What is a pyramid scheme?

pyramid scheme is a type of fraud that promises the investor that their initial investment will make them extremely rich. In fact, the scheme of the pyramid does not bring promised profits. In most cases, only people who come from the pyramid scheme, and several initial sellers or people who get to the top of the pyramid will earn any money. Most people only lose money because their money benefits only to those who are already involved in fraud. A characteristic feature of the pyramid scheme is that no real product is offered. Instead, people pay a one -time login fee to be part of the system or buy materials that guide how to log in. To make money, the person must register other people. Part of the revenue from the new recruits must be provided to those who have registered in the program. These people give part of their money to those who signed it. The money flows up toward the top of the pyramid andpeople who have created a pyramid scheme.

A similar strategy is used in businesses like Amway and Mary Kay. However, because both companies offer people real products such as cosmetics and household goods, are considered multi -level marketing and not pyramid schemes.

Another type of pyramid scheme is a chain letter requesting people to send money to the list of names to the highest name. The person then exceeds the highest name and hand over the letter in any hope that his name will eventually be upstairs when he gets money. Although this scheme promises to eventually make one lot of money, it never works. Furthermore, this chain letter is illegal.

For pyramid schemes of persons, the following strategies are employed:

very little mention of any real product;

trading playground will repeatedly emphasize the amount of money that one cando;

any product sold is at a price significantly above market value;

Income comes mainly when registering other people;

later recorders earn small or no money;

People who created a pyramid scheme make the most money.

people can avoid the pyramid scheme by searching for its identification characteristics. The pyramid schemes of the chain belong to the Shredder or should be handed over to local coercive organs. Internet providers should be reported with chain e -mail with the functions of the pyramid scheme. Furthermore, promises that are too good to be true, and capricious, as money is made in these "rich", should point out that it is focused on the pyramid scheme. Never give money to a person who cannot clearly define how the program works and which clearly does not define the product/production before purchasing.