When it comes to making money we can find more than a thousand ways. Some people are genuinely sincere and truthful about the business they run to make that happen. They deliver an added value, they help others to have improvements in their life. These people deserve all the money they get.
Meanwhile, some others just have the most elaborate scheme to get the money and just run away. Without delivering any benefit, good or real service to you.
Today, I will tell you everything about the Pyramid scheme. Let’s start!
What’s a Pyramid scheme?
Some people treat it as a variation or an improved scheme of the Ponzi scheme. It might be the case. They both have as the principal goal to use new investors money to pay the older ones. The principal difference in how it proceeds.
In the Pyramid scheme, there is a specified hierarchical order for the scam. The order as you may guess is exactly in a Pyramid shape. But it’s a reversed Pyramid.
Since it’s a scam as we said, when a company or any business use the Pyramid scheme, there is no real business behind it. They promise good (too good to be real) benefits and return in investments but only if they enroll other new investors.
The oldest investor is paid with the money from the ones that he will bring. These investors will get paid through the money of investors they will bring and so on they keep going like in a Pyramid going Top-Down.
This process is definitely going to fail. Because at some point the newest investors will not necessarily be able to bring as many investors as needed. That’s why in this Pyramid the bottom is going to be weak at some point and it’s just going to collapse.
That’s it. Unfortunately, we don’t know who created it, and in which condition like for the most famous scam: The Ponzi Scheme.
Example of The Pyramid scheme:
The TVI Express scam:
In 2010/2011, many authorities all over the world announced that TVI Express is a Pyramid scheme. Apparently the owner, Tarun Trikha from India, has recruited hundreds of thousands of investors using the Pyramid scheme. Only a few of these investors had got some of their money back.
In 2013, Tarun Trikha has been arrested in the New Delhi airport.
Be Careful, always be careful….
Finally, you should always be careful. There is still many new companies that might apply this scheme, or the Ponzi one, or a variation of one of them. Always try to check the product/service the business you are going to invest on is proposing. Try to analyse its business model, and also all the legal (boring I know, but when it comes to money….) papers. And always remember the old saying before to take the plunge in investing:
“If the returns sound too good to be true, they probably are.”
If there is any business that you are suspecting and you don’t know how to be sure and check it, feel free to contact me. It will be a pleasure to investigate for you.
That’s it for today. If there are any questions about the Pyramid scheme, or something that I forgot to mention, don’t hesitate at all to let me know about it.