“Want your money to get doubled in just one night? All you have to do is join our organization and ask 2 other people to join too and voila!”. You should never trust such claims because they are nothing but false. Such claims are disguised forms of either a Pyramid scheme.
So, what is a Pyramid scheme? It’s a scam (okay, but that’s not enough for me to understand). In this type of business model profit is made by employing people than selling products. The person at the top, say A, asks another person, say B, to join his organization. In order to become the member, B has to pay, say $10. After B becomes the member of the organization, A says: “If you bring five more people who are ready to join this organization, I will give you $15”. (Now who doesn’t like to make profit) B accepts A’s offer and manages to bring 5 more people and these 5 people become the member of the organization. Now B asks these 5 people to recruit 5 people each and the chain continues. But there are limited number of people on earth and after few chains there will be nobody left on this entire planet, who will not be the part of this organization (in real life such schemes never reach till this point as they are identified). The fee which the people pay to join the organization IS the income of the owners at the top.
To hide the fact that an organization is in fact a pyramid scheme it is disguised. The organization will persuade the members to buy cheap quality products at very high prices and then, the members are supposed to sell those products at further higher prices to make profit. When the member tries to sell these products, nobody is ready is to buy them and the members fail to make profit and are left with the baggage of the inventory. The members try to make profit in another way, that is by recruiting people, and if they are not able to recruit others, they lose all the money which they have invested in the organization.
So, the question now is how to spot such schemes. The following are the features of a pyramid scheme
1. Focus on recruitment than selling.
2. Promise of doubling your money within a short period of time.
3. No other way of selling their products than distributors.
Few people on top make huge profits from such schemes but most of the people who are trapped in such schemes, end up being worse than before.
