You’ve probably had at least one of your friends add you to online parties or ask you to sell products. You’ve probably also seen the ads offering ways to make easy money fast! If something sounds too good to be true, it is. Pyramid schemes are illegal business models based largely on taking advantage of others; the people on top can make a great deal of money but eventually the lower levels run out of people to recruit into the game, so they don’t make the money expected and the pyramid collapses.
To avoid being caught in a pyramid scheme look out for: a fee to get started, necessary purchasing of a starter kit, not buy back guarantees on unsold products, big rewards for making sales goals, or a product that is virtually unsellable...with the emphasis not on selling, but on recruiting. These have become especially popular on social media. Here’s a look at 5 pyramid schemes you might have seen on Facebook.
“Make a living...Living!” Sounds great, right? For the low, low price of $200 to get started and $55 a month, you have access to all kinds of vacation packages. Or sell it and pay $100 and $11 a month, giving you the opportunity to travel the world while doing amazing work...and start recruiting other people to be salespeople, because that’s where the money really is. In fact, if you do well enough, they’ll pay for you to have a new car -- until you don’t make enough sales in a given month, and then that loan is all yours to deal with. WorldVentures follows the multilevel marketing form, which is a product-based pyramid scheme.
4. The Blessing Loom
Gifting circles often masquerade as groups with names like “Women Empowering Women” or “Women’s Gifting Circle.” To join, you gift $5,000 then find eight more women to jump in and each give you five grand, which you are also supposed to send up the pyramid. When it’s your turn to cash in you get a sack with $40,000 (the top lady got way more) but explicit instructions not to deposit it because it’s a pyramid scheme, and those are illegal. The “Blessing Loom” went around in 2016 and asked for cold hard cash to be sent—it was big enough that the Federal Trade Commission was quick to call it what it was: an updated version of chain letters.
3. Secret Sister Gifting Circle
A gifting circle scam also popped up on Facebook—asking for literal gifts in the $10 range. Unfortunately, while you may send your gift in good faith and anxiously await to get the 40 promised presents in return, chances aren’t good there are still enough people falling for it to receive them. Not to mention the Identity Theft Resource Center (ITRC) warns it’s highly probable you’re opening yourself up to identity fraud in addition to getting pyramid-scammed.
America is constantly on the lookout for the next secret in losing weight, and Herbalife promises to deliver. Those who are recruited quickly learn the company isn't a reputable multi-level marketing corporation, but a pyramid scheme that works toward recruiting people while hiding behind weight loss and skin care supplements. It didn’t take long for Herbalife distributors to speak out, but the posts and advertisements are alive and well on Facebook. Many people may find Herbalife in “Garage Sale” groups, or you may be surprised to learn your friend has been recruited.
Amway is one of the most profitable direct selling firms in the world, but anyone who takes a look at the company will clearly see that it’s a pyramid scheme. Marketing beauty and housekeeping goods, the company actually encourages people to recruit others to make money, and then those people are then pushed to bring in more. Amway has expanded to India, China, and other countries since the United States has become more aware, so many Facebook posts you see are likely from another country. On social media you may be bombarded with dozens of ads talking about how great the company is and how the products are revolutionary, because the people involved are encouraged to spread this misinformation.