These are some of the hallmarks of a pyramid scheme:
- Emphasis on recruiting. If a program focuses solely on recruiting others to join the program for a fee, it is likely a pyramid scheme. Be skeptical if you will receive more compensation for recruiting others than for product sales.
- No genuine product or service is sold. Exercise caution if what is being sold as part of the business is hard to value, like so-called “tech” services or products such as mass-licensed e-books or online advertising on little-used websites. Some fraudsters choose fancy-sounding “products” to make it harder to prove the company is a bogus pyramid scheme.
- Promises of high returns in a short time period. Be skeptical of promises of fast cash – it could mean that commissions are being paid out of money from new recruits rather than revenue generated by product sales.
- Easy money or passive income. There is no such thing as a free lunch. If you are offered compensation in exchange for doing little work such as making payments, recruiting others, or placing online advertisements on obscure websites, you may be part of an illegal pyramid scheme.
- No demonstrated revenue from retail sales. Ask to see documents, such as financial statements audited by a certified public accountant (CPA), showing that the company generates revenue from selling its products or services to people outside the program. As a general rule, legitimate MLM companies derive revenue primarily from selling products, not from recruiting members.
- Complex commission structure. Be concerned unless commissions are based on products or services that you or your recruits sell to people outside the program. If you do not understand how you will be compensated, be cautious.
What happened was that I actually did give some money (the minimum amount) to try and get into a pyramid scam. There were many pyramid scammers that entered into USC-Main as well as other schools. I remembered one time when I gave up PHP 500.00 for a start and I was told that I would get paid for every new recruit. It really sounded too good to be true. What happened was I lost that money and never had it back. I had to study for my lessons especially fourth-year college was fast approaching. It was no time to start recruiting. Fortunately, I didn't give any more money to any of them after I was warned about the problem of pyramiding. I was told to be careful of these recruitment scams because there's no real selling. Yet, some people bought it hook, line, and sinker!
One reason why I wanted to join was all about the easy money. I was thinking about increasing my wealth one way or another. It's also the reason why I lost lots of money in bad credit with a family friend. Again, my failures aren't final and even the best businessman can still fail. I think about the whole issue of easy money with the pyramid scam. Getting paid to recruit others? Now, that's just something to think about as no company with a sound mind will offer extra compensation for referrals. Companies only pay based on work performance and work hours--not recruitment! Yet, pyramids offer so easy revenue that it's too good to be true. Yet, we know how greed blinds the human eyes, right? That's why no amount of education can ever divert one's eyes from the promise of easy money when greed is in the picture. That's why I also allowed bad sales to happen to believe that I'd get the money back when I didn't. Focusing too much on returns instead of considering risks is a surefire recipe for disaster based on my experience.
I could eventually remember the kitchen utensils pyramid scam. It's really something when people get deceived by "fast boiling" pots. How can it not boil fast when there was less water in it? The more water is in the pot--the slower it's going to boil. It's going to even boil less fast when one's on the mountain due to lower atmospheric pressure. There was also the microwave water scam which was also disproven. The pyramid scams try to paint a beautiful picture of their products. I heard there's nothing special about the pots and pans. I heard it was all about overpriced selling in hopes of making a quick buck without the effort to get quality pots and pans. It's like buying a cup of non-premium coffee at the same price for a cup of premium coffee. It's all about getting rich from selling overpriced products where the price doesn't meet expectations.
Based on experience, that's why I ignore those annoying play-to-earn scams. For instance, I think Axie Infinity is nothing more than a scam. I think it's legit (for now). However, who can remember that some pyramid schemes can be run by legitimate companies? I'm just amazed that Globe should consider Axie as legit. Then again, who can remember the Legacy Group of Companies? Its timeline actually tells you that the company in itself in 1998--" The Securities and Exchange Commission (SEC) grants a permit to Legacy Group, allowing it to sell one billion worth of pension securities, a type of pre-need plan products." In short, the Legacy Group had its permit. You could see that just because a company can have a permit or is considered legitimate that what they offer is good. Sometimes, a bank can start off legitimate with SEC permission then they decide to do scams all in the name of legality. I admit that I almost joined the Legacy Group of Companies before in hopes of making more money. The Philippine Star gave its details on the double-your-money scheme of the Legacy Group of Companies. It was during that time when Senators Manuel Araneta Roxas II, Francis Escudero, and Juan Ponce Enrile scathed SEC officials for not learning lessons such as the collapse of the College Assurance Plan (CAP). In fact, SEC also had an issue as to why they weren't able to see the Legacy scam either. Fortunately, SEC at this time around has given a warning not to invest in Axie Infinity. Though, it may only be a matter of time before SEC may fail and end up allowing Axie Infinity to get registered with it. It's what I might call a legalized scam one way or another.
So, I did do well not to enter into the Legacy direct selling. I did give some money to the now-forgotten recruiter and never got it back. Good thing that I started to develop a mind to reject those pyramid scams involving play-to-earn games. Play-to-earn, from what I think, is very much involved with getting paid when new recruits come in and scholarships enter in. It should be very important to reject both pyramids and Ponzis. Besides, I think one reason why I wouldn't get into cryptocurrency is not just volatility but because the lack of regulation may also make it even more prone to pyramiding. Axie scholarship and the like are best rejected as scams. If it's too good to be true then don't take it, get it? That's why after some painful experience--no thanks to any more invitations to pyramid scams!