Pyramid scheme

From ArticleWorld

A pyramid scheme is the illegitimate practice of inviting people to join a multi-level system without any real product or service. The people who make a payment are promised to receive exponential benefits from the people who have joined before them as a reward for signing up.

Pyramid schemes exposed

Often the people who pay money to this type of scheme are offered a vague idea of a marketing plan, and promised to make millions or more within a week, month, year, or even instantly upon signing up. In order to further this pyramid scheme, and to make it appear legitimate, fake testimonials, fake referrals, and fake information are often given within the advertisement for this scheme. This is true whether the advertisement is sent via postal mail or whether it is sent via Internet, or the person responds to an ad over the TV, Internet, radio, or newspaper.

Pyramid scheme example

One example of a pyramid scheme is the chain letter. Usually the recipient will be told to give a small amount of money to the first person on the list, and remove that person’s name off the list. After this, the recipient of this chain letter would move the names up one, and then add some more names on the bottom of the list. The idea is that soon that recipient’s name will be at the top and that person will receive money from those underneath. However, the person who wants to be involved in this scheme will have to invest a sum of money before that person can make any money.

However, by the time the person invests his or her money in this scheme, as it turns out, the pyramid is mathematically set up in a way that the person usually loses the some of money invested. The only way that a person can be successful at this scheme is usually if that person is the one who started the scheme.

Pyramid schemes are illegal in many countries, and are often thought of as marketing scams. These are not to be confused with multi-level marketing programs which actually sell a legitimate product or service, and it isn’t to say that money cannot be made from this. However, the way the money is made in a pyramid scheme is often dishonest, and many people often get taken advantage of in this situation.

Internet pyramid schemes

Examples of Internet pyramid schemes include advertisements on how to make millions on the Internet in a day, and similar ads. Usually this is impossible to do unless that person has just about that must to invest. Even in this case, a person will not even most likely break even in a year’s time, let alone a day.

People need to be careful. Even though there are many legitimate products or services out there, it is wise to watch out. A person could end up being involved in a pyramid scheme and not even realize it before it is too late.