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Pyramid Scheme Scam Resources

Pyramid scheme is a strategy adopted by marketers in order to promote a particular brand, product or service. In this scheme the consumers or investors are promised huge profits, based on the number of users they recruit to promote the brand.

Pyramid Scheme Scam References

PDFs :

Websites fighting pyramid scheme scam

1. Scamwatch
You may hear about a pyramid scheme from friends, family or neighbours. Usually, pyramid schemes recruit members at seminars, home meetings, over the phone, and by email or postal mail.

2. MLMs Scams
Pyramid Scheme Alert has not examined every single MLM but, among the hundreds we have examined, we have not found one yet that met the simple test of legitimacy. The test does not require years of analysis or evaluating the MLM product or pricing. It does not require a legal opinion. Legal or not, the test determines whether the MLM is a valid direct selling income opportunity.

3. Scam Alert
In recent decades, pyramid schemes have become an insidious, pervasive and corrupting influence in the marketplace and community, causing financial and social harm on a global scale.

4. Multi-Level Marketing
Multi-level" or "network" marketing is a form of business that uses independent representatives to sell products or services to family, friends, and acquaintances. A representative earns commissions from retail sales he or she makes, and also from retail sales made by other people that he or she recruits. Examples of well-known multi-level marketing companies include Amway and Mary Kay Cosmetics.

5. Investor Alerts
Pyramid schemes masquerading as MLM programs often violate the federal securities laws, such as laws prohibiting fraud and requiring the registration of securities offerings and broker-dealers. In a pyramid scheme, money from new participants is used to pay recruiting commissions (that may take any form, including the form of securities) to earlier participants just like how, in classic Ponzi schemes, money from new investors is used to pay fake "profits" to earlier investors. Recently, the SEC has sued the alleged operators of large-scale pyramid schemes for violating the federal securities laws through the guise of MLM programs.

6. Consumer Information
Slow your roll, my friend. Before you shell out a wad of cash and start making pitches to your friends, you should know that the FTC just filed a complaint against the company behind the pitch. The FTC alleges Vemma is running an illegal pyramid scheme and is targeting college students.

7. Federal Trade Commission
Pyramid schemes now come in so many forms that they may be difficult to recognize immediately. However, they all share one overriding characteristic. They promise consumers or investors large profits based primarily on recruiting others to join their program, not based on profits from any real investment or real sale of goods to the public. Some schemes may purport to sell a product, but they often simply use the product to hide their pyramid structure.

8. Better Business Bureau
Pyramid schemes make money by recruiting businesses or people rather than by selling real and legitimate products or services – even if a product or service is involved.

9. Action Fraud
Direct selling or network marketing should not be confused with Pyramid Selling. Pyramid selling is illegal in the UK and many other countries and is a type of fraud which is disguised to look like direct selling. Pyramid selling is where recruits pay an admission fee to join the scheme to earn commissions on persuading other to join rather than supply any real investment or sale of products or services to the public. Pyramid schemes do not offer contracts to participants, cancellation rights nor the opportunity to buy back unsold goods - all of which are required under UK law.

10. Companies Survey
A pyramid scheme is a fraudulent system of making money based on recruiting an ever-increasing number of "investors." The initial promoters recruit investors, who in turn recruit more investors, and so on. The scheme is called a "pyramid" because at each level, the number of investors increases. The small group of initial promotors at the top require a large base of later investors to support the scheme by providing profits to the earlier investors

11. Common Fraud Schemes
As in Ponzi schemes, the money collected from newer victims of pyramid schemes is paid to earlier victims to provide a veneer of legitimacy. In pyramid schemes, however, the victims themselves are induced to recruit further victims through the payment of recruitment commissions.

12. ID Theft Blog
Pyramid schemes are nothing new. They go by many names and offer a lot of different variations, some of which sound like harmless fun or even legitimate business opportunities. But in the end, not only are pyramid schemes a good way to lose a lot of money and the trust of your friends and family, they're also illegal.

13. Department of Commerce
Pyramid schemes and chain letters operate by recruiting people to make money rather than by selling a legitimate product or service. The victim makes a cash investment and, once they have recruited a certain number of other investors, they will allegedly receive a substantial sum of cash. Most of the time, you'll never make money and will lose any money you paid to participate. Sometimes theses schemes masquerade as home-based business opportunities such as envelope stuffing. You send away for the material which ends up being information on how to perpetrate the same scam on others.

14. Money Transfer and Bank Account Frauds
Pyramid schemes are illegal scams in which large numbers of people at the bottom of the pyramid pay money to a few people at the top. Each new participant pays for the chance to advance to the top and profit from payments of others who might join later. For example, to join, you might have to pay anywhere from a small investment to thousands of dollars. In this example, $1,000 buys a position in one of the boxes on the bottom level. $500 of your money goes to the person in the box directly above you, and the other $500 goes to the person at the top of the pyramid, the promoter. If all the boxes on the chart fill up with participants, the promoter will collect $16,000, and you and the others on the bottom level will each be $1,000 poorer. When the promoter has been paid off, his box is removed and the second level becomes the top or payoff level. Only then do the two people on the second level begin to profit. To pay off these two, 32 empty boxes are added at the bottom, and the search for new participants continues.

15. Finance and Development
The pyramid scheme phenomenon in Albania is important because its scale relative to the size of the economy was unprecedented, and because the political and social consequences of the collapse of the pyramid schemes were profound. At their peak, the nominal value of the pyramid schemes' liabilities amounted to almost half of the country's GDP. Many Albanians—about two-thirds of the population—invested in them. When the schemes collapsed, there was uncontained rioting, the government fell, and the country descended into anarchy and a near civil war in which some 2,000 people were killed. Albania's experience has significant implications for other countries in which conditions are similar to those that led to the schemes' rise in Albania, and others can learn from the way the Albanian authorities handled—and mishandled—the crisis.

16. Financial Conduct Authority
Get-rich-quick schemes promise investors high returns or dividends not usually available through traditional investments. While they may meet this promise to early investors, people who invest in a scheme later usually lose their money.

17. Chain Letter Scams
You are offered the opportunity of a lifetime. Join this particular scheme for a small amount of money. As new members join they will start sending money to you. This is a pyramid scam. Pyramid scams cost people a lot of money. A pyramid scam starts with a few people and spreads outwards to many people, who then send money back up the pyramid. The only people who make money are the people at the top of the pyramid.

18. Department of Justice
You spot a friend's post on your Facebook or Instagram feed. It's inviting you to join a gift exchange, and it sounds like a great deal. If you buy one $10 gift for a stranger, you will receive as many as 36 gifts back. Some people are even posting photos of all the gifts they have received in the mail. - See more at:

19. Developing Countries
There are many different flavors of financial crime. At a global level the terminology is often imprecise due to different meanings in different legal systems. In this blog series we see "financial crime" as belonging to the broader category of "white collar," "commercial," or "economic" crime and explore its linkages to the financial inclusion agenda. We use the term to refer to offences that involve the financial system, payments and transactions.

20. Investment Scam
One of the simplest yet most effective investment scams is the ponzi scheme. The promoter promises investors a return on investment and says it is secure, but there is no real 'investment'.