Investment Scams - Pyramid Schemes
Pyramid schemes require participants to recruit new investors and earn commissions based on the investments made by their recruits. The focus is on recruiting new members rather than selling legitimate products or services. As the pyramid grows larger, it becomes unsustainable, and the majority of participants end up losing their money.
Modus Operandi
- Promise of easy money and quick profits
- Focus on recruiting new participants
- Entry fees or product purchases required for entry
- Emphasis on recruitment rather than genuine product sales
- Illusion of legitimacy with deceptive marketing techniques
- Participants earn commissions based on recruitment levels
- Reliance on continuous recruitment for sustainability
- Collapse when recruitment slows down, causing financial losses