9 Ways To Spot a Pyramid Scheme

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By: Scam Risk - Expert Reviewer

9 Ways To Spot a Pyramid Scheme

We can categorically call the pyramid scheme a scam. They are what we would call wolves in sheep’s clothing. On the outside they look harmless and even enticing. They come with a lot of promises — all sizzle and no steak. But that’s precisely how people tend to fall into its trap — its promise of big money quick returns. 

Someone once said, spotting a fake is easy as pie if you know the real McCoy like the back of your hand.

Multi-Level Marketing (MLM) has received a lot of flak in the last decade because it has been equated to pyramid schemes. It’s a good thing, the network marketing or MLM folks did a good job dusting itself from the fall. But that’s another story. The point is these two models may look similar but in actuality, they are not.

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Can you spot the difference between pyramiding and Multi-Level Marketing or Networking? 

First off, pyramiding is downright unlawful. You can spot that it’s a pyramid structure if the so-called business does not sell a product or a service. Their main thing is to recruit and sign up people and let those victims shelve out cash with the promise of high returns. Technically, in a pyramid scheme, people on the top will earn money. Oodles of money, in fact. But only those who are at the top are capable of doing so, the rest is left with nothing but empty promises. 

The structure of a networking business or Multi Level Marketing model might be strikingly alike to a pyramid scheme. But Multi Level Marketing systems are legal. They have actual products and they do not promise ridiculous amounts of money simply by recruiting people into the scheme. 

Although in multi level marketing systems, sales people can earn more money by recruiting more people than earning profits from sales. However, the big difference lies in the fact that in multi level marketing, there is a verified product or service. People get conned into a pyramid scheme without them knowing that they got themselves into a deceitful “business” pursuit. 

Some lose all the money they put in and some even go into huge amounts of debt. Therefore, it’s crucial to look into the fine print. Be wary of get-rich-quick stories. Don’t get sucked into the opulent life these people show. Don’t rely on what they say. Do your homework and research. 

So to make things crystal, here are important guidelines that you need to watch out for in a pyramid scam.

  1. One major giveaway in a pyramid scam is this – They promise very lofty things. There’s a saying that goes: never trust a man who’s drunk, who’s running for office or who’s in love. Add this to that list — never trust a man who promises you that a certain business will make you earn a whole lot of money. Anyone that says that to you is definitely someone who’s up to no good. Stay away from scammers.
  2. Another dead giveaway in a pyramid scam is when these salespeople convince you that the only way to make money is by recruiting other people to join you. This shouldn’t be the case. A legal direct sales plan should be able to give you profit just by selling the company’s products.
  3. Pyramid scammers entice you to buy more products, more than you need and more than you can resell. Hold on to your money, don’t buy into this scam. Anyone that strong arms you to buy more in order to get bonuses smells like trouble.
  4. Act now or you will lose the golden chance of a lifetime. That’s the reverberating theme that most pyramid scammers use to persuade people into buying into their so-called business. They normally tell you there’s no time to sit on it, no time to lose and don’t bother sleeping on it either. When you hear that, it’s time to put delayed gratification into good use. Don’t give in to the pressure. Run away instead.

To keep yourself from jumping into a pyramid scam or other scams for that matter, it’s important to “do your homework.” Here are additional pointers on how to secure yourself from would-be pyramid scammers. 

Check out the products.

Be wary of the quality of the items that they sell. Is there really such a product? If yes, are the products of good quality as they say?

Check if you can get a refund.

You can bet your sweet patootie that if that company does not have a refund policy, that’s for certain a pyramid scam. Find out if you can get refunded should you change your mind.

Check what the sellers are saying.

Remember, it’s suspicious if they give you preposterous claims — especially if they tell you to keep recruiting people to earn more money. This is a signpost of a scammer.

Check out the company.

Do know what the company is about. Check if they have good and favorable statistics.

Check out the fine print.

Ask the pros like accountants, legal advisers, lawyers about what they think of the company. It’s always best to have a second eye or a third eye.

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1 Comment
  1. Hello,
    Thanks for your dedicated efforts to write post on Pyramid Scheme.
    I’m also want to mention some point about, How to spot the pyramid scheme. Identify if..
    *You’re not selling something real.
    *Get-rich-quick promises.
    *The company can’t prove it generates retail income.
    *Strange or unnecessarily complex commission processes.
    *Everything’s about recruiting.

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