The Real Definition of a Pyramid Scheme

Pyramid schemes have been around since the dark ages of the early internet. They were once considered to be very lucrative “get rich quick” schemes. Nowadays, they are mostly considered disgusting scams designed to take advantage of innocent people. It is effortless to fall into a pyramid scheme. Just because it is easy to do does not mean it is right or fair.

pyramid scheme

Pyramid schemes are multilevel marketing schemes in which you, the distributor, are recruited by you and rewarded based on your efforts to recruit more distributors. A pyramid scheme is essentially a business strategy that recruits members through a guarantee of sales or payments to enroll other members into the plan and not provide goods or services to the members. Typical multilevel marketing schemes require the purchase of the product at start-up costs, a sales commitment from distributors, and a high compensation rate for top distributors.

A new online program, skincare, is being marketed as a money-making opportunity. Skin manufactures and distributes a variety of skincare products such as cleansers, toners, and makeup. They are planning on expanding their product line with new products soon. But, in November, they received a cease and desist order from the United States attorney general. This company and others like it are involved in an illegal pyramid scheme.

The skin was started just over three years ago as an internet marketing scam. Investors in the company signed up without properly educating themselves about the product, and as a result, they have now lost a great deal of money. Because the distributors did not receive the proper training, many of them soon found themselves relying on the investors to provide them with additional funding and to cover up any other failures that may have occurred.

As a result of this alarming trend, the United States attorney general has filed lawsuits against several companies involved in the Skin program. Although the company has paid its investors, it must pay the government back for the extensive amount of debt that it has accrued. The lawsuit claims that the promoters of the Skin scam encouraged investors to invest money based on statements made on the company’s website that promoted the opportunity to make large profits by promoting other investors’ products. In some cases, the product promoters actually received kickbacks from other investors for investing money into these products.

Pyramid schemes work because one person recruits another to join his or her scheme. The recruiter promises potential recruits that income is possible based on the success that another person has had in joining the scheme. As recruits are recruited, the profits of the investors can continue to be made. This means that pyramid schemes have unlimited profit potential, and that is why they are illegal. To learn more, go to

The two types of illegal pyramid schemes that are most common are those that recruit people to actively recruit other investors and those that encourage people to recruit other investors without the knowledge of these investors. In both of these situations, the investors will be brought into contact with one another on the Internet. For pyramid promoters to escape detection from law enforcement agencies, these scams typically operate through online intermediaries. For investors to successfully detect pyramid schemes, they should use common sense and investigate any company they consider investing money in.

To avoid becoming a victim of an illegal pyramid scheme, individuals must research the company before sending money to its website. If an investor is given a specific amount of information about how much profit they can expect to make and tells the potential recruiters that they can expect similar results, they are being misled. Another problem that people experience when investing is that they give money to promoters who tell them that the returns will be less than they would get if they invested in the company themselves. This type of deception is illegal and could face serious financial penalties.