Pyramid Schemes

A pyramid scheme is an illegal form of business relying on other people recruiting new members. A pyramid scheme works in an odd way compared to a regular company. The scheme starts with the owner recruiting a number of people for money. Let's say that the owner recruits new members who may him/her 500 $. Those two other people recruit two more members siphoning the money upwards to their boss. This will lead to exponential growth leading to thousands of people without jobs or money. The only person who benefits from a pyramid scheme is the owner who does nothing and keeps on getting money until the whole scheme falls down.

How does a pyramid scheme fall?

A pyramid scheme falls when new members cannot recruit more people because everyone is either not gullible or vulnerable to fall for a pyramid scheme or other people has preexisting jobs. When this happens the main investor/s and owner/s leave before the company gets into trouble. They usually deny  the fact that they were member/s or owner/s

How to detect a pyramid scheme?

To detect a pyramid scheme some simple steps will be able to help you :

1. No legitimate company should ask you to pay membership fees or 'so-called investment' to be a part of it.

2. Usually, members are not aware of what the company really does, they would probably say the definitions there bosses have told them would constantly repeat what they were saying

3. Identify the profit and demand of the company before anything.

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