what is a pyramid scheme??

Answer 1

Generally it involves a person who enlists people to invest in something. Those people then get people below them to invest also and this continues and more and more layers of investors are added. The higher you are up the "pyramid" the more money you make. The more layers above you the less you make until the lowest layers make nothing.

Answer 2

There is so much ignorance out there on this subject, especially those who say MLM is part of a pyramid scheme. These people obviously know nothing about it and are answering your question based on medieval beliefs and what their friends have told them.
A pyramid scheme is when you are required to enroll people, you have no product or a superficial product to sell, and only the guys at the top make money. This has nothing to do with network marketing, this is usually a scheme cooked up by illegal frauds who will be shut down but make their money very quick.
As for a pyramid, if you want to get technical, every company runs a pyramid type structure. The CEO's and upper management make all the money, and they hire the people with less education than them to do the grunt work.
Have you ever seen a Wal-Mart employee who makes more than management? I haven't.
People confuse MLM and network marketing with a pyramid scheme, when all it is is a different way to market a product. Stores choose the high overhead to market with, including brick and mortar, advertising, employees, utilities, shipping etc. Each of those components get a cut in each product that is sold.
Network marketing chooses to have people in the field promote their product without all the overhead, so they are able to pay them their cut out of that. This is 100% legal. I would hardly think that these huge companies would be able to operate pyramid schemes illegally. It is merely a different way of marketing because they usually have an exclusive product that they don't want sitting on the shelves in the store. They want people who are trained to teach others about what their product can do for them.
It is actually an inverted pyramid, because there is room for everyone to earn income at the top, unlike conventional sales techniques.
So if someone offers to bring you into a company and doesn't have a consumable product but say some vague information booklet, then you know it is a scheme.
If the company is legitimate, and there are many out there, check with the BBB to see if they are in good standing.
People also say that if you have to put up any money to get in, then it is a scam.....Hogwash!
You are purchasing a business. Would these people expect to go out and buy a restaurant and not pay for it? Of course not. Any business is going to cost you money. But with legitimate companies your start-up cost should be less than $200 with the option to upgrade by purchasing more products that you would like to experience and sell.
Hope this answers your question.

Answer 3

A pyramid scheme is a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme, usually without any product or service being delivered. Pyramid schemes have existed for at least a century. In addition, other methods of conducting business known as multi-level marketing (MLM) and as "matrix schemes" often closely resemble pyramid schemes (although unlike pyramid schemes, which are almost always frauds, MLM and matrix schemes are in many cases regarded — at least legally — as legitimate business methods).

Most pyramid schemes are attempts to confuse potential consumers into complicated but convincingly fool-proof money making scams. The essential idea behind each scam is that the individual only makes one payment, but somehow they are promised to receive exponential benefits from other people as a reward. A common example might be that a victim is enticed with an offer that, for a fee, allows them to sell the same offer to other people. Each sale includes a fee to the original seller. Clearly, the fundamental flaw is that there is no end benefit; the money simply travels up the chain, and only the originator wins in swindling his followers. Furthermore, the people in the worst situation are the ones at the bottom of the pyramid: those who subscribed to the plan, but were not able to recruit any followers themselves. To embellish the act, most such scams will have fake referrals, testimonials, and information.

Although pyramid schemes have been declared illegal in many countries, they still persist in various forms

Answer 4

no capitalism is not a pyramid scheme it is a economic philosophy a pyramid scheme is a fraudulent plan to keep getting more and more people to invest to show a fake profit to only the original few. capitalism is a real working model that succeeds when applied correctly. the only similarity between capitalism and a pyramid is that the base is larger than the top so as to create a truley solid structure.

Answer 5

Pyramid or Multi-Level-Marketing schemes are illegal in many states, or come with severe restrictions.

Basically, it is this. The sponsor company gets you to market their product or service to others, and you get a commission. You are encouraged to get others to loop their friends etc. to form a chain. You get a percentage of sales not only from your own efforts, but each time people down your chain sell something, you get a commission. While there is nothing inharently illegal, the real issue is one of full disclosure and whether people down the chain are getting good value, because remember, everyone on top of them gets a cut, which has to be reflected in the price of the product or service.

This is different from a "referral fee" which is usually a flat fee for thanking the person who refers a lead. In MLM's, the chain is tied to each other for financial incentives, so there is a lot of greed involved in not breaking the chain and continuing it.

Answer 6

its one of the get rich schemes nd mostly it is a fraud, many people r lured to participate in such schemes by working online, from thier homes,

but hey,today there are many ways in which you can work from home and work online part/full time on your computer and earn extra money without being duped by frauds and scams–

Online data entry,
Medical/general transcription,
write articles,
Translation and proof reading,
sell on eBay,
make a website,
take surveys..

and much much more..and all of these options do not need any kind of investment ever!!!

There are international positions-ANYONE FROM ANYWHERE IN WORLD CAN DO MANY INVESTMENT FREE JOBS!

REMEMBER-ANY COMPANY THAT ASKS YOU TO PAY FOR A JOB IS A SCAM!

more details at-

http://www.pcworkathome.net

Answer 7

I think that's when you give $ to join and get $ for however many people you sign up. DON'T DO IT!! It is a scam. (Or at least every one I have ever heard of)

Answer 8

a quick way for you and your money to part ways....and they are illigal