Pyramid or “MLM” Schemes
Pyramid
Schemes have been around for years, and can easily be confused with multi-level
marketing plans. A pyramid scheme promises profits mainly from recruiting new
members and sharing in their investment. They recruit others, and on it goes.
Soon enough, the pyramid will collapse, everyone looses, except the person at
the top.
These schemes
are illegal although that will not help you to get your money back.....
Some of these
schemes will appear as if they are genuine multi-level marketing plans. In these
instances, the scammer will force distributors to purchase more supplies of a
product than they could ever sell, or your money is made from product sales to
other distributors, rather than actual consumers.
Prevention
Know that all
pyramid schemes are destined to collapse. This is because it is impossible to
continue recruiting people who will pay to participate.
Be aware of
big earnings claims. These schemes claim that you will earn a lot of money
quickly.
Always
research any multi-level marketing plans rigorously. Illegal schemes will go to
a lot of effort to show you how you can make fast cash. Be aware of their
tactics, and always check with your local Trading Standards Office to see if the
particular plan you are considering is legitimate.
If you do
participate in a multi-level marketing plan, do not purchase more supplies than
you can reasonably sell - be aware however that ultimately you stand to lose
money.
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