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What is a Pyramid Scheme?

When you go into this article thinking it’s MLM. I will change that opinion pretty quick. It’s obvious to find out what a Pyramid Scheme is and what Multi Level Marketing is. So please don’t get confused. Here is my article about MLM.

So. You may have heard about all kinds of money making opportunities from friends, family, the family pet and the neighbour. Usually recruit over home meetings, over the phone, email, social media or by owl. Are they pyramid schemes? Maybe? It’s your job to find out. As I said in the opening line do not get confused with a good MLM to a pyramid scheme.

In a typical pyramid scheme (also like some MLM), you pay to join. The scheme relies on you convincing other people to join up (also like some MLM) and to part with their money as well (also NOT like MLM).

This is how you identify a pyramid scheme. There has to be a physical product, something to sell, the MLM industry is massive and I can bet my bottom dollar that you will of bought from one of the main 50 MLM companies in the world, MLM is cost efficient marketing using people to sell products. On the other hand, this is a pyramid scheme “For everyone in the scheme to make a profit there needs to be an endless supply of new members. In reality, the number of people willing to join the scheme, and therefore the amount of money coming into the scheme” Does that make sense? So you get a link to join. You pay your fee to the person who referred you. They get paid. You then refer others, so you can get paid. Odd right? No products are involved. If products are involved its poor quality or downloadable content.

Pyramid schemes are illegal. It’s a scam benefited from people who have the bigger reach at the top of the pyramid. It only takes 5 minutes to go onto a money making group on Facebook and you will see hundreds of them. When the scheme collapses, relationships, friendships, and even marriages can be damaged over money lost in the scam 9 times out of 10 they do.

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What to look out for?

  • Massive up-front costs
  • No actual product or service.
  • Rubbish website and limited information on the company itself such as the owners, date founded and domain authority
  • Have they only just popped up?
  • Pressure sales? Do not let anyone pressure you into making decisions about money or investments
  • Be wary of schemes or products that claim a guaranteed income.

Google is your friend. Google the company. Find out more about them or what they actually do. Please don’t look at the first article you see. Spend time looking at other peoples opinions and experiences. People put legitimate companies as scams or title them so they get seen more for the benefit of SEO. Some also use it to deflect from a perfectly fine company to promote another one, just be aware if you see a lot saying scams or pyramid schemes from a good source with comments and experiences to back it up, you are on the right lines.

I’m new I don’t know what is real and what is a scam

If you are struggling to get in touch with me. I’m easy to contact via the Facebook or Twitter links below or the Contact page.

Just don’t get confused with MLM. I’ll be lying if I’d said people love it because they don’t. It has a bad reputation but they are legitimate companies selling actual products. It’s just a different way of selling. They use ‘tiers’ they use them for rewards this is why people get confused. With MLM you earn from selling products. You also earn via bringing other people into the company who you in-fact help start their business. You get a small bonus for expanding the company. That is totally different to a pyramid scheme, as it has products and it’s someone’s business.

Hope you enjoyed reading. I will be looking at doing Ponzi schemes next. This is a type of scheme you should avoid too!

 

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4 COMMENTS

  1. Hi Ash,
    I never knew that there was a difference between MLM and pyramid sales. Thanks for writing this post. I was contacted recently by someone promising a business with a very great prospect. There was loads of money to be paid and no physical product. Their product is online and very complicated to understand. Now I know who they really are. Thanks!

    • Hello Juliet, I’m glad this article was of use to you. What you are describing sounds like a Ponzi scheme which is like a pyramid scheme but involves investment for getting money back over-time. Just use Google as your friend and find out as much research as you can before you go ahead with things.

  2. Thanks for the tip Ash. Personally before I join any online program, I will make sure that I google the hell out of the program first lol. Usually I would be wary if there are a lot of negative feedbacks and negative reviews.

    I would also be wary if there ar little or no information on the program. I tend to just avoid it if at all possible. We just need to make sure we have done our homework before committing into anything. You don’t marry anyone on the street randomly, likewise you need to know e program before joining it! 🙂

    • Top words Leo. Your 100% correct. It amazes me how many people just jump in at opportunities. It’s really bad but all I am doing is rising awareness if people don’t choose to look into things with finer detail then its their own issue.

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