Pyramids, Pure and Simple: Different Names, Same SchemePyramids, Pure and Simple: Different Names, Same SchemePyramids, Pure and Simple: Different Names, Same SchemePyramids, Pure and Simple: Different Names, Same SchemePyramids, Pure and Simple: Different Names, Same Scheme

Chain LettersChain LettersChain LettersChain LettersChain Letters

One of the earliest types, the chain letter,still shows up today. These letters (oremails) ask people to send money tosomeone at the top of a list.They are told to removethat person’s name, movethe next person’s name onthe list to the top, add theirown name to the bottom,and send the list to severalother people withinstructions to do the samething. Victims are tricked into believing that,over time, their name will reach the top ofthe list and they’ll receive money from newletter-writers. But chains don’t usually lastthat long. Eventually, people stop falling forthe scam and the chain falls apart.

Online Pyramid SchemesOnline Pyramid SchemesOnline Pyramid SchemesOnline Pyramid SchemesOnline Pyramid Schemes

Pyramids are constantly changing and takingadvantage of new technology to lure victims.The Internet has become a cheap and easy way

for fraudsters to find victims who arelooking for quick money. For instance,some ads claim people can makemoney simply by clicking on links andsurfing the Internet. However, if theoffer requires you to pay to sign upand claims that you’ll make money byrecruiting others, it’s a classic pyramidscheme. Also be wary of spam emails

that offer money-making opportunities. Nomatter how you get the message — through themail, in a newspaper ad, online, or in person —the bottom line is that all promises of bigprofits for little work or high returns on no-riskinvestments are scams.

Resist the pressure.Resist the pressure.Resist the pressure.Resist the pressure.Resist the pressure.

Don’t let anyone rush youinto a money-makingopportunity. Legitimatecompanies will not disappearovernight.

Get all the details.Get all the details.Get all the details.Get all the details.Get all the details.

Do you have to pay to signup? If so, are you paying justfor the right to recruit otherswho will in turn pay a fee tojoin the program? Or will themoney you make come from sales of productsor services to actual consumers? Ask forwritten materials and review them carefully.Remember that even if they look official, theymay not be accurate.

Check out the companyCheck out the companyCheck out the companyCheck out the companyCheck out the company.....How long has it been around? Can you speakto any current salespeople about theirexperiences? Contact your local BetterBusiness Bureau and state or local consumerprotection agency to get information aboutcomplaints against the company.

Protect YProtect YProtect YProtect YProtect Yourselfourselfourselfourselfourself

Learn MoreLearn MoreLearn MoreLearn MoreLearn More

Get general advice and report suspectedpyramid scams

wwwwwwwwwwwwwww.fraud.org.fraud.org.fraud.org.fraud.org.fraud.org

National Consumers League’sFraud Center

800-876-7060

wwwwwwwwwwwwwww.ftc.gov.ftc.gov.ftc.gov.ftc.gov.ftc.gov

Federal Trade Commission

877-382-4357

For more information about multilevelmarketing

wwwwwwwwwwwwwww.dsa.org.dsa.org.dsa.org.dsa.org.dsa.org

Direct Selling Association.

202-452-8866

There are many different forms of pyramids. They go by different names, but the bottom line is the same:if you join one, you’ll lose money, not make it.

Gifting ClubsGifting ClubsGifting ClubsGifting ClubsGifting Clubs

In these schemes, new members give money as “gifts” to thoseat the top of the pyramid with the promise that they’ll advanceand receive “gifts” from others who join in the future. But, justlike with chain letters, most people never reach the top and getthe promised gifts. Instead, they do a lot of giving withoutreceiving anything in return. Know YKnow YKnow YKnow YKnow Yourourourourour

RightsRightsRightsRightsRightsThe state you live in may have specific laws about how legitimate multilevelmarketing plans should operate. Contact your state or local consumerprotection agency to find out.

SafetySafetySafetySafetySafety.....

SecuritySecuritySecuritySecuritySecurity.....

Social Conscience.Social Conscience.Social Conscience.Social Conscience.Social Conscience.

Join the League TJoin the League TJoin the League TJoin the League TJoin the League Todayodayodayodayoday

Founded in 1899, the National Consumers Leagueis America’s pioneer consumer organization.

NCL is your consumer advocate. NCL works forsafer foods, a cleaner environment, and protectionagainst consumer fraud.

Your $20 annual membership shows how much youcare about educating consumers — especially thosewho are most vulnerable — and strengtheningconsumer protections to meet the challenges oftoday’s marketplace.

Members receive the NCL Bulletin, discounted andfree publications, reduced conference registration,and a voice in determining NCL’s priorities.

Log on to www.nclnet.org or call 202-835-3323 tojoin today!

NCL thanks the DirectSelling EducationFoundation for anunrestricted educationalgrant and Alticor, a Direct Selling Associationmember company, for printing this brochure.

National Consumers League

1701 K Street, NW, Suite 1200Washington, DC 20006

202-835-3323 • www.nclnet.org2007

Pyramid schemes are scams promoted by con artists asmoney-making or wealth-sharing opportunities. New

members pay to join and are promised they will makemoney by recruiting other members into the plan.Pyramid schemes always fall apart because the pay-offrelies primarily on new recruits, and sooner or later, everyscheme runs out of new members. The only people whomight make money are the few scam artists who startedthe pyramid in the first place. Most people who join neverreceive any rewards or payment and are left with emptypromises.

Pyramid promoters seek out new victims just aboutanywhere — at work, at churches or temples, eventhrough social organizations or clubs. They also lurk onsocial networking Web sites and in online chat rooms.People involved in pyramids need to find more people tokeep the pyramid growing, and they often solicit friends or family to sign up. Since legitimate companiesmay also recruit among family and friends, it’s important to be able to tell the difference between a realand a bogus opportunity to join a business.

What Is a Pyramid Scheme?What Is a Pyramid Scheme?What Is a Pyramid Scheme?What Is a Pyramid Scheme?What Is a Pyramid Scheme?

A guide from theNational Consumers LeagueNational Consumers LeagueNational Consumers LeagueNational Consumers LeagueNational Consumers League

Don’t Let OneCollapse on You

PyramidPyramidPyramidPyramidPyramidSchemesSchemesSchemesSchemesSchemes

The pitch is attractive: you’ll make money by joiningthe program and recruiting others to join.The reality isn’t so pretty: if it’s a pyramid scheme,you and your friends will lose money, not make it.

Multilevel MarketingMultilevel MarketingMultilevel MarketingMultilevel MarketingMultilevel Marketing

NOT a Pyramid SchemeNOT a Pyramid SchemeNOT a Pyramid SchemeNOT a Pyramid SchemeNOT a Pyramid SchemeIn legitimate multilevel marketing plans (MLMs),sales people earn commissions from selling realproducts or services to consumers, both the salesthey make as well as sales by those they recruit. Butin pyramid schemes disguised as MLMs, any moneyearned comes from the membership fees of newrecruits. Some pyramid schemes offer “sham”products — useless items that little or no effort ismade to sell to actual consumers. Instead, newparticipants are often encouraged to buy theproducts themselves, and the money is used to “payoff ” those at the top of the pyramid.

Pyramids Are Illegal!Pyramids Are Illegal!Pyramids Are Illegal!Pyramids Are Illegal!Pyramids Are Illegal!

Pyramids claim to be money-makers, but the truthis they are sure losers.Pyramid schemes areillegal under federaland state law, andanyone who starts oneor recruits others tojoin can be faced withfines and/or jail time.

Don’t Get InvolvedDon’t Get InvolvedDon’t Get InvolvedDon’t Get InvolvedDon’t Get Involved