Talk:Pyramid scheme

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Contents 1 Connection to Egypt 2 Pyramid Scheme Illegality 3 Gratis 4 Pyramid schemes without money 5 Beware Pixstar and Worldwide Dreambuilders 6 Minor Change 7 "What to do" section 8 Market Saturation 9 Paypal Pyramid Schemes 10 Question 11 Civic Duty and Due Dilligence 12 Matrix Scheme Link 13 Names of famous schemes 14 Is this a contradiction? 15 Comparison to MLM's 16 Intro mention of MLM 17 Extra links 18 Removed bad link to FTC 19 Randomizers 20 People removing links to MLMs or pyramid schemes 21 Reduce overlinking 22 Coporate Companies 23 TV ADVERTISING TOUTING "THIS WEBSITE" 24 Claimed Examples 25 Strange POV 26 not enough description of pyramid scheme crash! 27 Amway 28 Reverse Funnel System

[edit] Connection to Egypt

Removed the "citation needed" notice from :

"Though sharing a similar nomenclature the concept of the pyramid scheme does not have any direct association with the Great Pyramids of Egypt, nor did it in fact originate in Egypt."

since the only connection is obviously just the geometric relation between the object and the organization of victims in "pyramid" scams. It hardly needs a citation, particularly since it would be difficult to find a citation for a negative (a lack of connection between the two things).156.34.60.157 11:03, 10 May 2007 (UTC)

Sorry, that doesn't cut it. You'll need to actually source any claim made, especially one that is "in fact". -Eep² 03:11, 11 May 2007 (UTC)

[edit] Pyramid Scheme Illegality

"Although pyramid schemes have been declared illegal..." Where? USA Jurisprudence?

• illegal in Austria (clem 17:42, 23 Apr 2005 (UTC))

I believe pyramid schemes are illegal under mail fraud statutes, and perhaps false advertising, but I don't think there is a specific law against them. Superm401 02:21, 8 Jan 2005 (UTC)

They are illegal in the UK now. Davidbod 00:05, 30 July 2006 (UTC)

And Aus. its in the trade practices act. THE KING 11:48, 27 August 2007 (UTC)

[edit] Gratis

Should Gratis be used as one of very few concrete examples of pyramid schemes in the article? It seems like the fact that even if you participate in it, but don't succeed in getting the free item you haven't lost anything, or sent anyone money differentiates it from a straightforward pyramid scheme. --AliasXIII 17:49, 14 Mar 2005 (UTC)

---

I don't think it's a very good example of a pyramid scheme. From my understanding, the idea of a pyramid scheme is that the base of the pyramid pays the return on the top's investment, requiring (as the article states) exponential growth, and crashing once new users run out. Like you stated, with Gratis there isn't (necessairly) any investment to lose, and the fact that users can sign up for multiple offers means that the growth required is drastically reduced. It might well be some kind of scheme, but by definition it's not a pyramid scheme. I've edited the Gratis page to say as much, (link: Gratis Internet), and will change this one as well in a few days, but if someone has a better example I'd rather the section be replaced rather than removed. Thanks, --Dashpercent 09:19, 1 Jun 2005 (UTC)

Gratis Internet is not a pyramid scheme. They do not recieve money from their members or their member's referals. Gratis Internet is an affiliate marketing company and earns it revenue from the fees advertisers (such as eBay and Netflix) pay to aquire new customers. On the surface the distinction is subtle, but look at the trends in affiliate marketing/ incentivized marketing and one will see that one business model (pyramid) is illegitimate and the other is not.

^Correct. The fact that signing up for Gratis does not cost anything, and also that after you sign up, you're not required or even pressured to complete an offer. It's all about effort, and the likelyness of completion does not matter when, or how you sign up.

[edit] Pyramid schemes without money

I have seen pyramid schemes where no money gain is advertised; as a kid, I participated in one, sending chocolate to others on the list; I think my father (he has a clothes shop) mentioned a pyramid letter thing where business friends would send underwear (unused, I hope). Variants might also include postcards or smthn like that. (clem 17:41, 23 Apr 2005 (UTC))

[edit] Beware Pixstar and Worldwide Dreambuilders

These people act like they are interested in you, talking about financial independence, being your own boss, serving more people is the way to make more money, etc. Pixstar and Worldwide Dearmbuilders are pushing a pyramid scheme on you. They try to get you to sign up for online access to products and then motivate you to excite others to do the same through your reference. The more people sign up through YOU, the more you "upline" (i.e. guy who conned YOU into doing it) makes in terms of a bonus.

Come on. I dare you to meet the people that I work with. You don't have a big enough desire to make a difference in this world to make a statment like that. It is obvious that you know nothing about the details of what WWDB does and stands for. Just build the buisness and help someone change there life for the better and then come talk.

Its funny, i just ran into some guy who made me watch a dvd on Pixstar and Worldwide Dearmbuilders. its true, they do act like they are interested in you. watch out for this.

• I vote for removal of this entire section since it's so obviously POV on both parts. Orthografer 06:54, 24 November 2005 (UTC)

[edit] Minor Change

I changed the term "IBO" to "participant" as the former acronym was not defined earlier in the article.--Chuckhoffmann 06:59, 13 January 2006 (UTC)

Fixed the (broken) link to "Cutco Knife Company" to correctly point to Vector Marketing.--Britannicus 16:05, 15 February 2006 (UTC)

[edit] "What to do" section

Should Wikipedia be giving advice? While I generally agree with the advice given, I don't know that it's the role of an encyclopedia to provide that sort of advice. Though a link to a gvt. web page where that sort of advice is given would be apropriate. Generic69 02:12, 5 February 2006 (UTC)

I agree, on all points. 68.14.76.141 09:41, 10 April 2006 (UTC)

[edit] Market Saturation

Is the math in this section correct? I think if each member must recruit 2 more beneath them the percentage of losers is 87.5%. See http://www.pyramidschemealert.org/PSAMain/pyramids/progression.html.

You are probably correct. I wrote the section to emphasise that the bottom layer always loses money but in truth, the people in the layer above, and maybe the layer above that do too because of the way the money is divided. I suggest it would be worth changing the section to make it clearer if your link is a more accurate representation of how these schemes work. --MagicMoose 21:40, 13 March 2006 (UTC)

I totally rewrote the section after a lot of thought and hopefully it makes a lot more sense. I initially misunderstood how the recruit 2 / 8-ball models worked and have adjusted the description and stats now that I do know how they work. --MagicMoose 23:52, 21 March 2006 (UTC)

[edit] Paypal Pyramid Schemes

Recently a lot of paypal pyramid schemes are appearing on the Internet. It would be great if someone would discuss on that subject in this article, or maybe in a new article. Dooga 00:20, 14 April 2006 (UTC)

[edit] Question

I've always been wondering one thing when I read mails advertising pyramid schemes. They tell me to mail a few dollars to some guy and put my name at the bottom of a list. What's stopping me from putting my name at the bottom of a list without mailing any money to anyone? In fact, what's stopping me from putting my name right at the top of a list? Who's going to know whom I have sent money to, or where I have posted the mail? All this makes pyramid schemes even more dangerous and false, because there is no guarantee a new recruit will ever be paid any money, no matter how many levels of recruits come after him. JIP | Talk 13:35, 23 April 2006 (UTC)

I was thinking the same thing...except, of course, that you wouldn't want to put your name at the top of the list, since then you'd be knocked off the pyramid after one iteration.

But this page was still pretty helpful in explaining the problems. I just got a form letter that said I should purchase names and addresses from some random company. I have a feeling the creators of the letter don't care about the $1 at all, but rather the $150 for names and addresses...pretty slick.

[edit] Civic Duty and Due Dilligence

I have removed this section entirely, as it violates Wp:not#Wikipedia_is_not_an_indiscriminate_collection_of_information point 8. Instruction and advice is not appropriate for a wikipedia article. In addition, the entire section pertained only to the United States. --Xyzzyplugh 03:11, 24 July 2006 (UTC)

[edit] Matrix Scheme Link

I have noticed that someone added that Matrix schemes are mostly viewed to be legal, yet there is no evidence to this. I agree with the comparison, but do not agree with that statement. The OFT has identified them as being scams and at this point there are no statemtns which would lead someone to believe they are legal. Arzel 17:04, 24 July 2006 (UTC)

The article is clearly no longer true in this regard. I have re-written the intro to make this clearer.Davidbod 00:29, 30 July 2006 (UTC)

[edit] Names of famous schemes

Bit disappointed some schemes were not mentioned by name here - in particular Women Empowering Women which is so notorious it probably deserves its own article. Any others we should name? Davidbod 00:29, 30 July 2006 (UTC)

I just made a mention of it in the 8-ball section and of "gifting". It could probably be described in more detail in its own section. I think it would also be worth going through some of the psychological techniques that these scams use to push people's buttons. For example, someone in a scheme near me started putting it about that a local celebrity was involved, thereby conveying some kind of legitimacy on it - "well if he's doing it, it must be legal etc.". The WEW scam no doubt went to great lengths to make women think their hubbies were yahoos who wouldn't understand the scheme and therefore best not mention it at all etc. Unfortunately there are so many links to WEW that I've yet to describe one with a first hand description of how it works but it's clear it's just an 8-ball --MagicMoose 11:55, 24 August 2006 (UTC)

[edit] Is this a contradiction?

From the last part of the article:

These businesses thrive on selling sample cases of their products to newly recruited salespersons, and will offer bonuses to members which recruit new salespersons....In addition, these legitimate businesses do not pay bonuses for the recruitment of salespeople.' Thanos6 06:01, 4 August 2006 (UTC)

[edit] Comparison to MLM's

I don't see the purpose of this section. For one it does NOT offer a comparison to MLM's. It seems to be nothing more than a shill for a few MLM's. Since this article is not about MLM's I think this section should be removed, or if a comparison section left in, it should deal specifically with the differences between MLM's and Pyramid schemes. Arzel 15:17, 17 August 2006 (UTC)

I agree. There might be reputable MLMs, but there are plenty of disreputable ones with a failure rate mathematically built-in. --MagicMoose 12:14, 24 August 2006 (UTC)

I agree as well, the section comparing popular MLMs to pyramid schemes is totally unsourced for something raising such a controversial claim, weasel words also abound ("may lead to" "Simular") and without sources for the assertions that they strongly urge referals over product sales must be sourced because they are boarderline attacks on the companies in question. In addition phrases like "they consider themselves..." speak to a strong POV issue. Would it be alright if I attempt a cleanup of the section? Wintermut3 07:52, 20 January 2007 (UTC)

[edit] Intro mention of MLM

There's a sentence in the intro that seems too strong to me. It's

There are other commercial models using cross-selling such as multi-level marketing (MLM) or party planning which are perfectly legal and sustainable.

I think that's a little strong, and the sentence seems a little weird in its context. I'd be inclined to change it to

There are other commercial models using cross-selling such as multi-level marketing or party planning which can be perfectly legal and are claimed to be sustainable.

and also to move it a little lower. I also might remove the mention of cross-selling and go with a different intro that better matches the related paragraph in the text. Would people mind? William Pietri 15:30, 11 October 2006 (UTC)

I agree. MLM should be mentioned as a means of business whose model of income relies in part on recruiting new members (i.e. creating a downline), but claiming it is sustainable or legal depends on the MLM. Lots of pyramid / matrix schemes attempt to look like MLMs by selling some product, but they are still pyramid schemes. The legality would MLM would be defined by the income derived from the product and who its sold to outside members of the MLM. There should be a brief description of an MLM with comparison to pyramid schemes including wording to the effect described above, but actual instances of MLMs can be described in their own article. --MagicMoose 12:14, 1 December 2006 (UTC)

[edit] Extra links

I am removing an external link at the bottom of the page that is labeled "Pyramid scheme - Monavie" and links to a company called Monavie. There is nothing in the text of this article to warrant this random link. If the article wants to discuss Monavie and how it relates to pyramid scheme, then go ahead. But for now, I'm going to remove it.

Thanks! Bsheppard 06:16, 4 December 2006 (UTC)

From googling around Monavie appears to be some dubious health drink with claimed medicinal properties being promoted via MLM style tactics. So not a pyramid scheme but definitely a MLM and possibly a dubious one. The fact that it makes medical claims complete with nonsense about extracts of plants from the Amazon should set alarm bells off. If it did what it claimed it would be a drug and require FDA approval, if it doesn't then the person selling it is peddling snake oil and on very thin ice indeed.

--MagicMoose 12:38, 4 December 2006 (UTC)

Every thing written in the above quote is pure conjecture gathered from a googling experience. "The fact that it makes medical claims complete with nonsense about extracts of plants from the Amazon should set alarm bells off. If it did what it claimed it would be a drug and require FDA approval" This statement assumes that the proprietors of this "nonsense" submit to the FDA as the final word on what is healthy and worth marketing, and that anything with medicinal properties is a drug and should be regulated as such. I recommend that simply "googling around" should not be the sole determining factor to determine if something is dubious or not. did the author of this post do enough googling to determine factually that what is writen about this product is "nonsense" or does this poster have the opinion about any and all "extracts" from the Amazon to conclude that any medicinal value claimed from this region is "nonsense". I have "googled this product as well and anyone else who does so will see that the proprietors of Monavie do not mention any kind of "extract". which leads me to believe that the above poster did not google enough about the product or company of Monavie to construct an informed enough opinion to suggest to anyone whether or not Monavie is dubious. Anyone who has read enough reports in medical science and on the Amazon knows that the Amazon region is an as yet unlimited source of known and undiscovered plants and "extracts" containing food and chemicals of medicinal value. Acai berry which is the paramount ingredient in Monavie's marketing is well known as such and therefore any reference to the acai berry as medicinal or nutritious cannot justifiably be considered "nonsensical" without further study or reference.24.1.103.99 00:30, 3 October 2007 (UTC)

[edit] Removed bad link to FTC

I removed the link to the FTC's section on Pyramid Schemes because it no longer worked. When I have a few minutes, I'll try and find the correct link, unless someone else finds it first.

Bsheppard 06:19, 4 December 2006 (UTC)

[edit] Randomizers

I used to be involved in the GPT (Get Paid To) arena and I used to see randomizers advertised all the time. They are a pyramid scheme slightly upgraded to include indirect referrals. Here's how they work:

Alice signs up for "Dollar Randomizer" by creating an account and paying x amount to a member along with an administrative fee. She is given a referral page that she then promotes to bring in new members who will pay her x amount when they join. On top of this, any random or anonymous visitors to the page are presented with a random referral page, which could be Alice's or someone else's. Alice can increase her chances of it being her page being shown to random people by 1. upgrading her account or 2. bringing in a lot of new members.

Sometimes these programs offer other perks of being a member, such as advertising or stuff for download and/or resale. I actually joined one because they had a lot of e-books and software packages available for free with resale rights (thought there might be something there I could sell and make money from). My guess is the resale stuff is a flawed attempt to make it look like an MLM.

-- Arcturis 18:46, 22 December 2006 (UTC)

[edit] People removing links to MLMs or pyramid schemes

I noticed that somebody removed a link to - Alston Price. Upon review of this site it is obviously a pyramid scheme. I would ask people to vigilant to people removing links without good reason. If there is debate about site then take it up in discussion. On a side note I found a site which is a veritable rat's nest of Pyramids, Ponzis and other dubious get rich quick schemes, might be worth a look for other examples - [1]. There is some breathtaking gullibility in that forum. --MagicMoose 15:42, 30 January 2007 (UTC)

People remove links to "obvious pyramid schemes" because you are doing original research. Mdbrownmsw 16:21, 24 August 2007 (UTC)

[edit] Reduce overlinking

I'll happily admit to being a newbie, but I think some sections of this article exhibit link clutter and could stand being removed - notably the links to Dinner, Captain and others in the "8-ball" model section. Admittedly a minor nit, so I'm asking for clarification here. 213.162.65.17 15:15, 31 January 2007 (UTC)

I'd agree. Be bold and fix it. William Pietri 07:38, 1 February 2007 (UTC)

I just fixed it. I left in gemology but the rest are history. --MagicMoose 16:34, 2 February 2007 (UTC)

[edit] Coporate Companies

Are not all corporate companies gloified pyramid schemes? True many MLM companies turn out to be scams or they cave after a short period of time because their products are not in high demand, but the fundmental principles of a pyramid scheme are inherent in any corporate company. There will always be CEOs and stock holders who employ store owners (who have to pay a fee to own a piece of the franchise, I might add), who hire managers, who hire employees. In every store you see managers and they hire department managers and they hire employees. That's the way it is in small businesses as well. I worked for a small bread company a while back and because my boss owned a franchise license part of his earnings went to the Corporate Offices. Now, working at his company, I could never have his position. I could never exceed his level or pay, no matter how hard I worked. I would never own his business. It's the same with all corporate companies. I can never become a manager unless the person above me gives up there position entirely or dies. Even then, my promotion would be politcal, so there is a chance I wouldn't get the position anyway (and most MLM/direct marketing programs promote you by your numbers, not whether they like you or not). So I don't understand all of the negative hype that surrounds the pyramid scheme when the majority of the world's workers belong to one. It's not the concept of a MLM company or the concept of direct marketing that is to blame for bad experiences, because in my opinion, they are both very good ideas. Donald Trump and Robert Kiyosaki agree. They said so.. look it up. It's the money horders who abuse a good idea or those you join with a "get rich" attitude who are to blame. But, even then, you should research the credibility of a company and the people who elong to it before you join on the basis of someone's word. Besides, not all MLM/Direct Marketing Companies are built the same. There are some pyramid schemes that are inverted and if you do more work than the person who got you into it you can overcome their position. Trust me, I belong to one. Easiersaid3

REPLY

No, these Corporations PRODUCE ACTUAL PRODUCTS, such as Hamburgers, Widgets, or Lumber. Pyramid Scams produce nothing only sell 'getting rich'

dude, there are many so called legitimate corporations that sell "nothing" ie information,insurance,cyberspace,radio frequencies other non-material services.24.1.103.99 00:33, 3 October 2007 (UTC)

[edit] TV ADVERTISING TOUTING "THIS WEBSITE"

Bruce Berman, http;//www.296crazyfox.com, and all of the others are a new switch on the pyramid scam. They all tell you "FREE" information about how to get rich quick can be yours. Log on now...

When you do, you find that you have to pay $9.95 for shipping and handling, THEN you have 14 days to look at the information FREE. If you keep it you pay MORE, (typically $39.95) and if not you have to send it back, but forfeit your initial $9.95. These are advertised on otherwise reputable TV, such as Fox, MSNBC, History Channel, Discovery, and most major outlets.

Write to them to complain.

Look at my webpage http://www.otgadventures.com/Links.htm for more of these links.

dude.Paying for shipping and handling is NOT indicative of a scheme nor does it constitute "paying" for the "free" product or service offered.24.1.103.99 00:27, 3 October 2007 (UTC)

[edit] Claimed Examples

I've removed a few claims of examples: "Another example is a product (such as a dial-up modem purportedly using higher speed and/or using Voice over IP) sold at higher than ordinary retail price for the same or similar products elsewhere." 1) Not a pyramid scheme, just an over-priced product. 2) Original research.

"One example of this type of scheme is XanGo, whose participants purchase bottles of juice at inflated prices on a recurring purchase plan." 1) Not necessarily a pyramid scheme, just a probably over-priced product with dubious health claims. 2) Original research.

Heck, even if you find an actual pyramid scheme (and there are plenty of them out there), you cannot just add them to the article. You need a reliable source that calls it -- specifically -- a pyramid scheme. This article, and its talk page, are not the place for you to warn people about what you believe is a scam or talk about a business that burned you. Mdbrownmsw 16:38, 24 August 2007 (UTC)

Agreed. WP:SOAP. Dreadstar † 17:37, 24 August 2007 (UTC)

[edit] Strange POV

This might be a weird point to bring up, but is this article slanted against the subject? I know they're not the most positive business strategies, but more contentious subjects have far more neutral articles. Think of the pyramid scammers. They have feelings too. ALTON .ıl 00:34, 7 September 2007 (UTC)

[edit] not enough description of pyramid scheme crash!

I have issue with the section "identifying features" section This section is extremely POV. for example:

"A highly excited sales pitch (sometimes including props and/or promos)." uhh, this is not a characteristic limited or in any way exclusively indicative of any scheme or scam.

also: "Assurances that it is perfectly legal to participate" again this is not a feature specific to pyramid schemes or scams.

IN fact this article is rife with POV. the entire section "Market saturation

Over 90% of the people who get involved in pyramid schemes never recoup their initial investment.

The people on the bottom level of the pyramid, no matter how shallow or deep it goes, will always lose their money. It is easy to see that the number in the bottom level of the pyramid always exceeds the total of all those in the levels above no matter how many levels there are. If each level must recruit six more below them, the ratio of losers to winners is close to 5 to 1 - ~84% of all investors will lose their money. The pyramid in reality would not be perfectly balanced and some members might be able to partially fill their number of recruits, but the same principles apply."

where are the citations? Is it really so easy to "see" how this illustrates that over %90 of the people involved never profit? The structure of the model does not indicate the potential of anyone within the model failing or succeeding at the pyramid scheme.

What is the cause of the pyramid schemes "collapse", I did not find it this description. Is it government,consumer, or competitor hostility? Do they "run out" of customers, or product materials? (is that possible?) Is there a time constraint? is it a varied circumstance based upon the particular scheme?

I also have a few suggestions for this article. please define the term pyramid scheme! the description used in this article could he used to define any networked financial enterprise whatsoever. This article could be used to describe an internet access network, such as AOL or Excel(circa 2000) with referral bonuses! I think in this article there should there be a distinction or correlation drawn between pyramid schemes and pyramid scams since it seems to me that scheme describes a business model and scam describes the effect upon those who are conned. Therefore is it true that all pyramid schemes are scams as well? There are just too many generalizations here. The comparison with MLM business models is not thorough and I think it should be supported by defining a contrast with other business models eg corporate,contractor or LLC models this would further develope the distinction and make it clear. Also I think discussion of legality of these business models must be accompanied by definition and reference as to which legal bodies define them as legal or illegal , how and why. for example if the USA is referenced, then the agency that prosecuted or ruled them as such should be referenced as well as what business model is favored and why.

I think this article may be a good start at defining this phenomenon but perhaps it is far from complete. —Preceding unsigned comment added by 24.1.103.99 (talk) 00:22, 3 October 2007 (UTC)

[edit] Amway

in a recent Skeptics Guide to the Universe podcast, it was mentioned how Amway is a pyramid scheme, yet the FTC has not brought it down due to govt ties. Can someone add this to the article? Not sure how confident I am in doing it myself. 64.6.6.13 (talk) 01:12, 13 March 2008 (UTC)

The Skeptics Guide podcast was quoting a guy, Robert FitzPatrick who is a self-proclaimed expert in the field and whose only supporters are anti-mlm zealots. He believes essentially all MLMs are pyramids, and backs his belief with false claims. A california court recently refused to allow him as an expert witness. The claim of "government ties" is prime facie absurd. Amway is operating in more than 50 countries and next year celebrates it's 50th anniversary. Those governments around the world have been of all variety of political hues. For FitzPatrick's claim to be correct there is a conspiracy to outdo the illuminati going on. It's ridiculous. --Insider201283 (talk) 23:53, 4 May 2008 (UTC)

[edit] Reverse Funnel System

I think the new Reverse Funnel System pyramid scheme needs its very own wiki page. The reason being, if you look it up, it's IMPOSSIBLE to find impartial information on it. It has expanded to truly insanely massive levels. Youtube and Google are utterly saturated with information that is in the scheme's favour. It's practically impossible to find anything impartial about it. It deserves its own wiki page simple because of the scale of the phenomenon. —Preceding unsigned comment added by 87.194.245.5 (talk) 22:51, 4 May 2008 (UTC)

Very difficult to include it if there's no impartial information. Do you have a link at least to a description? --Insider201283 (talk) 23:54, 4 May 2008 (UTC)

I'll work on that. There must be some impartial information somewhere about this, it's just so difficult to find, because people being sucked into the scheme have saturated search results, youtube, the lot. Matt 87.194.245.5 (talk)

There's plenty of material to be found by Googling "Reverse Funnel" pyramid scam. For example, this article. 07:10, 17 May 2008 (UTC)