How to spot a pyramid scheme – Stacie Bosley

In 2004, a new company called Vemma Nutrition started offering a life-changing
opportunity to earn full time income
for part time work. Vemma’s offer was open to everybody, regardless of prior experience
or education. There were only two steps to start
get started earning: purchase a $500-600 kit
of their liquid nutrition products, and recruit two more members
to do the same. Vemma Nutrition Company grew quickly, becoming a global operation that brought in 30,000 new members
per month at its peak. There was just one problem— while the company generated $200 million
of annual revenue by 2013, the vast majority of participants
earned less than they paid in. Vemma was eventually charged with
operating a pyramid scheme: a common type of fraud where members make money by recruiting more people to buy in. Typically, the founder solicits an initial
group of people to buy in and promote the scheme. They are then encouraged to recruit others and promised part of the money
those people invest, while the founder also takes a share. The pattern repeats for each group
of new participants, with money from recent arrivals funneled
to those who recruited them. This differs from a Ponzi scheme, where the founders recruit new members and secretly use their fees to
pay existing members, who think the payments come
from a legitimate investment. As a pyramid scheme grows, it becomes increasingly difficult for new
recruits to make money. That’s because the number of participants
expands exponentially. Take a structure where each person has
to recruit six more to earn a profit. The founder recruits six people to start, and each of them recruits six more. There are 36 people in that second
round of recruits, who then each recruit 6 people— a total of 216 new recruits. By the twelfth round of recruiting, the 2.1 billion newest members
would have to recruit over 13 billion more people total
to make money– more than the entire world population. In this scenario, the most recent recruits, over 80% of the scheme’s participants, lose all the money they paid in. And in real life, many earlier joiners lose out too. Pyramid schemes are illegal
in most countries, but they can be difficult to detect. They are presented as many
different things, including gifting groups, investment clubs, and multi-level
marketing businesses. The distinction between pyramid schemes
and legitimate multi-level marketing can be particularly hazy. In theory, the difference is that the members of the multi-level
marketing companies primarily earn compensation from selling
a particular product or a service to retail customers, while pyramid schemes primarily compensate
members for recruitment of new sellers. In practice, though, many multi-level marketing companies make
it all but impossible for members to profit purely
through sales. And many pyramid schemes,
like Vemma Nutrition, disguise themselves as legal multi-level
marketing businesses, using a product or service to hide the
pay-and-recruit structure. Many pyramid schemes also capitalize
on already existing trust within churches, immigrant communities,
or other tightly knit groups. The first few members are encouraged
to report a good experience before they actually start
making a profit. Others in their network follow
their example, and the schemes balloon in size before it comes clear that most members
aren’t actually profiting. Often, the victims are
embarrassed into silence. Pyramid schemes entice people with the
promise of opportunity and empowerment. So when members don’t end up making money, they can blame themselves
rather than the scheme, thinking they weren’t tenacious enough
to earn the returns promised. Some victims keep trying, investing in multiple schemes, and losing money each time. In spite of all these factors, there are ways to spot a pyramid scheme. Time pressure is one red flag— be wary of directives to “act now or
miss a once-in-a-lifetime opportunity.” Promises of large, life-altering
amounts of income are also suspect. And finally, a legitimate multi-level
marketing business shouldn’t require members to pay for the
opportunity to sell a product or service. Pyramid schemes can be incredibly
destructive to individuals, communities, and even entire countries. But you can fight fire with fire by sending this video to three
people you know, and encouraging them to do the same.

100 thoughts on “How to spot a pyramid scheme – Stacie Bosley

  1. It can be hard to spot pyramid schemes. But contact me to find out how YOU can bust schemes from home for free! No education needed!

  2. My dad was recently offered a business opportunity, and since I watched this video a few months ago I showed it to him. I was suspicious about it since he told me, so it made more sense for me to show it to him. Twas a was a pyramid scheme, plain and simple. Thanks for the very helpful video!

  3. In my first year of college one dude tell me about this kind of scheme,I asked my dad for money,he didn't gave me.sad.end.

  4. When you're at a Coffee Shop or Barnes n Noble minding your own business and someone comes up to you asking about your life, trying to find out your "WHY", and offering to introduce you to their 30 yr old retired MENTORS that were able to walk away from their full time jobs. Such a joke, they prey on the lost souls in college who aren't sure what they're doing is worth it. Be careful.

  5. This girl I talked to one day told me she wanted to do business, and I said well what do you wanna do and she never told me till later she took me to one of her business meetings by AMWAY, boi I told her it’s a scam she didn’t believe me 😢

  6. During my summer job I had at least 1 person a week trying to recruit me for a pyramid scheme. They prey on broke college students hoping they dont know any better.

  7. Wait what I only know the proverb "If the offer is big the people doubt" (this is translated) or basically "If it seems too good to be true it probably isn't"

  8. You know whats hilarious. Vemma wasn’t“shut down” or Never even classified as a pyramid scheme. The FTC too the company to Court and Vemma Won a Multi Million Dollar lawsuit. The person Portraying this video is a tab biased and Uneducated behind Network Marketing. And Industry that has created more 6 Figure earners than any other industry in the world. Which is also backed up by Donald Trump, Bill Gates, Warren Buffet. Some if the most successful people in the world. Dont get me wrong pyramid schemes do and once did exist, But the FTC is heavily involved in companies business practices now. And there not as many out there anymore.

  9. Our family friends once had us over under the guise of a "family barbecue." Once we got there, the barbecue was had, and then there was a presentation in the living room encouraging everyone to invest in "rapidly growing new energy company", recruit others to gain access to the full benefits of company membership, from a company that i'd never heard of before. And I'd never heard of since going there almost 10 years ago. My family was the only one that refused and so we were ostracized, but it seemed everyone else was so easily suckered in, and we also didn't have the money to invest even if we wanted to as we were paying for so much of our children's needs. They never invited us back again despite knowing them for almost 15 years prior. I have no regrets about saying no, and I bet they lost a heap of money.

  10. “Own your own business for less than $500”

    “Earn $10,000 working only 2 hours per week.”

    “Earn $40,000 per year by working from home.”

    Or basically any other public advertisement of a job or owning a business.

  11. "You have no idea how GREAT i feel knowing i could retire by the time im 30." "What about you? Would you rather have your money work for you or do you like working???" -_-

  12. I was soo close to fall for this exact thing when I was younger. I told my dad about it and he warned me and told me about pyramid schemes. I should thank him again

  13. Major Red Flags:

    All hype, no substance. "Look at all of the money you can make from this (but I'm not going to tell you how to do it)."

    Vague responses to any questioning.
    "It's fun and engaging. Easy to understand and the product is something anyone can do. You could make a lot of stuff from this opportunity."

    Not even talking about the product in question.
    "Recruit, recruit, recruit and here's how to do it and the strategies to 'bait' people. Now let's talk about more rewards and hype you up."

    (Currently at a conference that has done all of these things within the first 30 minutes out of 8 hours. Worst thing too is that my mother is buying into it.)

  14. Do you want a job that have a good pay and car company and credit card for the company and a cellphone? Me to if you find one pls hit me up thanks lmao

  15. Let’s talk about Amway. Is that legit? I mean they have been around for 60 years. So idk how thy wouldn’t get shut down if they were legit

  16. WARNING: This is not a TED talk and it is a presentation of lies that lawyers for the government give to judges who are not their peer and have ZERO ability to correctly evaluating the various organizational structures. I can PROVE that she left out important factors that make it work and the so-called losers ALL get what they put in for WORK period 100% of the time. These anti-pyramid scammers working in the law (and FTC ignorants) are literally envious and jealous of the freedom we who do the math deserve and enjoy. There are problems but not in the math or the structure, IN the laws that oppress single mothers, disabled workers, honest Joes.

  17. I think my sister and brother in law are getting involved in a pyramid scheme and don’t even know it.. they’ve been trying to sit down with us and talk about “investment” and” not trying to sell anything” and Bragg about how much money they’ve made. I think it’s always been fishy but they are contacting all their friends and family and even people they haven’t talk to in a while. What do you guys think??

  18. Self Help.
    Get Rich Quick.
    Write a book, published by ding dong.
    Train people to sell with nothing to sell.
    Then Train them to be Trainers.
    Welcome to Life Coaching.

  19. This is the equivalent of telling people "how to spot a TV Evangelist huckster." These MLM pyramid scams are so OBVIOUS it should be totally unnecessary to "teach" people how to avoid them.

  20. The reason why we get trapped in these schemes is because of our desire to become successful & not have a 9-5 job forever. We see all those pictures of all the entrepreneurs on Instagram & we want to be like them. Nobody will help us get there & school never teaches us these opportunities of becoming successful so we fall for the successful person whom is actually one of us who is trying to get you in a pyramid scheme.

  21. If it promises “get rich fast” it’s 100% a lie. If it was legitimate, no one would be working. There’s no shortcuts with becoming wealthy or even healthy (lose weight in 2 weeks).

  22. “I have a nameless mentor owns a private jet and retired at age 32. You seem to have the right attitude to join my nameless team of entrepreneurs. Let’s meet at Panera Bread this Saturday to discuss how you can become part of this mentorship and achieve financial freedom.”

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