How to spot a pyramid scheme – Stacie Bosley

Translator: Nada Qanbar Auditor: Muhammad Ramadan In the year 2004, I started a new company called Vima Nutrition By offering a life-changing opportunity To earn a full-time income for a part-time job. It was an offer of what was available to all, Regardless of previous experience or education. There were only two steps to start earning: Buy a $ 500-600 package of their Liquid Nutrition products, Recruit two more members to do the same. Vima Nutrition has grown rapidly, To become a global company It brought in 30,000 new members per month at its peak. There was only one problem – While the company generated $ 200 million in annual revenue by 2013, The vast majority of respondents got less than they paid for. She was eventually accused of running the pyramid scheme: A common type of fraud Where members earn money By recruiting more people to buy shares in it.

Usually, a founder seduces an initial group of people To buy stocks and promote the scheme. Then they are encouraged to recruit others And he promised them part of the money these people invested, While the founder also takes a stake. The pattern is repeated for each group of new participants. And the money for the newcomers is transferred to those who recruit them. This differs from a Ponzi scheme, Where founders recruit new members Secretly use their fees to pay existing members, Those who believe that the payments come from legal investment. And as the pyramid scheme grows, It becomes increasingly difficult for new recruits to make money. This is because the number of participants is expanding tremendously. Take a hull where each person must recruit six others to earn a profit. The founder recruits six people to get started, And each one recruits six others. There are a total of 36 people in that second round of recruits, Who in turn recruit six people – A total of 216 new recruits.

By the twelfth round of conscription, 2.1 billion new members will have to recruit Over 13 billion additional people to earn money- More than the entire world population. In this scenario, Latest recruits, More than 80% of the participants in the scheme, They lose all the money they paid. And in real life, Many of those who enrolled previously lose as well. Pyramid schemes are illegal in most states, But it can be difficult to detect. It is served in various ways, Including gift sets, Investment clubs, and multi-level marketing companies.

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The difference between pyramid schemes and multi-level legitimate marketing It can be particularly hazy. In theory, the difference is that That members of multi-level marketing companies They compensate in the first place from the sale of a specific product or service For retail clients, While the pyramid schemes primarily compensate their members by recruiting them to new vendors. But in practice, Many multi-level marketing companies succeed in everything however It is impossible for members to make full profit through sales. And many pyramid schemes, such as Vama Nutrition, Disguises itself as legal multi-level marketing companies By using a product or service to mask the wage and employment structure. Many hierarchical schemes also benefit from the trust within the churches. And immigrant societies, or other tightly knit groups. First members are encouraged to share a good experience Before they really start making a profit. Others follow suit, And the charts are getting bigger in size Before it turns out most members aren't actually turning a profit. Often times, the victims resort to silence out of embarrassment.

Pyramid schemes entice people by promising opportunity and empowerment. So when members don't ultimately make money, They can blame themselves instead of the scheme. And they think they weren't putting in enough effort to earn the promised returns. Some victims keep trying, And investing in multiple schemes, And they lose money every time. Despite all these factors, There are ways to discover a pyramid scheme. Time pressure one of the red flags. Be wary of "Act now or miss an opportunity in a lifetime." Big promises of life-changing amounts of income also raise suspicion. Finally, business marketing companies are multi-level legal You should not require members to pay for an opportunity to sell a product or service. Pyramid diagrams can be incredibly damaging to individuals. And for societies, and even entire countries. But you can fight fire with fire By sending this video to three people you know, And encourage them to do the same..

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