What’s The Truth? Pyramid Schemes and MLMs - Part 1

What is a pyramid scheme? Ever wondered, at some point in your life, a friend or a colleague or a relative lured you that you can earn an up to unbelievable amount of money by doing minimal to no work, or they tried to sell you a product which you have neither seen on store shelves nor heard about, but your connection is going crazy on the characteristics and specifications of the said product. It feels way real to be true, but in spite of what our logical minds may suggest, we latch onto our inbuilt greed and either buy those products or follow the friend’s paths. Today we are going to see, what’s the truth of these so called is and how to be safe from them.

One of the most common schemes on the market is known as Pyramid Schemes. How does it work? A person would generally be asked by their friends or relatives to invest in a so-called “business” to get heavy returns and benefits. You are generally being brainwashed into these type of hare-brained schemes where if you invest a certain amount of money, usually a minimum six-figure amount, you will slowly gain the confidence and trust of it being a genuine business, since they promise you high returns and other benefits plus they educated you into the greed of having multi-million dollar houses as well as premium luxury cars in just one year as soon as you start investing. Once you agree to this, they will set you up to meet their seniors who will explain this to you, but since this is easy money, the greed in your mind, the gleaming light in your eyes overwhelms you from reality and you tend to accept this. To which, they will ask you to attend this conference at an auditorium where some personality will arrive with bodyguards showing how they became successful in what they do, how they do. Since earning money is tough, and logic is left behind, you join the company and invest all your life savings. They promise you that you will earn when you recruit others in your vicinity, for every member you recruit, you earn a commission, and slowly and steadily they influence you up to the level where every ounce of reality feels wrong to one’s self.

But here comes the bad news, pyramid schemes are illegal to operate in almost every country because of the modus operandi. The promises slowly turn out to be false and you fall into the darkness of the realm as you realize you spent all your life’s savings on something you do not understand and as you realize you are in a deep quagmire, your seniors and their bosses have earned a fortune from you. In hindsight, the probability of these businesses getting caught by the law is pretty low since they use loopholes in the system and it takes years of hard work to crack such companies. However, justice does prevail and in 2019, the owners of a pyramid scheme Ebiz were arrested by the judiciary for frauds of Rs. 5000 Crore.

Is there a way to spot a pyramid scheme? There is but you need to be vigilant when you come across such schemes. When something sounds too good to be true, stay far as it is most likely a scam. Next way is when someone keeps saying the line “Apply now or lose a once-in-a-lifetime opportunity”, better lose it or else, you are going to lose your money and time. One major red flag of identifying a pyramid scheme is when they ask you to invest money in the business and recruit more people and ask them to do so, this starts the exponential recruitment of people and they get back way less than they invested. So in essence, being aware is a helpful aid against losing to those who commit fraud and you can be safe from pyramid schemes such as these.

Fin.

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