What's a pyramid scheme?
Answer:
A big rip off
http://en.wikipedia.org/wiki/pyramid_sch.
this will tell you everything.. basically the person at the top gets richer.. the bottom keeps growing etc..
Arab camel scheme
a housing estate in egypt
It's a system where someone gets $10 by 10 people each paying $1, and they in turn each get $10 by getting $1 from 100 people, and they each get $10 by getting $1 from 1000 people.What happens is that very few people make money, and a whole lot of people lose some money.
its a rip off scheme.dont get involve, only them at the bottom get any money.LEAVE WELL ALONE!
in theory they are buying something, but most of the time they are just putting their money in. if you can get people to keep putting in behind you then you make money. but eventually you run out of people to put in money. if you are at the end of the line then you lost your money.
http://en.wikipedia.org/wiki/pyramid_sch.
read all about it here.
It can have many forms,
basically, the person 'lower' in the pyramid' pays money to those higher up. This person gets their income from recruiting people to form a lower level of the pyramid.
the 'product' could be insurance, household goods, services - in fact anything...that is one reason why these pyramid schemes are so pervasive
totally illegal is all you need to know...steer clear you could lose a lot of money getting involved with a pyramid scheme.
You're in a pyramid scheme if you buy herbal Viagra off an online pharmacy.
A rip off from what i've heard.
Oh they had this one going on at my work. It was supposed to be for women only. It was called the birthday club. They had little hearts and wrote peoples names in there. It was in the shape of a pryramid. People would wrap up $1,000.00 cash into presents that were only that cash. When a line filled up some people above would be paid out. It is of mathmatecial signifigance that it cannot work out because too many people will get into it and the end people will get no money. It is also a felony to be involved. The reason people get into them is because they pay off promises to be 5,000 for every person that gives 1,000 but by that you have to keep recruiting more and more people and eventually you run out of people because it is a mathmathical exponential thing beacuse for every person you need five more people and then 5 for those 5 and it goes on and on.
Other pyramids are sales pryramids where things are so expensive to sell because they have to pay many people above you. The examples are Niken magenets, Melaleuka tea tree oil, and the most famous of them all the high pressure amway.
The money ones I mentioned above are the illegal ones that burn people. The ones that happened at my work caused people to get threatened to have dammage done to their cars and selves they could have all gotten fired too. It is illegal.
the key to wisdom is understanding,there are scams and discussed in some of these answers,but there is also some very legitimate business opportunities that have made more millionaires than Microsoft. Don't believe those that have never been in a multi level marketing business.Sure the name of the game is to share the opportunity with others.But good companys don't need to be disgrace by people who do not know.
A pyramid scheme is a kind of fraud where the number of investors, and their generations, looks like kind of a pyramid. (It is closely related to a thing called a Ponzi scheme, but is much less stable. Also, Ponzi schemes usually involve investing, while pyramid schemes involve selling products.) There is a person or small group of people at the top who are making bank, and each level under them gets bigger and bigger and bigger.
Here's an example. I make up a super duper recipe for Bronwen's Guaranteed Libido Enhancer, which is guaranteed to fix anyone's flagging love life. It sells for $100 a bottle. I convince 5 people to become distributors of my product, and all they have to do to make money is sell my product to others, kick back 10% of their profits to me, and MOST IMPORTANT, find 5 people to work under them. Then there is the small amount of money they have to pay to buy the rights to distribute--say, $1000. Hey, it's a great product! It's going to just fly off your shelves! People will be banging down your door to pay you $1000 to become distributors, and you will get to keep 10% of whatever they sell, plus 90% of your own sales! So my original 5 people, who are the first generation, go out and each one finds 5 people to work under them, with the same stipulation. Now, there are 25 people selling my product, and they are the second generation. They are kicking 10% of their profits back to their suppliers, who are the first generation, and that first generation is kicking back 10% of their profits to me. And those profits include not only the money they make on sales, but the money they give to be distributors. At each new generation, the distributors find 5 people to work for them, kick back 10% of profits, and find new distributors who will pay $1000 for the right to be involved in a pyramid scheme. The number of sellers increases exponentially. In the first generation there are 5 sellers, in the second there are 25, and in the third, there are 625, and so on. By the fifth generation, there are 3125 sellers out there, and everyone above them is getting some of the profits and some of the money from people buying into the scheme, but the thing that keeps them going is that they will make a bigger share of the money if they get more people buying in and selling under them.
Here's what the money looks like: for every $100 bottle that the first generation sells, I make 10%, or $10, and that's on top of the $5000 I have already convinced them to pay for their distribution rights. For every bottle the second generation sells, they are kicking back $10 to the first generation, and I am getting $1 of it, plus each of them paid $1000 to get in on this great deal, and I am getting 10% of that, or $100. At the fifth generation, I am making less than one cent on each sale, but there are so many people below me, the money is still rolling in, plus I am making money like a fool on the distributor's fees for joining the program. I make at least some money on every single bottle of that crap that sells, and I make some money for every single person who spends $1000 for the right to distribute my product. And the money is good for the first few generations of distributors, too.
The problem comes in that the profits are made off BRINGING IN NEW DISTRIBUTORS, not in selling the actual product. Each generation makes good money for a while, but the number of distributors has to increase exponentially, as I said before, for the money to keep rolling in. No sales company can support that kind of growth and survive, so the whole thing collapses. Usually the people at the lower generations are left holding a bunch of product they cannot sell, no one wants the product, which everyone knows by now is crap, and they haven't even made back their initial $1000 investment that allowed them to be a distributor. Meanwhile, I have split to the Caymans with my millions of dollars, leaving federal prosecutors and a bunch of really angry distributors gunning for me.
It's fraud because instead of focusing on actually selling the products, and making money that way, I am convincing people that the way they are really going to make money is by bringing in people under them. Yes, there is a product changing hands, and yes, there is money being made, but the real money is coming from bringing in new sellers who are paying to become distributors, not from actually selling stuff.
There are legitimate companies that look like pyramids but which are not. For instance, some companies allow you to recruit other sellers who come in below you, and you make a tiny share of whatever profits they make. However, the money that's coming in is not coming in from fees from new sellers, it's coming in from the sales of actual products. And a lot of those companies also offer you the option, if you want to distribute their merchandise, of dealing directly with the company, so there is no one above you.
Pyramid schemes are a real problem, and they are very hard to explain, which is probably why so many people get involved in them. I know I didn't do a very good job, but I hope that helps you understand at least a little bit.
Various schemes exist. But one common one is you sell things but then also recruit others to sell and you get your commission plus the commission of those you recruit and so on.
There is usually no product involved whatsoever. Money exchanges hands between the lower levels and the upper levels. There is no equal opportunity for advancement at each of the different levels. You cannot advance unless someone in the upper level gets a pay-out (gets bumped out of the pyramid).The sole money making activity is in the recruitment of individuals. Pyramids are illegal. Check the FTC website or the States' Attorney General's website for fraud alerts/scams.
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