How to Spot a Pyramid Scheme

Pyramid schemes are fraudulent business models that rely on recruiting new members rather than selling products or services.

Here are some of the characteristics of pyramid schemes:

• Participants make money by recruiting new members, not by selling products or services.
• The compensation plan rewards recruitment more than retail sales.
• There is no real product or service being sold.
• The only way to make a profit is to recruit more people into the scheme.

If you are considering participating in a multi-level marketing (MLM) program, be sure to do your research and make sure that it is not a pyramid scheme.

Here are some tips for spotting a pyramid scheme:

• The company requires you to purchase expensive products or marketing materials.
• The company promises you that you can make a lot of money quickly and easily.
• The company’s website or marketing materials are vague about the products or services being offered.
• The company’s compensation plan is complex and difficult to understand.

If you are unsure whether or not a program is a pyramid scheme, you can contact the Federal Trade Commission (FTC) for more information.