You are here

The telltale signs of a pyramid scheme

Share this page

What’s the difference between a multilevel marketing program and a pyramid scheme? Pyramid schemes are illegal.

If the money you earn is based on your sales to the public, the company may be a legitimate multilevel marketing plan. Here are some signs that the company is operating a pyramid scheme:

  • Your income is based mainly on the number of people you recruit, and the money those new recruits pay to join the company — not on the sales of products to consumers
  • You’re required to buy lots of inventory
  • You’re forced to buy other things you don’t want or need just to stay in good standing with the company

One other key difference: You’re likely to lose money if you sign up for a pyramid scheme.

Today, the FTC announced a settlement with Fortune Hi-Tech Marketing (FHTM), a company that operated an illegal pyramid scheme disguised as a multilevel marketing program. Over 350,000 people were scammed out of a total of at least $169 million. The settlement bans FHTM from the multilevel marketing business and from deceiving consumers. FHTM will fork over at least $7.7 million, which will be returned to consumers.

If you’re planning to buy into a multilevel marketing plan, get the details. 

  • Ask these questions to learn if it’s a pyramid scheme. Make sure your income is based on sales to the public, not on what you have to buy yourself or the number of people you recruit.
  • Be skeptical of rags-to-riches stories or portrayals of lavish lifestyles made possible by participating in the program. These stories may not represent the experiences of most members.
  • Exercise doubt. Even if a company sells products or services you’re familiar with — or boasts celebrity members — it may not be legitimate.

If you’re in the market for a job, investment, or work-at-home business, check out our tips to avoid other business opportunities scams.

Blog Topics: 
Jobs & Making Money

Comments

yes prime my body appears to be a pyramid scam. I would stay far away.

hello sir i have invested my 20000 Rs in click intensity in the hope of i can get money with work now 9 months have over they not paying for my money and now they have made another new one named adscash please i kindly request you please help me in getting back my all money....

If you want to report a scam, go to FTC.gov/complaint. You can provide information about the company, what it promised, and what you got. The information you give goes into a database that law enforcement uses for investigations.

Anyone have any comments or information on doTERRA Essential Oils?

The biggest pyramid scheme is the US Government. Q: Let's say what are they selling?

A: Nothing

Q: What do they produce: A: Nothing!

Q: How are they structured? A: Pyramid. Take a look at te org chart of the federal government or any corporation for that matter and you will see a pyramid scheme!

Stay away from TEAM NATIONAL. These people are SCAM ARTISTS! BEWARE!

Amway works for me. I have also learned how to properly manage my finances and get out of debt. I have learned how to be a better mom, sister, daughter, wife, and friend. Amway plays by the rules and a lot of people get mad because they want and easy way with no standards to get rich quick. It takes real work with focus for an extended period of time.

Does anyone know anything about social recruiters for ejobexchange? Sounds like a pyramid scheme from the information that is public.

Anyone know about PHP Agency? I have a friend who dragged me to one of their meetings in an attempt to recruit me. Sounded too good to be true

MOBE My Online Business Education / Empire is the biggest scam.

it is good to know about this for a work i need to do.

this was very helpful.

Amway is a scam. Sit through an Amway recruiting presentation sometime. Virtually all of the presentation is about recruiting, not about selling. So lets look at the math. Amway has been in business for 58 years. If they started with just 10 sales people and each sales person was able to recruit just two new people each year who then recruited just two people each year and so forth, the current number of Amway sales people wold be 2,882,303,761,517,120,000. Obviously the average rate of recruiting is much lower that 2 new people per year. So who is going out door to door and selling products?
Next, Amway is supposed to be a 12 billion dollar company more or less. But they refuse to tell anyone what percent of that comes from selling training aids and seminars. if they don't know that number, the managers are incompetent and need to be replaced. if they do know the number and won't release it, it's because they don't want you to know it.

You need to check out Zilis what a scam recruitment is the game products our a sham

Is Success by Health a scam? Need an answer quickly!

Have you heard of accelerated 5 figure formula with Alicia Ward and Garett frances. I feel like this company is a pyramid scam. They have a group only on face book. And I can’t find anything about the company online ?

Does anyone have insight on this?

How to find out if a company is running a pyramid scheme

There is a gifting circle going on right now in Missouri. Two of my trusted friends asked me to be a part of this too good to be true way to make money. Invest $1400 in 6 weeks get $11,200.

is MIG Skincare out of Denver a pyramid scheme,?

What about Paparazzi Accessories? It's a total pyramid scheme- fits the bill to a T!

Pages

Leave a Comment