Pyramid Schemes

Pyramid schemes con participants to pay money in what are suppposed to be money making ventures. There are generally no services or products being sold by the participants of this scam. The only revenue stream for the scheme comes from recruiting more members of soliciting more money from current members.

The people who start the scheme are at the top of the pyramid and they will take most of the money out of the scheme. There is no guarantee that you will get any money out of the scheme. Pyramid schemes collapse because they become unsustainable. Eventually, there is not enough money coming into the scheme to pay everyone and those lower on pyramid lose everything.

Ponzi Schemes

Ponzi schemes are similar in operation to a pyramid scheme. Ponzi schemes are fraudulent investment schemes that entice honest investors to invest with the promise of higher returns is the norm.

Early investors are paid their returns through the proceeds of investments by later investors. The person running the scheme will take money from one investor to pay original investors and themselves a return. Where possible the person running the scheme will also try to get participants to reinvest their returns to keep the scheme viable.

Many pyramid and ponzi schemes are presented to people by friends or people that they know. They may or may not know that the scheme that they are promoting is a fraudulent enterprise.

Protect Yourself.

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