Pyramid scheme

A pyramid scheme is a business model which earns primarily by enrolling others into the scheme, however rather than earning income (or providing returns-on-investments) by sale of legitimate products to an end consumer, it mainly earns by recruiting new members with the promise of payments (or services).^[1]^[2] As recruiting multiplies, the process quickly becomes increasingly difficult until it is impossible, and most members are unable to profit; as such, pyramid schemes are unsustainable and often illegal.

Pyramid schemes have existed since at least the mid-to-late 19th century in different guises. Some multi-level marketing plans have been classified as pyramid schemes.^[3]

^ pyramid scheme at the Encyclopædia Britannica
^ Website admin. (2024). "Multi-Level Marketing vs Pyramid Schemes". Consumer Protection. consumer.sd.gov. Office of the Attorney General of South Dakota. Retrieved February 18, 2024. The difference between a pyramid scheme and a lawful MLM program is that there is no real product that is sold in a pyramid scheme. Participants attempt to make money solely by recruiting new participants into the program. The hallmark of these schemes is the promise of sky-high returns in a short period of time for doing nothing other than handing over your money and getting others to do the same.
^ Cite error: The named reference Smith1984 was invoked but never defined (see the help page).

[1] yramid scheme at the Encyclopædia Britannica

[2] Website admin. (2024). "Multi-Level Marketing vs Pyramid Schemes". Consumer Protection. consumer.sd.gov. Office of the Attorney General of South Dakota. Retrieved February 18, 2024. The difference between a pyramid scheme and a lawful MLM program is that there is no real product that is sold in a pyramid scheme. Participants attempt to make money solely by recruiting new participants into the program. The hallmark of these schemes is the promise of sky-high returns in a short period of time for doing nothing other than handing over your money and getting others to do the same.

[Smith1984-3] Cite error: The named reference Smith1984 was invoked but never defined (see the help page).

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