Pyramid Schemes
Scams are happening all around us, and we often don’t even notice them. Pyramid schemes are very harmful towards investors, and are hard to watch out for unless you know exactly what they are, why they fail, the effect of the failure, common victims, how to avoid them, and how to prevent them from spreading. More individuals are hurt than are helped when dealing with these scams. Individuals should be more informed about pyramid schemes, because they can be easily disguised.
Participating in scams, will more than likely lead to a loss in money. “A pyramid scheme is a get-rich-quick business fraud that usually hurts investors in the end” (“Pyramid Schemes”). “Pyramid schemes need a constant supply of new participants in order to survive, so they must advertise broadly” (Hobson). These new participants only make money by recruiting more members to join (Coward). Without recruiters, this scheme would not exist. However, everyone on earth would have to be involved if a scheme consisted of ten layers of new recruiters. “The bottom layer of the human pyramid would have more than four and a half billion people, and it would have to be 60 feet high” (“What Is A Pyramid Scheme?”). Overall these schemes will lead to a bad solution, because there are not enough people on earth to fulfill a successful ending. “These schemes are much different than games of chance, like the lottery, because the leader is always the winner and a majority of the people below him always loses” (Danger Posed By Pyramid Schemes & Network Marketing Programs).
These loses are dealt with throughout the world, and the product-based and naked pyramid schemes are the two most commonly used to lead individuals to failure (Roos1). In a naked pyramid scheme no product is sold (Roos1). “A usual naked pyramid scheme would be structured as followed: one person recruits ten other people to participate in a “no-fail investment opportunity”, one hundred dollars is given to the recruiter by the ten
Participating in scams, will more than likely lead to a loss in money. “A pyramid scheme is a get-rich-quick business fraud that usually hurts investors in the end” (“Pyramid Schemes”). “Pyramid schemes need a constant supply of new participants in order to survive, so they must advertise broadly” (Hobson). These new participants only make money by recruiting more members to join (Coward). Without recruiters, this scheme would not exist. However, everyone on earth would have to be involved if a scheme consisted of ten layers of new recruiters. “The bottom layer of the human pyramid would have more than four and a half billion people, and it would have to be 60 feet high” (“What Is A Pyramid Scheme?”). Overall these schemes will lead to a bad solution, because there are not enough people on earth to fulfill a successful ending. “These schemes are much different than games of chance, like the lottery, because the leader is always the winner and a majority of the people below him always loses” (Danger Posed By Pyramid Schemes & Network Marketing Programs).
These loses are dealt with throughout the world, and the product-based and naked pyramid schemes are the two most commonly used to lead individuals to failure (Roos1). In a naked pyramid scheme no product is sold (Roos1). “A usual naked pyramid scheme would be structured as followed: one person recruits ten other people to participate in a “no-fail investment opportunity”, one hundred dollars is given to the recruiter by the ten