Is That Internet Business A Pyramid Scheme? Here's How To Tell


 Is That Internet Business A Pyramid Scheme?  Here's How To Tell

Pyramid schemes can be fun when they're done right, but according to the FTC, pyramid schemes aren't just for little kids anymore. There's a huge market for selling products and services online today — especially products that require ongoing and frequent purchases to keep them functional or profitable.

We examine some of the hallmarks of pyramid schemes so you can be on guard for them with your business!

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Pyramid schemes are tricky business. They're illegal in most countries, but it's not always clear if a certain company is one until it's too late- at which point you'll likely find yourself out both your money and your time.

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There are some common characteristics which many follow. Here is a warning list for you to consider when starting or investing in an internet business. All of these things are hallmark traits of pyramid schemes, but that doesn't mean they all exist in every company- so there's no reason to be paranoid about every company you come across. 
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Here's a bit of image to add to the article: 
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Multilevel marketing companies (MLM) exist all over the world and are typically advertised as a means of making money in a short time, but without the effort and risk that comes with working for money. The truth is that it can be hard work at times, but this isn't necessarily always reflected in the compensation you earn. It is often said that an MLM company can make you money two ways: through the direct sale of product to end users (either to consumers or distributors), or by having distributors who express interest in making sales and recruiting new distributors.

Pyramid schemes are illegal under federal law, but that doesn't stop them from existing. The Federal Trade Commission states that pyramid schemes "promise consumers or investors large profits based primarily on recruiting others to join their program, not based on profits derived from any real investment or real sale of goods to the public."

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Pyramid schemes also often require a large amount of startup money up front in order to "buy-in" and start earning money. It's common for new distributors to be asked to pay a registration fee of $100 or more. The FTC states that this fee is often collected by the company in violation of its own rules, and can be used to recruit more individuals to join the scheme.

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Inexperienced sellers are often attracted to these programs because they earn money from every sales made by others, even if they're not receiving the full earnings themselves. They also typically must invest a considerable amount of money in order to sell their own products. This is done because companies don't make their money from paid sales, but rather by recruiting others into their scheme. The more people you have in your "downline" who are dedicated to selling products, the more product you work to sell yourself.

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There are some telltale signs of pyramid schemes out there, and if you're looking to start an internet business, you need to know them before you get started. If a company is asking for a large amount of money upfront, they could be a pyramid scheme. If they're not making most of their money from sales of actual products and services but rather from recruiting new distributors through "pay-to-play" fees and other recruiting efforts, it could also be a pyramid scheme. Remember, if a company is making money from direct sales to customers, they shouldn't ask for startup fees. If they are, it's likely a pyramid scheme.

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Another common characteristic of pyramid schemes is the fact that you will have to recruit others in order to start earning a profit for yourself. This is done by incentivizing new signups with huge bonuses of product or cash at first, which then winds down significantly over time. The reason these incentives are offered is because the goal of any pyramid scheme is to sell your position in the hierarchy to new recruits before you're stuck with a ton of useless product and no means of selling it off.

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If a company is asking you for a lot of money upfront, and if they aren't making a profit from direct sales to customers, it's probably a scam. If they insist that you choose between "the business opportunity" or buying them something, particularly expensive items such as cars or vacation homes, then it's likely a pyramid scheme.

Ninth Paragraph: Here is the link to the Internet Crime Complaint Center:

Tenth Paragraph: Find out more about the FTC Anti-Pyramid Scheme Complaints. 
Eleventh Paragraph: Here is a page on Federal Trade Commission (FTC) pyramid scheme complaints. 
Twelfth Paragraph: Here's a list of FTC Complaints and Success Stories. 
Thirteenth Paragraph: Here's an FTC page that outlines some of the pyramid scheme rules on the books in addition to what can be done if you feel you've been a victim of one. 
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Pyramid schemes can be very tricky, but they are also illegal in most countries. If you feel that you have been a victim of one, talk to a lawyer about your options!
Fifteenth Paragraph: Here is another page on how to report pyramid schemes. 
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Here is an article about Fictitious Business Names (FBN), and how to avoid falling for a pyramid scheme with them. There are many different types of business names that are used for pyramids- check out the list on the bottom of the page.

Conclusion: This article provides you with the basic knowledge about pyramid schemes, based on the information mentioned in WIKIPEDIA. It also covers some products and services that are a part of the pyramid scheme industry. 


Naharat is a very nice guy who was born in London. He can be found selling digital goods on Amazon, for example:

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