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Welcome
to The Light Keeper.com
by Angella Kay,
The Light Keeper.com
What You Need to Know About Pyramid Schemes
Everyone hates scammers - especially those who have been scammed.
One of the most enduring scams is the Pyramid Scheme, also know
as the "Ponzi" scheme.
"Pyramids are illegal money-making ventures that focus
on the exchange of money and the continual recruitment of new
participants," says the Minnesota Attorney General's Office.
Pyramid schemes take many forms, including chain letters and
fake MLM setups. The typical setup for a pyramid scheme is to
start with a base level of members who pay to be part of the
scheme. These members, in turn, recruit others to pay the joining
fee to recruit still more members to join. The pyramid collapses
when there are no more recruits and the money has gone to the
top members of the pyramid - the originators.
The easiest way to distinguish a pyramid scheme from a legitimate
MLM organization is whether or not a product is being offered.
Legitimate MLM organizations sell products and services, not
just "memberships." Keep in mind, however, that some
pyramid schemes "create" products (such as cheesy,
off-market trinkets or "information pamphlets") in
an attempt to legitimize themselves.
The bottom line: be sure to thoroughly check out any organization
you are considering. Contact the Better Business Bureau and
the Attorney General's office for your state and the state where
the organization is based. If it sounds too good to be true,
or something seems fishy, follow your instincts.
A Public Service Message from the US Federal
Trade Commission:
Pyramids don't pay. The Light Keeper.com and the Federal Trade
Commission caution consumers about clubs or programs that promise
quick money for recruiting new members. Don't bank on the pyramid
promise that someone else will pay you.
Avoid the rubble of a fallen pyramid. The Light Keeper.com
and the Federal Trade Commission caution consumers about the
promise of easy money through a downline, matrix, or binary
pyramid plan. Don't bank on the promise that someone else will
pay you.
Don't let a downline bring you down. Pyramids are illegal.
The Light Keeper.com and the Federal Trade Commission caution
consumers not to fall for promises of quick money through new
member recruiting instead of real product sales.
For more information on get-rich-quick schemes, visit the FTC
at http://www.ftc.gov.
Some valuable links:
Definition of a Pyramid
Scheme - from the Skeptics Dictionary (also talks about
Ponzi schemes)
What's
Wrong with Chain Letter Pyramid Schemes? - Robert Teeter
explains
The
Low-down on Chain Letters - The US Federal Trade Commission
warns that Chain Letters are illegal.
Don't
Get Burned by a Pyramid Scheme - The US Federal Trade Commission
gives tips to avoid Pyramid Schemes. Also offers online complaint
form.
The
Bottom Line about Multi-Level Marketing - Another FTC publication,
giving tips on how to evaluate a potential scheme.
Angella Kay is the webmaster
at The Light Keeper.com, a website for at home parents. Sign up
today for The Light Keeper's Journal,
a free weekly newsletter highlighting at home parenting!
Copyright 2002
by Angella Kay.
Reproduction without permission prohibited.
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