What Is a Pyramid Scheme?

Pyramid schemes first appeared in the latter half of the twentieth century, starting with chain letters. Basically, a pyramid scheme involves the selling of the possibility to earn money, and does not usually involve any tangible goods.

For example, the pitch may be for the secret to earning ten thousand dollars a month. In order to get that secret, you must send X dollars to the seller. What you get, is nothing more than the original information, or a "license" to begin selling the same "information" yourself.

Ads for this type of scheme were often seen in newspapers and other mass media. The point was to sell as many opportunities as possible, before there were so many people in the pyramid that the entire scheme would collapse.

It got the name, because it starts with one person or a small group, and expands multiple times at each level that goes downwards from the "top", increasing the number of people involved, and thus the size of the sales staff at that level.

In some schemes, besides the original purchase of a secret, you were also required to send a certain fee per sale, back to the person who sold you the idea.

The typical features of a pyramid scheme are high-pressure sales pitches, little or no information offered about the opportunity or company prior to payment of a fee, and no contact information. If you suspect someone is operating a pyramid scheme, report it to your local Sheriff's Office.

Remember that a pyramid scheme is not the same as Multi Level Marketing (MLM) where people sell things such as make-up at home parties, but also earn "commissions" for enrolling new sales staff.

Recommendations for Making Money Legitimately Online

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But What if You Need Money Now?

Many people try to find income opportunities online because they need to earn money quickly. They don't really have the time to build a business or wait for results.

Other people just don't want to start an online business and don't feel their cut out for business ownership. That is completely understandable, and there plenty of legitimate ways to earn an income from home - you just have to make your own opportunities. For help finding legitimate and good paying work online, please read the article entitled But I Need to Make Money Now: How to Work from Home.