How to recognize a pyramid scheme
Here are some pointers on how to spot a pyramid scheme:
The scheme is promoted word of mouth or through closed door meetings. Beware of promises of extremely high commissions.
Products associated with pyramid schemes often have little real value and it is difficult for the average consumer to determine their actual worth.
Consider if there is a true market for the product and if it is actually being sold to people outside of the scheme. If not the name of the game is likely recruiting.
To survive, pyramid schemes rely on a continuous inflow of new recruits. But basic math shows they will eventually collapse.
Be skeptical about testimonials about the product or the plan. The company may be paying individuals to give testimonials or may have strategically ensured their success in the business.