25 ways to identify a pyramid schemetony tony https://secure.gravatar.com/avatar/aa9bbdf8f1e6bbf534778ecea7c0c925?s=96&d=mm&r=g
25 ways to identify a pyramid scheme
Pyramid scheme have been on the rise in the recent past and many are still falling prey to the antics being used by the con artists. The real goal of a pyramid scheme is often to attract new players into the setup and make them provide that investment that will pay the individuals at the top of the pyramid. The schemes are illegal setups that only deplete the savings and investments that people make over time. Identifying a pyramid scheme is easy and here are 25 ways:
Big upfront investments
Any establishment asking for big upfront investments with huge abnormal promises of huge returns is probably a pyramid scheme targeting the cash input.
Selling to other members and not consumers
Pyramid schemes are structured to be systems where one sells an idea to other members below them in the pecking order and not the consumer.
Joining for exorbitant fees
Companies that demand huge fees for one to join and be a part of their team is most probably a pyramid scheme since all the company is targeting is the financial windfall.
Doubling or tripling investment
The idea of doubling or tripling investment within a short period of time is preposterous and any company peddling that promise should be counted as a pyramid scheme.
Making money by persuading others to join
Companies with a business model dictating that the only way to make money is through persuading others to join should be avoided as it is a pyramid scheme in disguise.
Tax free investments
A tax-free way to make money is always a lure that pyramid schemes use to get access to the hard-earned savings of unsuspecting individuals.
No returns until steps are made up the tier
Most pyramid schemes structure their operations to restrict individuals from getting any returns until they move up the tier which is a tactic that encourages further recruitment by an individual.
Companies with high pressure sales tactics
A company that pitches aggressively with a high pressure to invest is mainly a pyramid scheme looking to get access to finances without an individual questioning or analyzing what is on offer.
High abnormal interests on investments
The most pronounced tactic pyramid schemes use is the promise of high and abnormal interests on investments made by the new members which is what encourages high stake investments.
Emphasis placed on recruitment and not products
Companies lacking products and focusing more on recruitment drives where all a members is asked to do is recruit other individuals should pass as a pyramid scheme out to increase their numbers for a potential con.
Commission depending on depth of recruit investment
When faced with a model of earning that is based on the depth of investment made by a new member recruited to the team, the system is a pyramid scheme encouraging one to target high value investments.
Sales pitch on offshore investments
What a pyramid scheme does is entice new members with a pitch on how offshore investments are worthwhile and high yielding only for the investment to disappear after being made.
Products offered have little to no value for consumers
Companies that have products with little to no value to a consumer should be considered as pyramid schemes since the only way the company is making money is through the money conned from members.
Difficulty in withdrawing proceeds
Pyramid schemes always make it hard for a member to withdraw proceeds instead asking for a reinvestment to increase stake for huge returns which are never realized.
Claims of financial instruments not available to public
Pyramid schemes disguising themselves as investment companies often claim to have financial instruments that are not available to the public which they allegedly use to analyze and make sound investments.
No financial statements from the source
Pyramid schemes usually have the top brass which does not deal with members which means that no financial statements are received from the source. Communication is always through advisors.
Promise of a luxurious life
The factor that pyramid schemes use to attract unsuspecting individuals is the promise of a luxurious life with top of the range vehicles and high-end holiday destinations.
Be a millionaire in 6 months
One of the preposterous claims that pyramid schemes make is that one can become a millionaire in 6 months with rapid recruitment. The company peddles the idea that it has made millionaires within lesser time frames.
Unsolicited emails and calls with questionable business opportunities
Pyramid schemes usually use a simple approach of inviting curiosity by offering business opportunities through unsolicited emails and calls.
Recruitment, recruitment and more recruitment
Companies with a goal of coning people off their hard-earned money always preach recruitment and encourage a person to have plenty of branched connections.
Claims of secret trading models
Most pyramid schemes are characterized as winning over people with claims of secret trading models that have risk-free returns.
Offers of alternatives to hard work
A pyramid scheme will always offer an alternative to the regular system of working for money with a promise of passive income.
Bulk stock at shell companies
When offered bulk stock at companies that exist overseas, individuals must be careful as this is how pyramid schemes target the investment.
Purchasing points to rise ranks
Companies that ask members to buy points to rise ranks or get financial bonuses are pyramid schemes.
Offers from unregistered companies
Pyramid schemes disguised as companies are usually not registered in the national database.