Why You Should Be Worried About Pyramid Schemes

This article touches on the demerits of investing in pyramid schemes. A pyramid scheme is an illegitimate multi-level marketing business whose model lies solely on a referral kind of system.

Life is all about growth, and most importantly, financially. Many have devised very many ways of climbing the financial ladder and it beats logic that actually, quite a good number has thought about investing either as a chief source of making a living or as a side job. There are very many investments that one can choose from to invest. However, we must appreciate that there exist both legal and fraudulent businesses. One of the investments that ought to worry you is the pyramid scheme model.

A pyramid scheme is an illegitimate multi-level marketing business whose model lies solely on a referral kind of system. Just like a pyramid, when you join this "investment", you are at the top of the pyramid and you are allowed to refer as many people as possible to join (subordinates) who also refer others and numbers grow down the graph. Interesting, right?

So, I am sure you are asking yourself why you ought to be skeptical about pyramid schemes. Well, any legitimate multi-level marketing company must have a distributor or distributors of products. These products are typically sold to buyers; the correct model in this case. However, with a pyramid scheme, your earnings depend on the number of people you are capable of bringing on board.

Pyramid schemes promise people fast riches. That's a red flag. They will tell you how you can become rich in a matter of a few weeks. This is just an advertisement. Yes, at the top of the pyramid, you may earn a lot, but that will be short-lived. The company, when cannot sustain paying the rapidly rising numbers, will close shop on you, unannounced.

Pyramid schemes are addictive. Always, they will come up with membership packages that you have to subscribe to. The amount required for such membership levels is adjusted accordingly; from the lowest to the highest. After making money from the lowest level, you can be swayed to use it to upgrade to the next. Unfortunately, you are bound to lose everything if the scheme collapses unexpectedly.

Most pyramid schemes have websites that are not protected or authenticated. This means that your personal data may be at risk of being retrieved by online hackers. Some information about your bank details, for example, may land in the hands of phishers and you may lose all your money in the bank.

Most pyramid schemes have no physical addresses, associates, or partnerships. You are given a link to register an account, and then you are left in the jungle to trace your ways. They have investor support systems that are inactive. You will never be able to talk to any. If you experience any challenges on their sites, you are alone!

Another thing that you have to know about such businesses is that they never guarantee you safety for your money. Who would want to invest under such conditions? The schemes also have ways of freezing your accounts without notice. If you lose your money while investing, there is no guaranteed refund. The only thing left for you is to move on. 

I don't want to be hard on you as an investor. You may earn from such schemes but please, make sure that you use your funds responsibly and after doing background checks on these schemes, understand their ratings on the Internet before you take the step to invest with them, lest you walk out of it empty-handed. Truly, genuine riches come a long way to realize.