One of the types of scams around on the internet is the pyramid scheme. Let’s discuss what a pyramid scheme is, how to spot one, and the difference between scams and legitimate multilevel marketing.
What is a pyramid scheme?
A pyramid scheme may sound like a good investment in the short term but over the long term you can lose hundreds if not thousands of dollars. Pyramid schemes focus on the con artist earning income in exchange for your set amount of money. A brief explanation is summarized here.
- A con artist recruits investors to invest in his scam.
- The con artist informs the investor that they will be paid as soon as they recruit a new investor.
- Each person who joins in the pyramid scheme sends money to their recruiter, or the person who recruited their recruiter.
- Only individuals at the very top of the pyramid, or the con artist himself, earn any income from a pyramid scheme. If no tangible products or goods exist, then it is obviously a pyramid scheme.
What is legitimate multilevel marketing?
Legitimate multilevel marketing does exist, but you have to know what to look for. The key to identifying genuine multilevel marketing business is to ask yourself what it is they sell and what profit margins can you expect to see. If the business is elusive about specific profit margins on their products or if they simply advertise the scheme rather than product, then chances are it is a pyramid scheme.
Still not sure?
If you are interested in a particular money making scheme but are not sure whether it’s genuine or not, call Melbourne Investigations. We can help you identify whether an opportunity is actually a pyramid scheme. Our private eyes are trained to pick out scams and con artists, so if you are curious about a certain marketing opportunity get in touch with us.