Pyramid Scheme
| A pyramid scheme is a type of scam that employs a top-down hierarchical structure in order to defraud people. In a typical pyramid scheme, a small group of people are recruited to invest money in a new business venture. These people are then responsible for recruiting additional investors, who in turn recruit more investors, and so on. The scheme relies on continuous recruitment of new investors in order to keep the pyramid going. The problem with pyramid schemes is that there is no real underlying business venture. The money that is invested by each new investor is simply used to pay off the earlier investors. Eventually, the pyramid collapses when there are not enough new investors to keep it going. This can leave the people at the bottom of the pyramid with substantial losses. Pyramid schemes are illegal in many countries because they are inherently fraudulent. If you are thinking about investing in a new business venture, be sure to do your research to make sure it is not a pyramid scheme. |
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