A fraudulent
business model, illegal in most places, in which participants are paid to recruit more participants, rather than commissions on sales.
Frequently passed off as
Multi-Level Marketing by incorporating sales of an unmarketable product or service into the scheme. In
such cases, participants are usually required to maintain a monthly purchase quota to qualify for payments.
Pyramid schemes market to
prospective participants while
Multi-Level Marketing plans market to prospective consumers. Pyramid schemes fail because scam participants are not a viable market. Most of the participants pay more money to participate than they receive for participating because there aren't enough suckers left to recruit.
Once the suckers figure that out and quit paying into the scheme, those who recruited them start losing money too, and then they quit. The scam
shrivels even faster than it grew.
