Pyramid Schemes And MLM Scams

Pyramid Schemes exist online as well as offline. They come in various and creative forms and vary from loans, pharmacy and cosmetic products to insurance policies. Actually the variations are endless, but the general idea is to make you invest and then pursue other investors. This is in your interest, since for everyone you recruited you get a percentage of his investment and for everyone your new recruiter referred you also (can) get percentage. That means the higher in the scheme you are and the more investors you referrer, more money you make, but the higher amounts are cashed in only by those few on the top, while you and the other investors do all the work. Not a question of if, but when, the scheme collapses because it has run out of new investors. Or the fraudster closed his "shop". Almost all participants never earn a profit, while many suffer huge financial loss. Only the top of the scheme makes money, that is, in the loss of all the others.

Pyramid schemes are deceptive practices which promote themselves as legitimate businesses. Taking money from thousands or even millions, they only enrich a small group of people who started the scam. Often also denying the fact they operate as a pyramid scheme with a masquerade, fraudsters claim to create new opportunities and uplift people. Results can be devastating with huge financial losses taken from people who fell prey to the scam with trickery, psychological manipulation or law loopholes. Always check the company background if investing huge amounts of money, don't thrust the nice sales person nor be excited on large potential return on investment. Usually, it only exists in your imagination, not in your wallet.

The distinguishing feature of these schemes is the fact that the product being sold has little to no intrinsic value of its own or is sold at a price out of line with its fair market value. Examples include "products" such as brochures, cassette tapes or systems which merely explain to the purchaser how to enroll new members, or the purchasing of name and address lists of future prospects. The costs for these "products" can range up into the hundreds or thousands of dollars. A common Internet version involves the sale of documents entitled "How to make $1 million on the Internet" and the like. The result is that only a person enrolled in the scheme would buy it and the only way to make money is to recruit more and more people below that person also paying more than they should. This extra amount paid for the product is then used to fund the pyramid scheme. In effect, the scheme ends up paying for new recruits through their overpriced purchases rather than an initial "signup" fee.

Article Source: http://www.articlemonk.com

Urban is the author of Pyramid Scheme and publisher at ScamInformation Website.

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