How To Spot A Pyramid Scheme | A Great Example

With so many online scams going around, it can be quite tricky to find genuine offers, so who can you really trust? All this talk of making lots of money and living your dreams can make you feel excited and hopeful but this is just mostly crafty talk and all they are interested in is your hard-earned money. So to help you out, I have found this great example for you to read and to show you how to spot a pyramid scheme…Enjoy.

how to spot a pyramid scheme

In the year 2004, Benson K. Boreyko, Karen Boreyko, and Lauren Boreyko started a new company called Vemma Nutrition By offering a life-changing opportunity To earn a full-time income for a part-time job. It was an offer of what was available to all, Regardless of previous experience or education. There were only two steps to start earning: Buy a $ 500-600 package of their Liquid Nutrition products, Recruit two more members to do the same. Vemma Nutrition has grown rapidly, To become a global company It brought in 30,000 new members per month at its peak. There was only one problem – While the company generated $ 200 million in annual revenue by 2013, The vast majority of respondents got less than they paid for.

Why Was Vemma Nutrition Shut Down?

In 2015 Vemma Nutrition was eventually accused of running the pyramid scheme: A common type of fraud Where members earn money By recruiting more people to buy shares in it. Usually, a founder seduces an initial group of people To buy stocks and promote the scheme. Then they are encouraged to recruit others And he promised them a portion of the money these people invested, While the founder also takes a stake. The pattern is repeated for each group of new participants. And the money for the newcomers is transferred to those who recruit them. This differs from a Ponzi scheme, Where founders recruit new members Secretly use their fees to pay existing members, Those who believe that the payments come from legal investment. And as the pyramid scheme grows, It becomes increasingly difficult for new recruits to make money. This is because the number of participants is expanding tremendously. Take a hull where each person must recruit six others to earn a profit. The founder recruits six people to get started, And each one recruits six others. There are a total of 36 people in that second round of recruits, And who in turn recruit six people – A total of 216 new recruits.

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By the twelfth round of conscription, 2.1 billion new members will have to recruit Over 13 billion more people to earn money- More than the entire world population. In this scenario, the Latest recruits, More than 80% of the participants in the scheme, lose all the money they paid. And in real life, many of those who enrolled previously lose as well. Pyramid schemes are illegal in most states, But it can be difficult to spot. It is served in various ways, including gift sets, Investment clubs, and multi-level marketing companies. The difference between hierarchical charts and multi-level legitimate marketing can be particularly hazy. In theory, the difference is that members of multi-level marketing companies compensate in the first place from the sale of a specific product or service For retail clients, While the pyramid schemes primarily compensate their members by recruiting them to new vendors.

But in practice, Many multi-level marketing companies succeed in everything however It is impossible for members to make a full profit through sales. And many pyramid schemes such as Vemma Nutrition, Disguises themselves as legal multi-level marketing companies By using a product or service to mask the wage and employment structure. Many hierarchical schemes also benefit from the trust found within churches. And immigrant societies, or other tightly-knit groups. First members are encouraged to share a good experience Before they really start making a profit. Others follow suit, And the charts are getting bigger Before it turns out most members aren’t actually turning a profit.

Image by mohamed Hassan from Pixabay

Often times, the victims resort to silence out of embarrassment. Pyramid schemes entice people by promising opportunity and empowerment. So when members don’t ultimately make money, They can blame themselves instead of the scheme. And they think they weren’t putting in enough effort to earn the promised returns. Some victims keep trying And investing in multiple schemes, And they lose money every time. Despite all these factors, There are ways to discover a pyramid scheme. Time pressure one of the red flags. Be wary of “Act now or miss an opportunity in a lifetime.” Big promises of life-changing amounts of income also raise suspicion. Finally, business marketing firms are multi-level legal You should not require members to pay for an opportunity to sell a product or service. Pyramid diagrams can be incredibly damaging to individuals. And for societies and even entire countries.

I know that it can be easy to be sucked into a pyramid scheme, especially when you read about all the promises of wealth, but these are crafty sales talks and most people will be excited to read these words, but please don’t let it fool you.

How To Avoid Pyramid Schemes

If you are serious about making money online, then the best way to avoid pyramid schemes is actually starting your own online business and forget schemes like MLM as most MLM’s are pyramid schemes in disguise.

It’s easy to start your own online business, all you need is a website, training, a bit of knowledge about a certain subject (ie a product or service) then you can start to make an honest income for life and you can avoid all these corrupt pyramid schemes.

Click here to read about my #1 recommendation for becoming a success online and please try to avoid all of those “get rich quick” schemes.

Have you ever been affected by MLM’s or Pyramid Schemes? If you have, then please leave a comment down below, which we can share with other readers, and by doing so, we can help others avoid these nasty schemes.

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