from government agencies and official reports. If you have been affected, know that this is a widespread problem — not something that only happens to careless people.
FTC 2024 fraud losses
Imposters
Most common FTC fraud category in 2024
FTC says imposter scams remained the most commonly reported fraud category in 2024.
History and evolution
- This scam family tends to persist because the social-engineering pressure works even when the exact scripts, platforms, and payment methods change.
- The specific packaging evolves over time, but the core pattern usually stays the same: create urgency, control the channel, and push action before verification.
- The FDA has issued multiple warning letters to CBD companies, including MLM distributors, for making unsubstantiated health claims about their products.
Recovery and follow-up
- ✓Save the messages, receipts, account alerts, and transaction details before you block or delete anything.
- ✓Report the scam through the official platform or government channel that best matches where it happened.
- ✓Compare CBD product pricing and third-party lab testing to non-MLM brands available in stores.
- ✓Report any claims that CBD products cure or treat medical conditions to the FDA.
- ✓Check the income disclosure statement — most CBD MLM sellers earn less than their autoship costs.
Why this pattern keeps working
Even when the story changes, most scams still use the same pressure pattern: urgency, authority, and a request to move money or data fast.
The FDA has issued multiple warning letters to CBD companies, including MLM distributors, for making unsubstantiated health claims about their products.
FDA warning letters to CBD companies and FTC MLM guidance.
Where to report it
If you have been targeted by this scam, reporting it helps authorities track the pattern and protect others. United States has dedicated agencies that handle fraud reports.
ReportFraud.gov
Federal Trade Commission
Central U.S. consumer fraud reporting portal.
File an IC3 complaint
FBI Internet Crime Complaint Center
FBI portal for internet-enabled crime reports.
Start identity theft recovery
IdentityTheft.gov
Official U.S. identity theft recovery plan builder.
Explore further
Understand the bigger picture
Who is most at risk
Who this scam targets
Primary targets
Adults, Older adults, Parents, Wellness enthusiasts
Geographic concentration
United States, Canada
Primary channel
Social media — Ponzi and pyramid schemes
Why this group is vulnerable
Adults are particularly vulnerable because this scam exploits trust in familiar brands, authority figures, and time-sensitive decisions. The ongoing nature of reports suggests that awareness among this demographic remains low.
Sources and methodology
How we verify this information
OpenScam tracks scam patterns using a combination of government consumer protection databases (FTC, IC3, Action Fraud), platform-specific fraud reports, and verified consumer complaint data. Each entry is cross-referenced against at least two independent sources before publication.
Severity ratings are based on financial impact potential, reversibility of damage, and volume of reports across multiple reporting channels. Trend velocity reflects the rate of change in report volume over the most recent 90-day window.
This page was last verified on 2026-04-05. Red flags, recovery steps, and reporting resources are reviewed quarterly against current agency guidance.
Evidence and indicators
- The FDA has issued multiple warning letters to CBD companies, including MLM distributors, for making unsubstantiated health claims about their products.
Source notes
- FDA warning letters to CBD companies and FTC MLM guidance.
Frequently asked questions
Common questions about cbd and hemp product mlm scheme
How does the cbd and hemp product mlm scheme work?+
The company promotes CBD products with health claims that may not be FDA-approved. Sellers purchase inventory and commit to monthly autoship orders. The compensation plan rewards recruiting new sellers more than retail sales. The CBD market is saturated, making it difficult for individual sellers to find customers willing to pay MLM premiums.
What are the warning signs of cbd and hemp product mlm scheme?+
Unverified health claims about CBD products curing or treating medical conditions Products are significantly more expensive than similar CBD products from retail brands Emphasis on building a team rather than building a customer base Monthly autoship requirements to maintain active status
What should I do if I encounter cbd and hemp product mlm scheme?+
Compare CBD product pricing and third-party lab testing to non-MLM brands available in stores. Report any claims that CBD products cure or treat medical conditions to the FDA. Check the income disclosure statement — most CBD MLM sellers earn less than their autoship costs. Consult a healthcare professional before using CBD products for medical purposes.
Who is most at risk for cbd and hemp product mlm scheme?+
This scam primarily targets Adults, Older adults, Parents, Wellness enthusiasts. It is most commonly reported in United States, Canada and typically appears on Social media.
Is cbd and hemp product mlm scheme still active?+
CBD and hemp product MLM scheme is currently on our watch list. It has been reported across US, CA. Last updated 2026-04-05.
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Help someone avoid this scam.
Scammers succeed because people do not talk about it. If you or someone you know has been affected, there is no shame in it — it happens to millions of people every year. Share this page with friends and family so they know what to look for.