Investor Alert: Beware of Pyramid Schemes Posing as Multi-Level Marketing Programs The SEC’s Office of Investor Education and Advocacy has issued an Investor Alert to warn individual investors about pyramid schemes, a type of investment scam that fraudsters often pitch as a legitimate business opportunity in the form of multi-level marketing programs. Have you ever …
Pyramid schemes are scams that need a constant flow of new participants to keep them going. If you’re asked to “join” in on the latest and greatest health and fitness trend, it should be a red flag.
Pyramid schemes are easily recognizable since their entire business model seems more focused on “recruiting” people, and not selling the product.
A legitimate marketing business model would be far more focused on 1 thing – SELLING. This might entail developing quality websites, maximizing social media exposure, creating advertisements – all part of basic marketing strategies.
Pyramid scams focus on recruitment. They seek out joiners, and people who want to be apart of something. At the end of the day, no one profits but the people at the top.
According to USA.gov
Pyramid schemes are marketed as multi-level marketing programs or other types of legitimate businesses. They use new recruits’ “investments” to pay “profits” to those participating longer.
Pyramid schemes collapse when they can’t recruit enough new participants to pay earlier investors. These scams always fail—it’s mathematically guaranteed.
The Multi Level Marketing and Pyramid Schemes Are You Considering a Multi level Marketing Opportunity (MLM)? Be cautious. It may well be a legitimate multilevel marketing business. Or it may be a pyramid scheme – an illegal scam designed to steal your money. The Multi level marketing and pyramid scheme concept is based on recruiting …