udit

Things you should know about pyramid schemes

1. They are losers. Pyramiding is based on simple mathematics: many losers pay a few winners.
2. They are fraudulent. Participants in a pyramid scheme are, consciously or unconsciously, deceiving those they recruit. Few would pay to join if the diminishing odds were explained to them.
3. They are illegal. There is a real risk that a pyramid operation will be closed down by law enforcement officials and the participants subject to fines and possible arrest.

Why would anyone pay to join a pyramid scheme?
Pyramid promoters are masters of group psychology. At recruiting meetings they create a frenzied, enthusiastic atmosphere where group pressure and promises of easy money play upon people's greed and fear of missing a good deal. Thoughtful consideration and questioning are discouraged. It is difficult to resist this kind of appeal unless you recognize that the scheme is rigged against you.
Disguised pyramid - wolf in sheep's clothing
Some pyramid promoters try to make their schemes look like multilevel marketing methods. Multilevel marketing is a lawful and legitimate business method which uses a network of independent distributors to sell consumer products.
To look like a multilevel marketing company, a pyramid scheme takes on a line of products and claims to be in the business of selling them to consumers. However, little or no effort is made to actually market the products. Instead, money is made in typical pyramid fashion, from recruiting. New distributors are pushed to purchase large and costly amounts of inventory when they sign up.
For example, you might have to purchase $1,000 of nearly worthless products in order to become a "distributor." The person who recruited you receives $500 (a fifty percent commission) and $500 goes to the top (the company, in this case). Notice the similarity to the simple pyramid scheme described earlier.
Most disguised pyramids, however, are not this easy to unmask. Pyramid schemes often choose products which are cheap to produce but which have no established market value, such as new miracle products, exotic cures, etc. This makes it difficult to tell whether there is a real consumer market for the products. The best way to avoid a disguised pyramid fraud is to know what to look for in a legitimate income opportunity.

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udit

Warning Signs of Fraud

1. Pressure to sign a contract quickly and agree to pay a large sum of money before sales claims can be investigated or legal advice obtained.
2. Promises of extraordinarily high or guaranteed profits
3. Claims that profits can be achieved easily
4. A required initial fee which greatly exceeds the fair market value of any products, kits or training
5. A large fee payable before you receive anything in return
6. Evasive answers by the salesperson or unwillingness to give disclosure documents required by law.

tonydnut

And don't forget the basic tenet of business' if they say it is "guaranteed" returns, run away and never look back.

syedwasi87

pyramid fraud is very extensive in that you can make money only if you can make others sign up...

tonydnut

So in other words everything with a referral can be seen as some sort of pyramid.

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grusomhat

Yeah pretty much. Well anything that's paying you money for getting referrals. Take the website "Take the internet back" The owners of the website make the most of the money by having everyone need/want to sign other users sign up with the incentive of a little extra cash.

tonydnut

The site that you say the makes you want to "own the internet" is a really big let down for alot of people. Let alone the backers of the site that have pretty much lost all hope.

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st1905

I`ve seen so many scam pyramid scheme sites on the internet nowadays.Some poor people from countries especially from asia believe them and lost lots of money and time.

.Essence.

Thanks for sharing all this information! Will be sure to be more careful!

Jerlene

udit, next time put a source or it will be classified as illegal. Source added to your original post.

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