Avoid pyramid schemes

A pyramid scheme is one of the oldest and greatest scams. It is a multi-level marketing technique where people are promised easy riches to be earned mostly from recruiting other people into the scheme rather than selling a product or service.

Here is how it works, a potential member is asked to pay to join the scheme. The money is split up to pay the persons upline who recruited him/her right up to the founders. When the member recruits another member, they also get a commission from the new member. If enough new members join, the pyramid will grow enabling some participants, those who join early enough to make money. But, in order for every participant to make money, there would need to be an endless supply of newcomers.

In reality, the number of new participants is limited and they will eventually run out of people. Each new participant will have increasingly lower chances of recruiting others and a greater chance of losing their money.

When no new participants join the scheme, the last recruits and all those who were not able to recruit enough people to turn a profit eventually lose their money.

Unlike pyramid schemes, Multi Level Marketing involves real products and services and money is earned from selling the products or services rather than from recruiting new members. It is always important to read the fine print to differentiate the two.

Pyramid schemes are largely illegal in most countrie so some try to disguise their nature by introducing the selling of products and services but they are usually of inferior quality. Equally, the commision made from selling the products or services is too small compared to that earned from recruiting other people.

People that you trust such as friends, relatives, colleagues, faith groups are most likely to recruit you into pyramid schemes. They will promise you;

• Work from the leisure of your home
• Be your own boss
• Huge returns for small work done e.t.c these promises are often too good to be true because they are.

You should avoid pyramid schemes at all cost because you may either lose your money or if you are lucky enough to make some profit, people that you recruit will eventually lose their money. They will blame you and you will deserve it.